Good morning, everyone. Thanks so much for being here. My name is Colin Rusch. I lead the Sustainable Growth and Resource Optimization practice at Oppenheimer. We're very pleased to have the team from Microvast here, CEO, Yang Wu, and CFO, Craig Webster. Guys, to start, can we talk, you know, about a little bit about the history of Microvast? Because I, I think oftentimes that, that gets underestimated or misunderstood. How long has the company been around, and how long have you been making batteries? And this is going to be important later on, so just want to lay the foundation for some of the history here. Yeah, thanks. Yeah, that's a good question. You know, the Microvast actually start with an idea. You know, the Microvast may be the only company start with no battery experience, nothing with battery, you know, related. I started from 2006, end of 2006, after I sold my ex-company to Dow Chemical. Mm-hmm. You know, I team up about 100 people, research people in 2007, and concentrate on the research. In about four years, we started first production, produce the battery in 2011. Excellent. You've been making batteries for over a decade at this point. We just want to make sure that everybody understands making batteries is really, really hard, you know, doing it at high yields and positive margins. You know, the IP portfolio at Microvast is unique. Can you talk about some of the elements, like gradient cathode, aramid separators, before we get on to the current portfolio? You know, what are those advanced technologies doing for you with your customers at this point? Yeah, you know, during our research, you know, basically why we came up with, you know, aramid separator and, you know, FCG, you know, full gradient material, you know. This come from a, you know, requirement of the commercial vehicle application, you know, especially, not even commercial vehicle in the future, even the passenger car require, you know, battery first function I gave to my scientists in 2008, actually. That's three fundamental functions: fast charging, and I require scientists to, you know, do the research, you know, less than 10 minutes fast charging. Fast charging is, you know, is a fundamental, you know, for ensure the mobility. If your car cannot do the fast charging, you lose the mobility. The second function is long life. Battery has to be super long life. What, what, you know, has to sync life with the vehicle. You know, nobody afford to change the batteries in the middle of vehicle life. That's, you know, the second, you know, the function we research, research on. Third one is the superior safe, you know, because the battery is relatively unsafe, you know. Especially, you know, is unpredictable, you know, the internal, you know, shortage or internal problems. You know, that, that, you know, the three function require, you know, we push back, we're looking for the materials. We found the material, you know, especially back to, like, you know, the decade ago, and those materials on the market, not very good for those function, you know, the applications. Then we start to research on the raw materials. Aramid separator, you know, the most, you know, the significant function is the high temperature and shrinkage. Normally, you know, like a PE, PP separator, you know, the shrinkage temperature is about 130. Even you have a ceramic coating, you get to- Mm-hmm ... 170, 180 degrees centigrade. Aramid separators shrink it from up to 300 degrees centigrade. Why we need a 300 degree? Because the cathode material start to decompose around the 250 degree. Right. If you're pretty got a problem, you know, you hit up, and you want the, you know, the cathode, you know, disarm the cathode. Mm-hmm. Then your separator, you know, hold it to the last and make the battery much safer. That's the principle, you know. You don't want your battery, separator is a guard for safety. You don't want your guard die first. Yeah. That, that's incredibly helpful that you guys have a portfolio of advanced technologies that, that really do enable some of the functionality and, and the safety requirements that OEMs really are looking for down the road. You know, last night, you talked about, you know, about 80% of your backlog coming from the 53.5 Ah cell that you've designed. Can you talk about what makes it unique and, and how involved your customers were in helping you narrow the, the target performance for that design? Okay. The, back to the FCG a little bit, you know, I, I had still not answered your FCG question. FCG is a technology, you know, we licensed from DOE, you know, Argonne National Laboratory. Mm-hmm. We utilize the FCG manufacturing from there. You know, the patent invented by Argonne. You know, Argonne is the inventor of NMC. Mm-hmm ... call the FCG is a next generation NMC, which right now we can, you know, we can produce, you know, larger volume. Talking about a 53.5, 53.5, you know, we spent, like, four years to develop it. When we moved to Western countries, Microvast decided to move to Western countries, you know, for business. Mm-hmm. We know what country require, you know, much, you know, stronger battery because the very serious for the warranty. Mm-hmm ... you know, warranty commitment. You know, you cannot fail it. You fail it, you, you take a consequence, you know. That's why we start from a, you know, the scratch and special engineered this long life, you know, the high-capacity battery.... Fortunately, you know, we get the performance. You know, sometime, you know, on the market, the performance is, like, too good to be true, you know? People say, "Oh, this battery, why it's, it's, you know, almost like a three times longer life than other battery? Mm-hmm. After we test it, you know. Right now, it's tested, the customer testing the field, and everybody agree. It's, you know, we use the data to, to prove, you know, the super performance. That's why right now, you know, the, this battery is in high demand, and we cannot produce, you know, enough for the market. Only problem is to expand the factory right now. Fantastic. And so you touched on that last night. And I guess can you talk about the performance characteristics of the battery? Because we've certainly seen what commercial vehicle duty cycles look like, are very specific, and it's not dissimilar to what we're seeing on the grid. Can you talk a little bit about how that duty cycle is met so effectively by the cell design? The cell design, for example, you know, for a passenger car, you look about your battery running about 1,000 cycles, and, and, you know, you, you run about, 300,000 miles maximum, you know, for passenger car. For a commercial vehicle, you're talking about 100,000 mi- 1 million miles. Mm-hmm. It's a three times longer life. That's require battery, you know, the. That's why, you know, our battery, 53.5, we can charge, like, over, you know, our spec, we over 5,000 cycles, you know. Right ... high charge. That's like, you know, 3x longer than the passenger car batteries. Right. Also, the, the, the passenger- Yeah ... the commercial vehicle, they want a fast charging as well, you know, because... Yeah ... they cannot lose it for five hours to charge a battery or three hours. They want you to charge in about a half hour or less than one hour or, you know, 40 minutes, whatever, you know, the shorter is better, and to keep, you know, 24/7 running. Yeah, and, and the uptime is substantially more for the, the commercial batteries, or the commercial vehicles. You know, that your, your utilization rate is more like 25%-40% a day versus passenger vehicles, which ends up being, you know, in the order of 3%-5% utilization, on, on, on a basis. You have that, that greater uptime, faster charging, and, and a longer, longer lifetime. When you look at the, the commercial vehicle market and the design and process, how long is that design and process, for you guys? How long do you expect, the platforms that you've been designed into to, to extend? Are these typically three-year platforms in your view, or are they more like five- to seven-year platforms? normally three years, commercial vehicles. Is there an ongoing design and process for you guys, where you're getting spec'd in on an ongoing basis on the rolling evolution of these platforms? Of course. We have different stages, you know, they engage with, you know, the customer development, who is different- Uh you know, the VMs. And can you talk a little bit about that customer base and kind of where you're at with the development process? Because we're just in the very early stages of commercial vehicles beginning to ramp, and so would love to understand kind of the breadth and depth of that, that opportunity for you guys. We have a, you know, development with the vehicle, you know, the a lot of their, you know, their platforms, and Volvo and, you know, Daimler, and work with Daimler as well, you know, for their next, you know, the projects. You're continuing to make progress there. Okay. Yeah. Well, well, changing gears a little bit, you know, you, you've got a fairly broad portfolio of IP within the organization. Can you talk about how easily and, and how quickly you can evolve the products to, to meet customer needs? We're seeing an awful lot of design activity right now when it comes to pack design, whether it's in vehicles or for stationary storage products. Just curious about how quickly you're going to be able to evolve from product to product over the next three to five years as, as we see some of those needs evolve. Normally adapt to their new application take two, three years. Some of them, you know, take a one year, you know, rework. Mm-hmm. You know, depends on the project. If it's a completely new platform, you know, take, take, like, three years, and if it's just modification on vehicle, you know, the. We work with them, normally about one year will be fine. Okay, you guys can kind of evolve pretty quickly. Does that typically include changes to chemistry or, you know, incremental changes, or are they, they primarily around just configuration of the cells to its early made pack designs? A change of chemistry, it's not an easy job, you know. Mm-hmm ... and then you modify the chemistry, maybe, it, you slightly modify, like, electrolyte, you know, the, those stuff, you know, the, to adapt a different application may be fine, but you, you know, fundamental chemistry change take a much longer time, take, like- Mm-hmm ... Four, five years. Because if you, if you change the chemistry, you have to test the battery to end of life. Those, you know, test is going to take about a one and a half year. Just, you know, internal test. Then you do ABC sample, and it take, you know, take a very, very long time. Excellent. I mean, I think this is an important point for our investors to understand about how long it takes to actually qualify batteries and actually get designed into these, into these products, because it does take any sort of, you know, evolution takes one year to three years to get the chemistry through full validation. But also for you guys, once you're designed in, there's a much, you know, faster process around that kind of one year plus or minus timeframe that you talked about on the product side. Shifting gears to the stationary storage, you know, you, you invested in having a utility scale stationary power business. And you've had a, an, you know, by all intents and purposes, is an impressive run of building this business, building a backlog, and having a product on the market very quickly. Can you talk about, you know, why that happened so quickly, and why it's been so effective, for Microvast? As a better performance, you know, because, you know, we dedicated in the, you know, the commercial vehicle require much longer life battery, which is, you know, super, you know, suitable to, you know, the energy storage business. Energy storage require 20 years lifespan for your battery. Not many battery can stand up for 20 years, you know. 20 years require, you know. If like a one charge or two charges per day, one charge per day, 20 years, that's already 6,000, 7,000 cycles. Mm-hmm. You know, our battery enable to over 10,000 cycles and in, in low rates, because the energy storage is like a 0.25C rates. That's about, you know, 1/3 of the commercial vehicle charging rates. Mm-hmm. It give a battery much longer life. When we moved to the ESS, you know, the customers, they're very happy, you know, this long life battery, because they haven't seen this battery before. They were able to get confidence in this battery, not just from your testing process, but, you know, how important has the longevity of the company been in terms of helping customers get comfortable with the technology, and then your viability to, you know, sustain a warranty that's 20 years long out in the field? It's, it's a superior important, you know, because the, the, you know, you have the, you know, the performance warranty, you know, for 20 years, and it give you a little bit of money, you know, the to extend the life. You know, because solar system designed for, like, a 25 years, you know, at least, you know, the. Mm-hmm ... panels. It's, it's same concept, they want your battery to sync life with the system. You know, nobody afford to change their battery in the middle of a system life. The same principle like a vehicle. That's, that's super helpful. The energy density that you've been able to provide customers, you know, talk to us about that, because from our checks, it looks like you guys are getting a premium versus a number of your peers, you know, based on some of that cycle life, but also some of the, the energy density that you're able to bring to, to those customers. Energy density, that matters, for sure. You know, the energy density represent the cost. Mm-hmm. If you, because the people buy battery by kilowatt-hour, you know. You, you get a higher energy density, they pay less. Also the, especially for the commercial vehicle, you know, energy density really represent the mileage, you know, how far the, the vehicle can, can run. Right. For, you know, the, for ESS business, energy density represent the, you know, the, a fewer, you know, the container or less container, you know, in the field and the small, you know, the space needed. Mm-hmm. The energy density always the, you know, the important factor. Yeah, you're, you're really saving on the balance of system and the, the, the preparation on the site, and you're actually potentially able to, to put more content on that, that same piece of land, because a lot of these, these sites are actually land constrained, is my understanding. Does that, that make sense with what, how you guys understand the customer decisions? That, that's correct. Just like our, you know, the ESS container, we have, you know, 4.3 MWh, you know, the per container. Mm-hmm. It's, you know, normally cost- you know, the competitors, they have like a 3 MWh-3.5 MWh. Mm-hmm. We got a 30% higher. That means, you know, we have a 30% less container do the same job. Mm-hmm ... and 30% less land usage, do the same job. That's why we get a quick adapt, you know, the, with big project. Right. That's perfect. That's, that's super helpful. Can you talk a little bit about where you're at with the U.S. manufacturing? You know, obviously, you guys are, are building a substantial factory in, in Tennessee. Can you talk about, where that, that is from a process perspective, and how you're tracking to your, your targeted timeframe? We, we are really right now, we are running super, super fast, you know. The entire team is just, you know, race to, to, to get there and, and, like, put that first, the 2 GWh, you know, in Crossville, Tennessee. Mm-hmm. We expect, you know, the, the test production, you know, the end of this year. As in, you know, slowly ramping up, you know, to the, capacity, design capacity. Can you talk about the, the process in Huzhou? Because you've got a very you know, very similar layout in China, you know, and the learnings that you, you've been able to gain from ramping the, the product in China and, and how you, you expect to be able to bring those over into, into Tennessee. I just came back three weeks ago from, you know, I, I went into the factory. It's a, it's a great factory, you know, it's very modern and, you know, One good you know, super good news and I'm super happy, is we produce, you know, the qualified battery from, you know, the production line. Mm-hmm. Normally, you know, your pilot line, you know, does not represent that you can produce the same thing in a production line. It's confirmed, you know, we can produce, you know, even slightly better batteries than pilot line, you know, production. Mm-hmm. Because it's fully, fully automated, pilot line is semi-automation. You know, we already start to deliver to the customers, and the capacity is still ramping up to the design spec. Okay. Can you talk about, you know, what the key bottlenecks are, the key things that you're working on in terms of getting to the, to the nameplate capacity? Are there particular areas that we should be attending to as you, you work to get to that full nameplate capacity? Full name, the key thing is just the, you know, the tuning each machine, you know, the, and the training... Mm-hmm. It's the two cents, you know, you train the, the employee to understand that fully automation, you know, the equipment and the maintenance of the for the equipment. You know, the, and that, that's it. It's, it's a, it's a natural process, and then-. Okay it kind of ramp up, you know, naturally. How do you, you know, how are you training between the two facilities? You know, I assume that there's a great deal of understanding around operating the facility in China. As you work to get your Tennessee team up to speed and ready to ramp, how is that process evolving, and what are you doing to prepare those folks in Tennessee to, you know, expedite the ramp of the facility in the U.S? Since the two, you know, two factories is a mirror factory, it's, it's the same thing. Mm-hmm. We send the Tennessee employees from U.S., you know, send to China. We will just send over 30 of them. Mm-hmm. Those key positions, send them their workforce, you know, they two, three months, and they come back and, you know, the, for future, they like we call the backbone team. You know, the every key position, and that's the way. Because U.S. is really lack of the experience, the battery manufacturing employees- Mm-hmm We are creating that, you know, you know, fortunately, our workers, they work well. You know, they, they love it. Right. I think this is an important point that we're, we're, we think it's important, for folks to understand, is that, you know, the vast majority of battery manufacturing happens in Asia right now. There's not only supply chain, optimization that's already happened in Asia, but also expertise around manufacturing equipment, and, and, and other elements of this. Migrating that, that IP and know-how into new geographies ends up being really important. On some level, folks have been concerned around the, the multinational nature of Microvast, but it, in my view, is a pretty important strength of the organization and, and the fact that you've been making batteries in Asia and can bring best practices into the U.S. You know, does that- how does that resonate with you? Do you... Would you agree with that, that assessment that migrating IP out of Asia into North America and, and migrating supply chains are meaningful challenges, for anybody that's thinking about ramping battery capacity in either the U.S. or Europe? You're, you're absolutely right. You know, the U.S. really, you know, the, you know, I just I'd say that we invented everything in U.S., you know, NMC and LFP battery, all invented in US, you know. Unfortunately, you know, Asia, you know, took the technology and then make a much better, you know, products. Mm-hmm. It's, it's funny, right? Yeah. And- A little ironic. Yeah, and we move everything back, you know, from Asia, you know, specifically in China. Mm-hmm. We feel, you know, Fortunately, Microvast, you know, has the fully vertical integration capability. Mm-hmm. You know, if you see the next, that we are gonna build an electrolyte cathode, you know, the plant. And even the separator, you know, the, we're still considering building in U.S. Okay. Got it. Yeah, to, to get the supply chain, you know, the fulfilled. Perfect. Shifting gears, you know, for, to, to you, Craig, you know, you, you know, you've been able to talk about visibility to revenue and, and a certain amount of margin. Can you talk a little bit about, you know, where you're at from a sales process with the, with the backlog and visibility to the guidance that you provided for this year, and thinking about, you know, how that carries over into 2024? Well, I, I think, you know, the backlog tells you that we're super confident, you know, in our guidance, right? It's just gonna be a matter of getting the production out this year to do that, and then it's all about this visibility into next year. 60% of the, of the backlogs for 2024, the 2024 backlogs, we think it's gonna grow every quarter. It's, it's what we said. It's why we're so excited about this year. If you remember, Yang Wu, at the start of this year, said, "It's the best position that Microvast has been in, because we've never gone into a year with, like, so much backlog. Mm-hmm. That's why we could all see this, like, what we call multi-year high growth phase. 2023 is just our first one, and we expect 2024 is gonna be the same. You know, what we have to do is make sure that as we hit 2024, we've got all of our capacity expansions done, because we're gonna need those to make sure that we hit the numbers. Great. When we think about your cash needs and, and that sort of growth rate with all the different incentives and, and sources of cash, can you give us a sense of where you're at from a cash position, and, and what your CapEx needs are through the balance of this year and next year to, to really ramp up to some of those, those higher revenue levels that you, you're targeting? I mean, I think we're quite relieved to be at the back end of this $500 million investment program, right? That was huge. Mm. We did. The 2 GWh in Huzhou is done. This is what we took the money from the de-SPAC for. You know, we raised $703 million. Vast majority of that has gone into CapEx expansions. A little bit had to fund our losses, to get them into this high growth phase, but I think we're through that. Huzhou 3.1 is done. Very small CapEx needs in Huzhou 3.1 for the next year. Phase I-A in Clarksville, as Yang Wu said, the construction phase is nearly done. The equipment we've been paying installments for, being equipped with, the equipment is arriving now. There's CapEx to finish on that, and then cash-wise, we'll add a little bit of debt on Clarksville this year. Then we'll get some decent customer prepayments in Q3. One benefit on the U.S. side of commercial vehicles is that the U.S. business is really energy storage, so those customers, because they're booking out your capacity, and it's, it's sizable capacity, they book out for a defined job. They pay you in advance, so you get these prepayments. The prepayments come in, it's U.S. production, and then that U.S. production means that we get the IRA credit. Once we get through phase I-A, and if we're gonna do phase I-B, we're doing it because we've got the demand, then we'd have a prepayment for that, and we'd have, we'd have IRA credits underpinning it as well. Future expansions become sort of you know, self-funding, if you like. That's incredibly helpful. Then, at the operating level, you know, what can you tell us around, you know, the effort to reach, you know, operational cash flow breakeven? Where you need to be, you know, at a, at a revenue level to, to think about hitting breakeven at the, you know, on a non-GAAP operating profit perspective. I think the key bit really for the next, operationally, for the next six to nine months, is we know we have to improve the yield. You know, as we improve the yields, that's really the sort of key part for your gross margin. Mm. Huzhou's ramp-up phase, it'll improve its yield. It'll be the same for Clarksville next year. We're doing these yields on really high utilization. They kind of go hand in hand. When we add that utilization improving yield, then we'd expect to see that ongoing gross margin expansion next year. You saw the improvement already in Q2. You know, we're targeting to hit, you know, 20% next year. Mm-hmm. I think if we do that, with the backlog growth, we expect that maybe towards the back end of next year, Q3, Q4, we're gonna be in that breakeven phase. You know, if you're looking for sort of rough numbers, it's probably $700 million-$750 million top line, and as long as we can maintain that minimum 20% gross margin and get that yield improvement, and I think you're seeing already this year that we can scale the business and without the operating costs, like, going absolutely gnarly. Mm-hmm. Yep, and we've certainly been paying attention to that. As you guys think about the business and kind of key initiatives here over the next couple of years, what, what should we be talking about that we haven't been talking about so far this morning? Don't know. You always have the good questions, Colin, so... Yeah. Flattery will get you everywhere, my friend. Uh- All right, guys, yeah. No, I think as, you know, as we say, this is, it's the best position Microvast has been in. I think the things to look at are the backlog growth... Mm-hmm ... we think we've improved on that throughout the year. You've seen the gross margin improvement as we scale the business. You know, I think we're, you know, we're pretty confident that we can manage this through to breakeven next year, towards the end. Fantastic, guys. Well, listen, let's leave it there. Thanks, everybody, for tuning in, if you have any questions around Microvast, we're more than happy to help. We've done an awful lot of work on the company and, and worked very closely with the team, and, and if you need to get in touch with the, the management team, we're happy to help facilitate as well. Guys, thanks so much. Have a great day at the conference. Thanks, everybody, for dialing in, we'll talk to you all soon. Take care.