Thank you for standing by, and welcome to the Enovix Corporation Q3 2022 earnings conference call. Currently, our participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. As a reminder, today's program will be recorded. Now I'd like to introduce your host for today's program, Charles Anderson, Senior Vice President of Investor Relations. Please go ahead, sir. Thank you. Hello, everyone, and welcome to Enovix Corporation's Q3 2022 financial results conference call. With us today, our President, Chief Executive Officer, and Co-founder, Harrold Rust, and Chief Financial Officer, Steffen Pietzke. We will also be joined by our Chief Commercial Officer, Cameron Dales, and our Chief Technology Officer and Co-founder, Ashok Lahiri, for the Q&A portion of our call. Harrold and Steffen will review the operating and financial highlights, and then we'll take questions. After the Q&A session, we'll conclude our call. Before we continue, let me kindly remind you that we released our Q3 2022 shareholder letter after the market closed today. It's available on our website at ir.enovix.com. A replay of this conference call will be available later today on the investor relations page of our website. Please note that the shareholder letter, press release, and this conference call all contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are based on our current expectations and may differ materially from actual future events or results due to a variety of factors. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission. All our statements are made as of today, November 1, 2022, based on information currently available to us. We can give no assurance that these statements will prove to be correct, and we do not intend and undertake no duty to update these statements except as required by law. During this call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the investor relations page of our website. I will now turn the call over to Harrold to begin. Harrold? Thank you, Charlie, and thank you everyone for being on the call today. Enovix made strong progress in the Q3 that advanced our goals to continue commercializing what we believe is the best product in the lithium-ion battery market that will allow our customers to deliver transformational features and products to the world. This is evidenced by the strength of our large revenue funnel and increasing engagement with leaders in portable electronic products and EVs. We have active engagements with six mega-cap technology companies, two of which we have design wins with. Today, we are announcing a non-binding MOU with one of these leaders. Under this agreement, Enovix and this customer will work together to leverage our technology across their broad product portfolio and further collaborate on our technology and manufacturing scale-up. We believe we are well-positioned in the portable electronics market overall, with more than 75 accounts clamoring for our products due to our technology leadership and energy density and safety. We continue to grow our global reach throughout Asia and have engagements with leading smartphone OEMs in China and major consumer brands in Japan and Korea, including Samsung. We are also seeing strong interest from leading automakers given our fast-charge advantages, and in the Q3, we shipped production cells for initial testing to a tier 1 EV battery supplier and a top 10 global auto OEM. Our task remains to scale the capacity for our revolutionary product with our Gen two auto line, the engine of growth for the company. Together with our key vendors, we made excellent progress on Gen2 during the quarter, including placing initial purchase orders for our laser patterning, assembly, and packaging lines for long lead material, design, and proof-of-concept projects to demonstrate the design improvements built into Gen2. These 47 projects are presently being completed with our key vendors and have thus far validated the design concepts and improved performance of Gen2. We have also placed a follow-on purchase order for the remainder of system fabrication with our packaging equipment vendor and expect to do the same with our laser and battery assembly vendors in the next several weeks. We believe that we remain on track to land our first Gen2 line in the H2 of 2023. In total, over the last nine months, we've incorporated over 120 learnings from Gen1 into the detailed designs for Gen2, resulting in a line that can assemble and package many more batteries in the same footprint for significantly less capital per battery. I'd like to highlight a few areas that illustrate why and how Gen2 is such an improvement. First, we have a laser pattern electrode form factor that allows us to deliver breakthroughs such as a 100% active silicon anode and safety innovations like BrakeFlow that uniquely address thermal runaway. Laser patterning is at the core of our technology, and we must become a world leader in that field. To support our vision, we announced today a collaboration with IPG Photonics, a global leader in laser technology. Our alliance with IPG provides ongoing access to the most advanced laser technologies and has already resulted in our Gen2 lasers having 5x the power of our current Gen1, far ahead of our original scale-up plan. Second, in stacking, we are eliminating a frequent manual alignment of four independent punch heads and replacing them with a single punch head that stacks four batteries simultaneously. This is an example of one of the proof of concept projects we launched months ago that has already been proven out long before the production tools are even built. Thirdly, we are making a major change in how we transport and process batteries. In Gen1, we use a low precision, low speed conveyance system that moves batteries between each assembly station. For Gen2, we have replaced it with a high speed, high accuracy linear motor that has only become recently available. This eliminates the need to move batteries on and off the track, increasing throughput and reducing the complexity, size, and cost of the equipment as we can now process on the track directly. In addition, we expect it to improve our process capability and yield as the accuracy of the linear motor is often better than the Gen1 fixturing. Lastly, we have learned in Gen1 how critical automated vision systems are for both inspection and metrology. They detect issues instantly, drive faster yield learning, and increase equipment uptime. We have added significantly more metrology to Gen2 with this learning. Given our high and increasing confidence in Gen2's superior performance, it has become clear to me that we must begin redirecting resources to Gen2, even at the expense of the ongoing improvement activities of Gen1. From the beginning, we knew that improvements and learning in Gen1 were less about making Fab-1 run better and more about making Gen2 as perfect as we could. Our goal is to replicate multiple Gen2 lines in the future directly on our own and indirectly via licensing and joint ventures with our roster of high-profile customers and potentially incumbent battery leaders. For those of you familiar with semiconductor history, it is our blueprint for copy exact. We believe that the result of this change in emphasis will be lower volume from our Gen1 lines in Fab-1 and Gen2, until Gen2 ramps in 2024. It was a tough decision, but I feel it's the right one. Now I'll turn the call over to Steffen, who will discuss our financials, and after that, I'll make some closing remarks. Steffen? Thank you, Harrold. Our detailed financials and the reconciliation between our GAAP and non-GAAP results can be found in our shareholder letter. I will spend my time covering a few high-level topics. We recognized a nominal amount of revenue in the Q3 as we focused our efforts during the Q3 on optimizing Fab 1 and shipped the majority of our batteries as samples for customer qualifications. Our adjusted EBITDA loss in the Q3 was $20.2 million, compared to an adjusted EBITDA loss of $18 million in the Q2 of 2022. Excluding stock-based comp, our non-GAAP operating expenses in the Q3 were $19.4 million, down from non-GAAP operating expenses of $19.5 million in the Q2 of 2022, which also excludes stock-based comp. We closed the Q3 of 2022 with net cash of $349 million, down from $385 million in the Q2 of 2022 due to $20.6 million of cash used operationally and $16.9 million of cash used on capital expenditure. Now, let's discuss our guidance. For full year 2022, we now expect to use between $130 million and $150 million of cash, of which we expect roughly 40% will be CapEx. We are lowering our cash use guidance primarily due to the timing of capital expenditure payments for our Agility Line and final payment milestones for our first Gen 2 line. For revenue, we continue to expect to recognize between $6 million and $8 million for full year 2022, with service revenue being a significant contributor. Before I turn it back to Harrold, I want to highlight that in this quarter's shareholder letter and investor presentation, we are sharing details around the economics of a Gen two line. Many shareholders have asked us how to best model our Enovix scale-up, and we believe the Gen two economics will allow you to do that. To summarize, we exited the quarter with a very strong balance sheet and with Gen two underway and the caliber of customers we have, we believe we have the ingredients to scale and realize our vision of every person being positively impacted by Enovix innovation every day. I will now turn it back to Harrold for closing remarks. Thanks, Steffen. Our task ahead is clear: continue to push the boundaries of what's possible with our technology while developing and bringing up a world-class Gen two manufacturing line to fuel our growth and satisfy our customers. On that first point, I'm pleased to report that we are now far along with a new technology node we call EX-1.5, which sits within our first technology node, EX-1, and our second generation node, EX-2. We have successfully built EX-1.5 wearable-sized batteries in our R&D line that equate to 965 watt-hours per liter for a smartphone-sized battery, up from 900 watt-hours per liter for EX-1. We anticipate sampling this technology next year to customers. This gives us confidence in our long-term energy density roadmap and our ability to move off the industry's historical trend of meager improvement. I'm more excited than ever with the progress we've made with our technology, our customers, and our Gen2 manufacturing line. The collaborations we have announced today with industry-leading customers and partners supports our vision and highlights the compelling value we bring to the battery industry. With that, I'd like to turn it back over to the operator for your questions. Operator? As a reminder, to ask a question, please press star one one on your phone. Please stand by while we compile the Q&A roster. Our first question comes from Colin Rusch with Oppenheimer. Your line is now open. Thanks so much, guys. You know, you've obviously been testing this equipment and working on it for quite a while now. Can you talk a little bit about the decision-making and some of the triggers for shifting a little bit of the CapEx strategy and deciding to move forward with the Gen 2 line in the way that you are? Yeah, Colin, thanks for that question. Yeah, I think it's really not a question of shifting CapEx focus. It's really a question more of as we get further and closer to Gen 2, we wanna make sure from an internal resource standpoint, we've got all the talents on that we need to make that successful. You know, we spent a lot of time the last two quarters extracting all the learning out of Gen 1, and I'm, you know, pleased to say I think we're not seeing additional learnings come out. I mean, that effort is kind of timed out. We basically, you know, as a part of that, solved the big problems we think that were in Gen 1 that go away in Gen 2. We wanna make sure we sufficiently staff Gen 2 to make sure that that comes in to hit its objective and timeline. That's what we gotta do. That in my mind is the most important thing for the company right now because that's the blueprint for how we scale our business going forward. Perfect. That's actually quite helpful. Shifting gears towards the customers, obviously there's an awful lot going on, and you've talked a little bit about having to prioritize customers. But can you talk a little bit about how you're moving through the qualification process with those folks and the designing process? You know, the numbers haven't shifted too much in the funnel, but I'm assuming that you've made some meaningful progress and discussions in moving through some of those technical details and planning, you know, and in their planning process? Yeah. I'll just briefly comment and let Cam pipe in. You know, I think from a manufacturing standpoint, we've delivered a lot of samples out of Fab One in support of the customer qualifications. Those parts have been hitting specifications and those qualifications have been progressing quite well. I'll let Cameron add a little bit of color to that. Sure. Thanks, Harrold. Hello, Colin. Yeah, to give you a little bit more of a sense of where things are in the funnel, you know, the overall funnel is relatively stable in terms of the total dollar value, and we've been focusing on moving programs from kind of design opportunities at the top down into active design and then design wins. You know, I think we're up to nine design wins now. As those programs progress through those stages, it really goes from sampling, you know, R&D cells originally, and now most of our samples are actually coming off of Fab-1. I think we shipped to 25 different companies today off of the Fab-1 line. Customers run those cells through their, you know, test programs, really matching them up against their own requirements on their products. Then the focus switches to either using a standard cell, which, you know, we have a couple that have been defined off of our lines, or to move to a customization program where we build a cell specific to customers. We've launched a number of those. It really comes down to moving into full manufacturing qualification. Part of that is testing and, you know, kind of detailed reliability on cells off of the factory line, as well as, you know, the auditing and the managing of our quality systems in the factory. I would say most of our focus now with these programs is kind of in those latter stages. A lot of effort going into the quals and certifications from a quality perspective on the line in preparation for you know more meaningful volume shipments next year. And then really through next year a number of significant qual programs, which ultimately will be planned to launch in 2024 on the Gen 2 lines at you know significant volume. Great. Thanks so much, guys. Please stand by for our next question. Our next question comes from Bill Peterson, JPMorgan Chase. Your line is open. Yeah. Thanks for taking my questions. Wanted to get some clarification around what is left to, I guess, be solved for Gen2. It sounds like you still are on target for H2 of 2023, but I guess how much more work, if you can quantify, or what types of areas need to be completed in order to be ready for shipping in the H2 of next year? I guess sort of related to that, you talk about our gens and lines and fabs, but you really didn't talk about, you know, where this is gonna be going, I guess, in terms of a fab footprint. Are you still thinking about the potential for two fabs, or is this, I mean, how much of this will be internal capacity or maybe partnership, finance or other means? Yeah, thanks for that question, Bill. I think relative to your first question, you know, Gen 2 is pretty far along in the design process, I would say detailed design process. We expect that we'll be kind of going into final detailed design review towards the end of this year, right? You know, we've got high confidence given the interactions which are very regular that that's gonna pan out well, but that's kinda your final checkpoint where, you know, you've looked at every single part and you're ready to proceed. Kind of simultaneously with that, we're gonna finish up the last of the proof of concepts to just validate the design things. I think things, those things are all on track, and those vendors are moving very quickly. I'm quite confident we'll be in a position to, you know, get through that and then have that equipment show up in the H2 of next year as we've talked about. Relative to your second question, Fab-2, you know, for us, the equipment is really the long pole in the tent. While we've continued to look at facilities and we have multiple options, we haven't made a decision yet. We'll do so. You know, we're gonna do it in a time that makes it advantageous to us, but rest assured it'll be, you know, before that, equipment needs to have a home. Okay. It sounds like that won't be the long pole, but that's good to hear. I guess sort of pivoting, when you think about your funnel and design wins, you know, I'm assuming this is primarily against conventional lithium-ion batteries. You're taking the steps to really focus on, you know, getting ready for the, I guess, line two and new fabs. I guess one of the risks is that competition could catch up or other, you know, your customers and interesting customers may need to be looking at other means. What are you seeing from the competition? What are the risks that are associated with having other, let's say, higher energy density silicon anode companies out there trying to intercept the market in 2024? Just trying to get a feel for how the competitive landscape could evolve in the absence of having product, meaningful product in the market, you know, today and then really not that much next year either. Yeah. Let me let Cameron field that, and I've got kinda one comment after that. Yeah, sure, Bill. With respect to competition, particularly in the consumer space, we're not seeing a shift in, you know, the competitive dynamics from what we've experienced over the, you know, over the last year or many years, really. You know, the industry continues to move forward at its sort of steady material-based set of improvements in terms of energy density. We, you know, we also are moving forward, I think at a rate that's faster than the market. You know, in our communications, we talked about, you know, kind of our next node of performance being EX-1.5, getting us up to, you know, 965 Wh/L. What I see with the specific customers we're talking to is that that is extremely competitive. We don't really see any, you know, anything that's kind of out of the historical norms from the industry, and people remain focused on our solution as really kind of their best bet to move the needle in terms of competitive advantage. Go- Hey, Cameron, you actually added on what I was gonna add on. You answered the question. Sorry. My bad. Just to be clear, you're not seeing other sort of silicon anode newer players being in the competitive space at the moment. It's more, you know, they're looking to work with you and lock in with you in a sort of 2024 timeframe? Yeah. I mean, we certainly do see the industry as a whole continue to adopt, you know, silicon materials on the anode side. What we see is that most of those are, you know, blended with carbon. You know, ironically, as you kind of plot the improvement in energy density at a kind of product global, kind of global view, it just essentially adds to the 4.5%-5% increase that you see every year in the space. That's something that we've always anticipated would happen. We didn't always know how it would happen. If you know, if you kind of look at where we're at and our trajectory in terms of improving energy density, you know, we still remain kind of that five years ahead of where the industry is today. Okay. Thanks for the color. Please stand by for our next question. Our next question comes from Alex Potter with Piper Sandler. Your line is now open. Great. Thanks a lot. I appreciate the new color on CapEx guidance. I just wanna ask a couple clarifying questions there to make sure I'm understanding it correctly. It looks like $50-$70 million in CapEx for a single Gen 2 line, and you can make nine million cells. My interpretation is that that's like smartphone, cell phone size cells, assuming 80% yield. Is that the right way to think about that? Yeah, I think you're right. It can make nine million smartphone-sized cells. The OEE is a combination of yield and basically equipment availability. That's basically how many good cells you're getting out of, you know, possible 100% you could get out of every moment of every day you're running. I think you I think you've got it right. Okay, great. You also mentioned sort of in that same paragraph that you could make in the same footprint a similar line that can make four times as many cells if you are focused on smartwatches. Is the CapEx for something like that also in that same range? I would say, we're still in the middle of kind of doing the proof of concept of it. My guess is it would be slightly higher, but I think economically it would still be, you know, a significant advantage over where you would be with a single battery per line design. Okay. Does that clarify anything? Yeah. Alex, it's Steffen. Maybe to give you a little bit more color. The way you have to think about it, we gave you the CapEx for a universal line, right? It can make small cells and large cells, and certainly, from the gross margin perspective, like, more larger cells are more attractive, right? When we start deploying the gen two line, my expectation is that it gravitates from the mix perspective towards the large cells. From a dedicated line that Harrold was alluding to on a variable size, my expectation is that the CapEx will be higher, but the gross margin will look better, for- Okay. Just to clarify, in Fab-2, you've not yet disclosed how many of these lines you contemplate building. Is that accurate, or would you just start with one line? Yeah. That we are proceeding with one line right now that will land in the H2 of 2023. Our plan is to actually add additional lines that would come in in 2024 into that Fab-2 location. Okay, great. I'll take the rest of this. More than one line running by the end of 2024. More than one by the end of 2024. Perfect. Yeah. Okay. Thanks very much. Thanks very much, guys. Please stand by for our next question. Our next question comes from Anthony Stoss with Craig-Hallum. Your line is now open. Thanks. Harrold, I wanted to follow up on the new track transport system. Yeah. It seems relatively new, and I understand, you know, the laser side must be much more difficult. Can you quantify maybe how much risk that this may introduce? Secondly, I'd love to hear your thoughts since BrakeFlow has been out a couple of months. I wanna hear kind of the early customers that weren't afforded BrakeFlow out of the gate, you know, now that they have a little bit of time, can they come back, or what's the reception been, and do you think most of your customers will opt to go with BrakeFlow? Sure. On the first point around the track, even though this technology is new, it's being made by a very reputable company, right? That technology, even though it's new, I think is already out in the market and works quite well. I think it's a very low-risk thing in my view. The difference is that, you know, these kinds of systems were around a few years ago. They just didn't have the same performance. It allows us essentially to eliminate having to move parts on and off this track for processing. There's just a bunch of overhead time you take out of the manufacturing process, which is great because it's not value add. I don't think there's a risk there. I think it's actually a much better way to run the line, and we're super excited to be able to do it. I'll let Ashok talk a little bit about the BrakeFlow or maybe Ananda and Cameron about kind of from a customer standpoint and technology standpoint. I don't know which Sure. Happy to jump in. You know, on BrakeFlow, you know, the plan for launching that is to launch that with the launch of our larger size cells. Essentially smartphone-sized cells and up will have BrakeFlow built into it. We're currently not thinking about, you know, offering this as a menu item for people. We think this is something that's inherent in the technology, and it's part of our overall value proposition for the product. With respect to customers that would not have it, you know, the launch of our wearable cells today don't have BrakeFlow associated with it, but of course, the amount of energy in that cell is lower. Over time, we expect that all of our products will incorporate BrakeFlow, and, you know, it's our hope that this becomes kind of a standard expectation from customers like, "Why wouldn't your cell be, you know, resistant to thermal runaway?" We think it's an important foundational technology there. Great. Thank you, guys. Thanks. Please stand by for our next question. Our next question comes from Gus Richard with Northland Capital Markets. Your line is now open. Yes, thanks for taking my question. Next year, I think a majority of your or a significant portion of your revenue is gonna be professional services. Is that just NRE, helping your customers design in your batteries, or is there something else related? Yeah. I can comment a little bit. I mean, I think each of these programs has some amount of NRE around them. I think next year is a combination of production output, and NRE. Yeah, Gus, this is Cameron. I don't know whether I'd characterize it just as NRE, but these are essentially product development programs where we're customizing batteries specific to somebody's requirements. Those programs can vary from, you know, a simple size change to, you know, enhancing the product with respect to, for instance, its temperature, you know, capabilities, et cetera. They're all typically around developing products to meet customer-specific requirements. Got it. Then in terms of the MOU you guys announced, you know, what is that program, I guess, for lack of a better term, sort of entail? What are you working with exactly with that customer? Yeah. So, thanks for that question. We're super excited about this. You know, this is another step in kind of a, you know, kind of a long-term relationship with this particular customer. It's one of the, you know, our strategic accounts. In fact, it's the same customer that we announced purchasing wearable cells for their next generation smartwatch in Q2. You know, since that time, we've been working with them to try to put in writing the vision of the two companies of how we would work together, and that's the MOU as a result of that. While it's non-binding, it's really the roadmap and the framework for working together towards definitive agreements that, you know, that move forward commercially on each of these areas. You know, the areas that we're collaborating on together. First is batteries for multiple products within different kind of vertical segments of their product lines. So wearables, mobile phones, you know, laptop computers and other mobile products. Second is customization of cells to their specific requirements, you know, often around these specific product categories. Third is collaborating with them in the area of proprietary active materials. So think about, you know, better performing cathodes or electrolyte systems that they would like to incorporate into their specific products. Fourth, collaborating with them on manufacturing and scale up in order to enhance our ability to support their, you know, their volumes over time, which if we're successful here, as you know, could be quite substantial. You know, you put it all together, it's a non-binding MOU. It's non-binding, but, you know, we've spent three hard weeks or months negotiating, you know, every word of that agreement, so that it accurately captures what both companies want to do together, and we use that as a roadmap towards, you know, the specific commercial agreements to come. Got it. On the last element of that MOU, the manufacturing scale up, it this sounds like a roadmap in order to get the products that they want ending in, you know, assuming this is one of the mega cap companies, your ability to sort of meet or your mutual ability to meet you know their significant demand. Do I understand that correctly? Yes, that's exactly right. This is one of the mega cap companies, is what we call a strategic account. You know, given the volumes we're talking about, we don't expect to be able to support this customer's complete volume needs on our own. This is a piece of our model going forward as we look at joint venture partners and potentially licensing to hit those volumes. I think. Perfect. Thank you. Even dedicated capacity in place. Yeah. Yep. Got it. Just one housekeeping question. I think at the end of 2023 line or Gen 1 equipment will produce a little bit less than one million units. Is the second line in Fab-1 considered Gen 1 or Gen 2 or Gen 1.5? It's Gen1. Okay. Okay, very good. Thank you so much. Please stand by for our next question. Our next question comes from Ananda Baruah with Loop Capital. Your line is now open. Hey. Yeah, good afternoon, guys. Thanks for taking the question. Yeah, a couple if I could, really. The first is clarification from the shareholder letter. In the language where you talk about Fab-1's focus on a handful of high-profile customer launches and then also qualification programs with strategic accounts in 2023, are those one and the same? Cam, why don't you field that one? No, those are not one and the same. You know, in 2023, the earliest programs that are gonna reach market are typically not the strategic accounts. Those are longer term programs. You know, we're working with some pretty exciting products with some well-known brands that you know, we hope to have on the market in 2023 and we can support those volumes out of the Gen1 factory. The strategic accounts, we're looking to start scaling those in 2024 with significantly more volume than we can produce in you know, in Fab-1. The focus for Fab-1 from a strategic account perspective is really working through qual on you know, a number of different programs with, you know, I think we've said we're working with big strategic accounts at this point and are, you know, have reached tech qual with four of them, and design wins with a couple of them. There's a lot of activity there. It's supporting their prototyping and qualification efforts through 2023 and anticipating, you know, volume production in 2024. Great. Cameron, could you do initial volume production with any of the big strategic accounts? Could Fab One accommodate that in 2023? Potentially. It depends on the specific, you know, product selections and the volumes that, you know, that are contemplated in that type of a program. Awesome. A quick follow-up, guys. There was, I guess sort of another clarification. There was a remark to an earlier question that Gen 2 will gravitate towards larger cells. I guess just sort of can you sort of add some context for us there, given it also sounds like Cameron, you know, Gen 2, just sort of your remarks a moment ago about Gen 2 really being used to ramp some of the big strategic, though it seems like some of the smartwatch business will also be some of the initial big strategic, business. Can you just put that with the remark earlier, Gen 2 will gravitate towards the larger cells? Yeah, I think you know I would say if you think, Ananda, over the longer term, think of a factory that'll have you know small cells predominantly running on these 4X lines that we talked about earlier. I mean, in the initial days with the first lines, I would view that we'd be doing those both small and large cells on those first lines. Mm-hmm. As you get into 2024 and 2025, you'll have dedicated lines tuned for the small cells. This other Gen2 line will become, you know, kind of your standard for the larger cells, 'cause economically that's what's gonna make the most sense. Got it. That's helpful. In 2024, I would expect we'll be doing both of those things off those lines probably, undoubtedly. Appreciate that. Awesome. Thanks, Cameron. Please stand by for our next question. Our next question comes from Derek Soderberg with Cantor. Your line is now open. Yeah. Hey, guys. Thanks for taking my questions. It's great to be back on these calls with you guys. On the comment that Gen two could be improved by up to 10x in terms of output, I think the wording around that was that it's gonna lower the cost per unit. I think you guys put out a similar gross margin estimate target of 50%. Wondering if you can help me square that commentary. You know, Steffen, are you guys sort of managing towards 50%, or can Gen two equipment sort of drive margins beyond 50%? I guess, how should we think about the impact Gen two equipment's gonna have on margins? Thanks. Thanks, Derek. From a Gen2 perspective, the way you have to think about the margin, our long-term model is the 50% gross margin and 30% EBIT. The larger cells will have exceptional margin at that target range. The smaller cells at the four Ah that Harrold was talking about will have larger gross margins blended with the product mix between small cells and large cells and phasing out the single small variable lines. That's what we are targeting to get to the 50%. It's a blended range. It's a blended number at 50%. Got it. That's helpful. I also wanted to ask about the EV announcement on some of the progress you guys are having, with the DOE program. I think you guys have said, 1,500 cycles while retaining 88% capacity. I guess I'm curious, how does that compare to, other batteries on the market today? I mean, is that a differentiator for you guys potentially? I'm curious, you know, where are you guys tracking on a watt-hour per liter basis, on those EV test cells at this point? Yeah. Thanks, Derek. I'll let Ashok kinda talk to this one as he's been kinda driving a lot of this effort. Sure. Hi, Ananda. Yes, certainly 1,500 cycles for a high silicon blend, let alone a 100% active silicon blend, as well as a 10-year calendar life are exceptional numbers for an EV class cell. It really shows the power of our architecture. It is definitely differentiated from, I think, other products on the market. You know, your second question is how would this manifest itself into a product? You know, I think I'll let Cameron kind of answer that question, but you know, we have a dedicated team that is taking this information and this data and translating it into a product that customers can use. Yeah. Thanks, Ashok. You know, as we announced maybe a couple quarters ago, we created a dedicated business unit called Enovix Mobility. Their charter for this year has been to, you know, establish relationships with the major automotive OEMs worldwide, and then to start working with them on essentially translating our clear technology capabilities that have been proven on the consumer side, and then translate them into an optimum product in the automotive side with the goal of early next year essentially picking our dance partner or partners, you know, from the OEM side. You know, I think they've been making really excellent progress there. One of the interesting points is that, it turns out, perhaps one of the most important advantages to the architecture that we've developed is its thermal properties and its ability to enable fast charge. When you add, you know, the silicon anode piece for energy density, the cycle life, which Ashok Lahiri commented on, and you add that to a cell architecture that is just extremely beneficial from a thermal fast charge perspective, we think we have a really winning product here, and we're getting some great feedback along those lines. Yeah. Just one last comment. In terms of volumetric energy density, we will easily beat the kind of the long-term DOE goal of 750 watt-hours per liter by scaling up those that chemistry into larger cells. That's great. Thanks, guys. Please stand by for our next question. Our next question comes from Chip Moore with the Putnam. Your line is now open. Hi. Thanks for taking the question. Wanted to ask on the Gen 2 auto line, getting to that nine million cell level you laid out in the shareholder letter, is there a good way to think about that ramp as you build that out? Yeah. You know, we've got those first lines hitting the floor in the H2 of next year, right? Towards the end of the year, early part of 2024, they're shipping qualification samples to customers, which doesn't actually consume that much capacity. It basically just starts to clock, you know, on those quals, which could be, you know, a month or several months. You're basically ramping that capacity throughout, you know, 2024 in terms of the line's capability. I would kind of think of it as a bit linear throughout the year. You know, you'll be probably still working on some of those improvements into 2025, but a significant amount of that capacity growth will happen in 2024. Yeah, even those lines. Yeah. Yeah. As we talked about earlier, our plan is actually to land some additional lines in that same space by in 2024 as well. Okay. No, that's very helpful. I just wanted to ask on just the increase in throughput, the 10x increase. Maybe you can talk about just the flexibility that gives you, whether it's on, you know, form factors for new markets where maybe there's limited volumes up front, just what that potentially gives you. Yeah, I mean, it certainly opens up a world of possibilities. I think, you know, we obviously understand kind of the established markets and products, but there's some emerging markets that are coming at us that I think give the opportunity to really leverage that. Certainly also the 4X kind of wearable cell line is gonna be a game changer for some of these markets, like augmented reality, when they take off. I think that effort is really directed at being ready for those opportunities when they arrive. We think that's the right investment for the company to make. Got it. Great. Thank you. Please stand by for our next question. Our next question comes from Mark Kokes with Alder Lane. Your line is now open. Thanks, guys. Did I hear you correctly saying you had design wins from some of the $200 billion-dollar customers? Is that right? That's correct. Okay. We take that concept, and these customers are obviously smart, and they know that Fab-1 was a beta plant all along, proof of concept plant all along. If these guys have design wins, they must have a schedule of when these products are coming out, right? That'd be a good assumption. What prevents them from funding their own Gen2 lines right now? Yeah. Mark, I mean, obviously, we can't get into specific discussions around specific customers, but that's certainly part of our vision. If you look at the MOU that we just signed, you know, one of the provisions there is to look at exactly that. Hey, Mark, this is Steffen. I think you need to look at this as a capital-light opportunity for us to bring multiple Gen2 lines in very quickly. Under that concept though, Cameron, why wouldn't these $200 billion customers simply fund Gen 2 lines right now? I mean, it sounds like Gen 2 is ready to go, and if you guys are ordering equipment for Gen 2, why couldn't the $200 billion customers order equipment and you guys run them? Why can't that happen tomorrow? It could. This is Harrold. I would say, Mark, you know, we wanna get through this final design checkpoint, right, in the next couple of months, right? So that we've got that locked and loaded. I think, you know, we would have the confidence at that point to move forward with additional lines, if customers are willing, you know, to help do that. We'll do some of it on our own, but I think we won't shy away from customers wanting to be a part of that solution. You're potentially two months away from the good to go on the Gen 2 line. Is that it? I think we're looking at getting kind of sign off end of this year, early part of next year. You know, in that ballpark. Okay. Cool. Thanks, guys. Thank you. I would now like to turn the conference back to Harrold Rust for closing remarks. Thanks everybody's time today. I just wanted to kinda wrap up and kinda hit on, I think, kind of the three major takeaways that I want you guys all have about the company. You know, the first is, you know, customers continue to tell us we have the best battery out there. You know, the work we talked about on EX-1.5, which is this new kinda intermediate technology node, is just kind of evidence of us continuing up that energy density curve in support of our long-term model. We think that's super powerful and, you know, puts us on a curve that others can't be on, which is great. We've also made a lot of progress, I think, in the technology with some of our key partners. We mentioned the IPG partnership today, which we think is very critical because we're gonna be a big, huge laser consumer, and that's a big part of our business, so we need to be world leaders in that space. Second is that, you know, we've got the world's biggest customers on us to make products for them, and we wanna capitalize on that demand, and so we're just very well positioned with our customers. The third is that we're ready to go with this Gen 2 line. We've done a lot of hard work on Gen 1. That's been loaded into Gen 2, and we're gonna be ready to execute on that to grow this company over the next couple of years. We think that puts us in a fantastic position to satisfy our customers and to deliver value for our shareholders in the future. With that, I think I'll wrap up. In the future. This concludes today's conference call. Thank you for participating. You may now disconnect.