Kevin Hettrich: Ben, thank you for the question. We ended the year with $1.70 billion, which we think is a strong cash balance for this transition phase going from prototype to product. We provided guidance for the year for CapEx of between $70 million and $120 million, and adjusted EBITDA guidance of between $250 million and $300 million loss. That combines together to a cash runway into the second half of 2026. And we did note in the letter that, that is an extension of a further two quarters relative to the prior guidance. So while we haven’t given interim detail in the periods outside of 2024, we have updated the aggregate cash runway guidance.
Ben Kallo: Thank you.
Operator: Our next question today comes from Jed Dorsheimer with William Blair. Please proceed.
Mark Shooter: You have Mark Shooter on for Jed Dorsheimer here. I just want to reiterate what other analyst sentiments here, congratulating to you both Jagdeep and Siva. Thinking about the, amp hour size of your cells, there’s obviously some energy density efficiency that can be gained from larger cell sizes. And my understanding is that the limiting factor here is the area of the — of the separator. Not that you can’t make larger, but there’s an optimization function there. So, can you walk us through some of the offsets between cost and yields versus the energy density benefits you may go, or you may get from going to a larger cell size with a larger area separator?
Jagdeep Singh: Yeah. It’s a great question. Thanks for asking. So, you’re absolutely right that for any given architecture, if you go into a larger package, the ratio of package inactive materials to electrodes and active materials gets more favorable. And so you will get an energy density advantage, by going to a bigger cell, just because there’s less spinage and unnecessary, sort of componentry in the cell. Having said that, our mission was to get our first product to market as quickly as possible, and we wanted to minimize how many changes we made to the design and the form factor we were already working on. So the reason why the QSE-5 is in the form factor that it’s in, is largely because that was the form factor we had identified as our initial A sample early on, and all of our manufacturing capability was designed around that, that particular form factor.
So, rather than change the form factor and incur a number of unnecessary delays as we read tooling and so on, we wanted to just focus on time to market and deliver a cell in that same form factor. The good news is, even within that smaller form factor, we see very compelling numbers. In one of our previous in the Q2 ’23 show letter, you’ll see a chart on page three, I think, that shows you that we believe we can get to a pretty unique combination of energy and power in that form factor. Even the 5 amp hour form factor, which is about as much energy as you get in a 2170 cell, the one that’s used in the Model 3, for example, the Tesla Model 3. You basically can get to on the order of 800 or more watt hours per liter, while still targeting 15 minutes charge times.
To our knowledge, that’s a unique part of the curve, all of the other major EV cells that are out there, can either get energy or power, but not both simultaneously. And then, having said that, the roadmap absolutely allows for us to get to higher energy density simply by increasing the form factor. So even with no fundamental changes to the chemistry, simply by going to larger separator films and larger cell packaging, you end up improving the ratio of active to inactive materials in the cell and thereby improving the overall higher energy density sets, something that’s very much on the roadmap, and it’s just a matter of sequencing what we do, so we can focus on getting to market without unnecessary delays.
Mark Shooter: That’s great. Thanks for the color. There’s a follow-up here talking about Raptor and Cobra, there’s obviously a large development that’s occurred in the Sintering process for the heat treatment. Unfortunately, with all things with batteries, there’s often a performance negative side to every improvement you make in one area. Could you touch on any of the challenges you’ve had? And what do you want to see from the material set in Raptor that gives you the green lights for Cobra? Does the void space change? Does the lithium conductivity change because of the faster sintering? Any color on that would be great? Thanks, guys.
Siva Sivaram: Even though the heat treatment time has dramatically reduced, we have not changed the composition of the films, which continue to be refined as our needs evolve. Both the Raptor films, which we’ve already integrated, and for ourselves satisfied that it meets our needs, we continue to follow this very closely with Cobra. Like any step-change, production change things, you know, there are going to be difficulties as you ramp them up. And we, as careful development engineers, we do go back and systematically analyze them to make sure that we are doing the right things to scale up. As of now, we don’t see anything that is a blocker for that. We are doing very well in this, that’s the reason we are putting a priority on getting Cobra into production as soon as possible. But it is an order of magnitude improvement in productivity, so it makes it very attractive for us to implement it into production as soon as possible.
Operator: Our next question today comes from Wesley Brooks with HSBC. Please proceed.
Wesley Brooks: Hi, guys, and thanks for the question and congrats on the new roles. So, firstly from me, could you — are there any key timelines that you can provide us for these goals through the year? I mean, particularly on shipping the A-2 cells and kind of when we should expect feedback on that, and then kind of when we should expect that low volume production to get off or we just kind of wait to see as you go through it?
Siva Sivaram: As we have said in our shareholder letter, we expect low volume B0 production for this calendar year, and that’s the guidance we have given. And all in-between steps, such as the shipping of Alpha-2 and ramping Raptor into production, and getting Cobra on site, we’ll keep you updated as we achieve each of these milestones through the year. But for now our guidance is to say that we will be in low-volume production in calendar 2024.
Wesley Brooks: Okay, understood. And then kind of a follow-up, just — you talked about the four key building blocks, obviously, the packaging, the high load cells, the Raptor. Are there any other key technological challenges that still need to be resolved, or is it really just kind of putting these all together and figuring out how to do that kind of efficiently and well?
Siva Sivaram: So we are making that big transition from having developed individual components into making a product, the QSE-5. I do not want to minimize for instance, the reliability improvements that we need to make. As we increase the volumes, we will make sure we continue to monitor productivity increases, particle reduction, variability reduction, process control, these things do take time. So I don’t want to minimize the amount of work that goes into making that happen. The individual components as we said, the higher-loading cathode, the better packaging efficiency, the Raptor films, we have — the 24-layer, we have shown all of these independently. The QSE-5 puts these together. The devil is going to be in the details of getting all of this together and ramped in volume. And so I don’t want to come back and say that to minimize the amount of challenges ahead of us.
Wesley Brooks: Great. That’s understood. Thank you. Very clear.
Operator: Our next question today is a follow-up from Gabe Daoud with TD Cowen. Please proceed.
Gabe Daoud: Thanks, guys. Just wanted to hop back on and ask a quick one. Could you maybe confirm or curb any kind of confusion around the prospective automotive launch customer for QSE-5? Is that still the same and is that prospective launch customer VW or PowerCo? Thanks.
Siva Sivaram: Yeah. We have not explicitly called out who our launch partner is. All I can say is in the last four months that I have been here working with Jagdeep, I have spent a lot of time with the customer. The customer continues to be as excited as always to get this launched. As we get close to it, we’ll disclose with their permission on who the launch partner would be.
Gabe Daoud: Got it. Thanks Siva.
Operator: Thank you for your question. There are currently no questions registered. [Operator Instructions]
John Saager: Thank you. With that, I’d like to thank all of you for joining us. I’d also like to thank our team for their excellent work this quarter. And we thank our shareholders for their continuing support of our mission. We look forward to sharing more as we continue ahead. Thank you all.
Operator: That will conclude today’s conference call. Thank you all for your participation. You may now disconnect your lines.
