Mike Shlisky: Got it. I want to switch over to gross margins and maybe even dollar margins really quickly. I’m just trying to do some, throwing the ball against the wall math here. But it sounds like maybe given the fixed cost we’ve got today that might be coming down a bit, you could turn even dollar positive at maybe a thousand units a year. Am I on the right track there? Or can you give us an update when you think you might be able to start showing some pretty EBITDA out or some free cash flow?
Dakota Semler: Yes, that’s a great question. So I think as we shared about a year ago in our previous earnings call, we had a calculated plan to reduce direct material costs, reduce fixed costs of operating the business and other OpEx and improve our trajectory to getting the business to gross margin positive. And the next thing we shared was that the next step on our roadmap is getting to generating positive free cash flow. So we haven’t guided to a specific date, but I think we’ve made some incredible accomplishments in the last year to achieve these goals and to get there in the very near future. First and foremost, we’ve got unit gross margins ranging anywhere from the low teens percentage all the way up to low 20s percentage points.
Second, we’ve cut operational expenses significantly, nearly 50% year-over-year, which demonstrates that we can continue to operate our model, scale sales and scale growth of our products into the field while maintaining our lean operational structure that supports the ongoing needs of the business, including engineering, supply chain and our service requirements to keep our vehicles supported in the field. And then the third thing is we continue to increase volumes quarter-over-quarter. And so our focus as we increase volumes is to get to that point where we’re generating positive EBITDA and eventually positive free cash flow in the near term future.
Mike Shlisky: Got it. Maybe one last one for me, and it goes back to your last question that your last answer there. You’ve got a bunch of vehicles now that are on the road for well over a year, two or even more than that. Do you guys sense that in 2024 that parts and service will start to be a bigger part of the revenue? Should we start to actually model any actual numbers there? And I guess on a kind of related note, can you give me, share with us what your customers have shared about uptime of your vehicles compared to other ICE models or even other EVs that they may have out there? I’d appreciate both of those answers. Thank you.
Dakota Semler: Yes, it’s a great question. So we’ve had vehicles on the road all the way since 2018, but a substantial portion of vehicles have been put on the road in the last couple of years. We are continuing to see our service needs grow in the field from unplanned maintenance events. And we do have a small amount of service revenue coming in through parts sales, as well as service labor to help repair those vehicles out in the field. And when we say unplanned maintenance events, we’re talking about things like breaking a mirror off or a tire or a wheel, systems that aren’t failing because of the reliability of the vehicle, but maybe because of an operator error or other kind of issue. So we are seeing some parts revenue on that front and expect that will continue to grow as more vehicles are out there in the field and more powertrains are out there in the field.
The other component, which is as we start to see vehicles age into the field, it’ll be a few years before we see significant replacement costs on things like battery or powertrain components, just because the expected lifespan of a lot of those components is far longer than these vehicles have been out there in the field. As you probably remember, Mike, we have a hybrid model of how we service and support customers in the field. We have a team of Xos technicians across the country from California all the way to the East Coast and covering the Midwest and Texas and other areas. And for those technicians who are conducting repairs and diagnostics on vehicles, that’s where we’ll sell a direct part. But then we also have certain markets where we work with strong dealer partners to sell our parts and utilize their service teams to support our vehicles.
