Greetings. Welcome to the Plug Power Q2 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Teal Hoyos, Director of Marketing and Communications. Thank you. You may begin. Thank you. Welcome to the 2021 second quarter update call. This call will include forward-looking statements. These forward-looking statements contain projections of future results of operations or of our financial position or state other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results to perform or differ materially from those discussed as a result of various factors, including but not limited to, risk factors and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31st, 2020, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day in which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug Power's CEO, Andy Marsh. Thank you, Teal, thank you for everyone for attending our call today. This quarter had a mixture of successes and challenges. The successes are easy to rattle off. Revenue increased dramatically by over 75% versus the prior year. Shipment of GenDrive units and new sites dramatically increased versus the prior year. We closed the HYVIA JV with Renault, targeting the light commercial market for vehicles in Europe. This market is expected to be 500,000 vehicles in 2030, with over 30% of the market captured by the JV. We did have some challenges in the quarter associated with hydrogen costs. There are two major drivers, the cost of ending our relationship with Air Products. This had a short-term impact on pricing and construction costs to replace Air Products liquid tanks. This is about two-thirds of the increase in the hydrogen cost for the quarter. There also was a crisis with the availability of hydrogen due to a force majeure. The force majeure was due to a major hydrogen plant going down for two months in the Southeast. This local disruption impacted the U.S. hydrogen network. What I think is really important, we at Plug Power made sure our customers had hydrogen throughout this event. Let me talk briefly about our near and midterm corrective actions. The Air Products changes were a one-time event and now won't be duplicated. We're also now not stranglehold by having industrial gas companies own equipment at any of our customer sites, giving us greater flexibility in making sure we have cost-effective hydrogen solutions for our customers. Second, the force majeure for hydrogen was an unprecedented event. In July, additional capacity was brought online by our partner, Linde, over 30 tons per day, which will alleviate future issues. Just to give people a feel, this is an increase of over 10% of U.S. capacity. We're also increasing our own capacity in October by 3.5 tons in our Tennessee plant. Plug Power will have an additional 70 tons online in the Q3 of 2022, and additional sites online in early 2023. Just to remind folks, we use about 50 tons of hydrogen a day at the moment, and we've already announced additional green hydrogen sites across the board in New York, Pennsylvania, Georgia, and Texas. This week we broke ground at our Georgia site, and the sites in New York and Texas will be the largest green hydrogen plants in the world. Some may ask, why did we absorb the cost of the force majeure? We believe in the near term, protecting our customers from the challenges in the market today will pay off in the near term. We want our customers to know they can count on hydrogen being available and more importantly, can count on Plug Power meeting their needs. They will be critical in helping us fill up our new plants. We have exciting news coming up in the coming quarters. We are increasing our gross billing guidance in 2021 to $500 million. This means we'll be increasing our gross billings by over 50% from our 2020 numbers. We will close our JV with SK this quarter as planned. We're working on the final details of the relationship. Both of us are really quite excited. We'll also be closing our JV with ACCIONA in the Iberian Peninsula. We plan to build 30 tons of liquid hydrogen capacity with ACCIONA, making us one of the largest liquid hydrogen producer in Europe. We're also targeting bookings of 250-500 megawatts of electrolyzers in 2021, with 250 megawatts shipping out of our new gigafactory. We'll be making announcements in the second half for additional takeoff agreements for our hydrogen plants. Finally, and this is really important, with the gigafactory, we're utilizing state-of-the-art automated equipment in our new manufacturing processes. We're planning to match our unprecedented capabilities in sale and design of fuel cells and electrolyzers, and become not only a leader in manufacturing those devices, but a global manufacturing leader. That's why we hired David Mindnich, who ran the Tesla gigafactory in Nevada. We remain incredibly excited about the future. We'll be holding our third annual Plug Power Symposium on October 14th. We're moving to a virtual event because of the recent uptick in COVID cases. You'll be able to sign up online next week. We expect to have an in-person event in the spring once this pandemic recedes, to show off our facility in Rochester. I was there yesterday. It's just great. Finally, we are operating now with four general managers for our different businesses. Keith Schmid for New Markets, that includes stationary and on-road vehicles. Keith's done a marvelous job closing out the HYVIA JV. As you know, Keith has been Plug COO for seven years. Ole Hoefelmann, running our Electrolyzer Business. Ole worked at Air Liquide for 29 years and ran their U.S. hydrogen business for many, many years. Jose Crespo, as a lead, has led our sales efforts for six years and is now the head of our Material Handling Business. Sanjay Shrestha, with a long career in renewable energy, is running our energy business. Quarterly, I'll ask one of them to join the call. They're focused on building the business, and I'm sure the analysts would like to speak with them. In this quarter, I've asked Sanjay to join me, as well as our CFO, Paul Middleton. We're ready now to take questions. Thank you. Our first question comes from Colin Rusch with Oppenheimer. Please proceed with your question. Thanks so much. Guys, well done on the revenue guide higher here. What I would love to understand in more detail is what's going on with your customers in terms of the growth trajectory into 2022 and beyond. What sort of foundation are you laying at this point? What can you point to in terms of customer activity, conversion rates, and order size that would give us some comfort on the continued growth as we go forward? Yeah. Colin, as you know, we've committed. First, let me take a step back. I'm sitting here, and it's the beginning of August, and we have the $500 million in house for shipping this year. That's really unprecedented. For next year, we feel incredibly comfortable with the $750 million. Now, I expect the electrolyzer business to be $150 million of that. I expect material handling this year will be $457 million, and we expect that number to go up and continue to grow. The energy business and new markets have great potential. Before this call, Sanjay and I had a long talk about whether we should be upping guidance for 2022 today. We have this Plug Symposium on October 14th, and I think you'll see us lay out a new plan and some new insight into how the business can be significantly bigger in 2021, 2022, and 2024. Okay. Thanks so much for that. The follow-up is really around the Class six truck and the progress that you've made on that in terms of finishing up designs, qualification of suppliers, and your ability to start building some of those things with your partners. Yeah. Colin, we expect things are progressing well. Unfortunately, we're not having the in person event, where we were going to have some vehicles there, both for the light commercial vehicles and the Class six to show off. I've seen the vehicle that we've done for our JV. We're remaining in line that we will do 10 significant pilots next year for on-road vehicles. I think probably more important, we are in discussions about the model for heavy duty vehicle trucks. I think, I didn't mention that in my opening remarks, but I think you'll be certainly hearing a lot more about that in the coming six months and certainly at the Plug Symposium. Perfect. Thanks so much, guys. Good talking to you, Colin. Thank you. Our next question comes from P.J. Juvekar with Citi. Please proceed with your question. Yes. Hi, good morning. Good to be on your call. Good afternoon, P.J. I know we usually do this in the morning. It's wonderful to talk to you. Good to talk to you, Andy. I understand that you had to absorb some hydrogen cost for your customers this quarter, but as you build out your hydrogen network, would you have cost passthroughs built into your future contracts? I will let Sanjay take that. Sanjay, I know you run this and do this every day. Sure. I'm happy to do that, Andy. Thank you. Hey, P.J., how are you? P.J., a couple of points, right? Our goal is to really think about making green hydrogen as economical as gray hydrogen, right? Number one. Number two, the way we're building this green hydrogen generation network, we're really thinking about how can you tackle force majeure like this so that any another plant shut down because of a force majeure disruption in the industry is not as big of an event for the entire hydrogen industry as well as for Plug Power and our customers, right? The way we're looking at it, our goal is to be as transparent as we can. We're really not looking to take a view, frankly, of being opportunistic, if you would, for a lack of a better word. If there is a disruption in the industry, this is the time to hike up the price, deal with situation like that. Look, our goal is to make sure that we keep driving the cost and price of hydrogen down, so more and more application opens up, right? That's the approach we're taking. That's how we think about it, and really, we're not looking to sort of make sure that we're maximizing the profit opportunity. Of course, we want to make sure we have the right return profile built into this, right? Again, one of the key things that we have said it in the past, we are really looking to make sure that our end customers get green hydrogen at the same price that they're paying for gray hydrogen today. More importantly, we're focusing about really build the ecosystem, more apps come online, where hydrogen becomes more and more ubiquitous and folks aren't concerned about having apps like long-road, middle-mile vehicle, and things along those lines. That's how we think about this, P.J. Great, Sanjay. Thank you. As you get closer to building out your new hydrogen network, cost of construction is going up everywhere. Do you have a good handle on your building costs as well as your green power costs? Given all that, are you still sticking to your gross margin targets for hydrogen fuel that you highlighted before? Thank you. Sure. Sanjay, you want to take that one, too? Sure, Andy. Happy to do that. PJ, sure, let me break that into two parts, right? First part of the question is the power component. Absolutely yes. Right? That there is no change to that. If anything, we're continuously looking to see where else can we lock in more location, where there is an attractive renewable sources as well as expansion potential, and which is why we're working with a lot of different partners on that front. You bring up an excellent point, which is commodity prices are up, right? Are we concerned about potentially EPC costs being maybe marginally higher than what we thought? Look, when you're doing big projects like this, there's always going to be some pluses and minuses, right? At this point in time, given that the biggest component of the cost is variable cost, and that's electricity, right? CapEx is still a relatively small component when you think about the total cost per kilogram of green hydrogen molecule, right? Even if there were to be some escalation, given what's happening to the commodity prices, labor prices, we really don't see any changes to what we've talked about from our cost target as well as our margin targets. Great. Thank you. I'll pass along. Thank you, P.J. Thank you. Our next question comes from James West with Evercore ISI. Please proceed with your question. Hey, good afternoon, guys. Hey, James. How are you today? I'm doing well, Andy. Andy, your increased confidence in raising guidance, and then it sounds like increased confidence in next year as well, is that driven more by your base materials handling business just gaining some more initial momentum, or are you getting momentum in some of the other areas you've been targeting, like data centers? Yeah. James, yes, and yes. Okay. Let me just give you a good deal for my increased confidence for next year has to do with the continuous performance of our material handling business, which I think it's probably fair to say will continue to grow at the rates we've seen before. We have now five pedestal customers. When I started talking about pedestal customers two years ago, we had two. As Jose Crespo pointed out to me, we've already hit the number of pedestal customers we expected in 2024 this year. I mean, that's a huge accomplishment. Right. The electrolyzer business I believe will be at least $150 million next year. Just to give you a feel for that, I spent seven to 10 days in Europe with Ole Hoefelmann and David Bowe, who run our electrolyzer business. Just in those seven to 10 days, we booked $30 million worth of business for next year. Wow. That just gives you a feel, and we're working on some rather huge market projects. Right. One of the advantages we have versus James versus other folks, is we actually have a factory that can make stacks at that pace, which is needed for that market. It provides us a unique advantage, I think, versus the competition. I look at the funnels, I didn't even touch on the stationary market, in the stationary market, we have activities in data centers. First units will be getting deployed now. What we also found, two other markets, which, the first one I never really thought about, which is counterintuitive to me, we're seeing for EVs that folks are having difficulty bringing the electricity to the grid. We actually probably, next year, could just do $25 million-$30 million in business providing stationary products to power EV vehicles, which is, in some ways counterintuitive. Right. Our present customers in material handling at the end of this year will be at 165 sites. They have hydrogen on site, and I can tell you, because of some of the issues with citing diesel, some of the issues with, in California, there's limits to how long you can run the diesel engine. We actually see and been talking to our five big customers about deploying stationary power products to back up their building. Those applications, they're low-hanging fruits because we have the hydrogen there. Right. Makes sense. Lots of congratulations on that. A follow-up from me on your green hydrogen. As you bring production online, how should we think about the pace of takeoff agreements? Should those be coming on kind of consistently as you start up the production? Should we hear about them well before? I guess, do you think you'll basically have sold most of your hydrogen before it actually comes online? Sanjay, I will let you take that one. Yeah. Hey, James. How are you? Great question. Okay. This is something, obviously, we're spending a lot of time on now because our initial priority was to lock in the sites, right renewable sources, cost of green hydrogen molecule. That's been our focus, right? How do you make sure you get these things done on time, on budget, stay with the schedule, right? Now, that part, as Andy mentioned, it's now becoming a lot more reality. We just broke ground in Georgia plant. Right which will actually be the gas plant by the end of this year, the first green hydrogen gas plant, and then 15-ton liquid plant by the summer of next year. We obviously have a lot of those discussions going on, right, and we look forward to providing a lot more update, obviously, at our upcoming symposium. The way we're thinking about this is as follows, right? Our goal is to really make sure that our customers are getting the benefit of this green hydrogen, number one. Number two, our goal is to expand more applications so that the pie becomes bigger. We're not looking to go after the existing pie of the hydrogen market, if you would, right? Right. Our goal is to really make sure that the pie gets bigger. For example, James, right? Material handling consumes one kilogram of hydrogen a day. If you have Class eight truck, that's going to consume 40 kilograms of hydrogen a day. If you have 10,000 Class 8 trucks, you're going to need 400-500 tons per day of hydrogen capacity. Today, you have 285 tons per day of liquid hydrogen merchant capacity in the U.S. We're trying to tackle that topic, right, that issue, and not to mention the fact incremental demand from stationary data center opportunities. You will see us start to get these plants loaded as we go forward, as these plants are going to start to come online by the summer of next year, in Q4 of next year, Q1 of 2023, and we'll have a lot more to share over next quarter or two. Okay. Got it. Great. Thanks, Sanjay. Thanks, Andy. Thanks, James. Thank you. Our next question comes from Craig Irwin with Roth Capital Partners. Please proceed with your question. Hi, good evening, and thanks for taking my questions. Oh, good evening, Craig. How are you? I'm great. Congratulations on that really nice revenue guide. It's good to see the traction. Andy, I remember many years ago, in Albany, when you were working on the cost out of your systems, you really did an impeccable job by engineering the product. Then there was a little bit of a, let's just say, technology substitution, technology evolution in there as well. This gigafactory you're going to be building, this is more innovation on the manufacturing side, not just on the technology suite, so it's a more holistic approach. Can you maybe help us understand the potential cost improvement on stack production out of this facility, and electrolyzer production, I should say, too. Are we looking at very material cost down in overall system economics? Is this something that you see as key to unlocking the longer term margins of the company? Craig, I think you've hit it on the head. I mean, I brought Dave in from Tesla to automate that factory and help us significantly drive down costs. When I look at the cost of MEAs, when I look at the fact that we're moving to metal stamp plates for our stacks, when I look at we're changing the whole manufacturing process for how you manufacture electrolyzers by going from a wet to a dry build, we see step changes in cost. I think, before we do other work, I think you're probably thinking about the costs on a typical truck can drop 20%, but there's still so much more. We've been to our Latham factory, Craig. One of the areas is, I kind of opened this call, and I talked about that improving our prep manufacturing, both at the gigafactory and in Latham. We're looking at all sorts of tracing systems to make sure we're on top of everything. Not only will it drive down our material costs, it'll make our quality better and our service better and predictability better. I was there at the gigafactory yesterday, watching the construction process, and I think it's going to be a game changer for our costs. Excellent. My follow-up question is around the heavy-duty market, right? Trucks and buses. I guess medium-duty as well. Yep. There seems to be a misperception out there that this market is several years away. I know you've been talking about this now, I guess, for close to two years. It's unusual for you to talk about something unless there's material action. Yeah. Can you maybe scope out for us, I know you're not ready to talk about individual customers or commitments on the part of customers, but can you maybe scope out for us, roughly, how many stacks you've supplied for potential customers to evaluate, either as engineering bench systems or to build test vehicles or prototypes, that would be evaluated to put together business plans? Are we talking about single digits or is there potentially a much wider experience base that's already been developed? Yeah. Craig, I would say the experience is wider. Look, we're building vehicles at our HYVIA and JV. You look at the Master Van truck and you look at it's the real deal. Let me try to make sure I phrase it right. We do have, I'll say, MOUs, based on trials we have, which could expand rather rapidly for vehicles beyond light commercial vehicles. As you can see with the AE, we have activity going on in the bus, which quite honestly I put at a lower priority long term. I know I'm giving a presentation coming up in the next month about everything we're doing with vehicles, and I think I'll be able to answer your questions probably even better than. It is a significant activity. What's really nice about it's completely tied to our stationary product activities, too. I look at our 125-kilowatt module, it's really a system. It's not just a module. That, I think, from a density and performance point of view, we think it's the best in the industry when we look at Toyota numbers, when we look at Hyundai's numbers. We think we're well positioned. Look, Craig, after it dies down here with COVID, after this Delta virus goes away, I'd love to have you come up and kind of show off a little. Sounds like fun. Hey, congratulations on the progress. Thanks, Craig. Thank you. Our next question comes from Eric Stine with Craig-Hallum. Please proceed with your question. Great. Thanks for taking the questions. It's Aaron Spychalla on for Eric. Hey, Aaron. How are you? Doing good. Thanks, Andy. Maybe first on the Pedestal customers, you kind of touched on it a little bit, and congrats on being ahead of the timeline. With that fifth customer, is that still the thought process of $25 million in the back half? Can you just maybe talk a little bit about potential for other auto customers and then maybe switching over to Europe as well? You've kind of talked about three pending customers. Can you just give us an update there? Sure. Good question, Aaron. The Pedestal customer is 25 in the second half, and we expect well over 50 for 2022 already, with sites that have been identified. They're targeting to really roll it off around their factories around the world. In Europe, we're making a big commitment there. By the way, you're going to get a scoop here. We're putting a facility in Düsseldorf, Germany, where we'll have over 50,000 sq ft to support the material handling customers in Europe, where we'll do final assembly and do stocking levels for Europe because that's really the target. I know that there's customers, and I've spoken about them before, Carrefour, which at the sites that have material handling equipment from Plug Power, during COVID, performed better than others in their network, and that's how we usually convince people, because they could see they could move more goods with less people and faster. That value proposition is really valuable. The activity we're doing with ACCIONA in Spain is also closely tied to that work. By putting 30 tons of capacity in Spain, we'll be able to provide those customers cost-effective hydrogen, not only for the material handling fleet, but stationary products, as well as on-road vehicles. We're really trying to package and sell all the activity as a group, not as an individual item. Great. Thanks for the color. Yeah, that's really interesting. Second question for me, on the electrolyzer side, can you just give us a little bit more detail on the pipeline? You kind of gave some really good news on that 10 day trip you had out there. Just what are you seeing on the size of deployments as we look into next year, given the capacity you're bringing on? Yeah. We have a funnel today that exceeds $2 billion for electrolyzers. As you can see, I put out relatively modest numbers for next year based on that. We are in negotiations with customers who are looking for sites as large as 1 gigawatt. Just to give you a feel, that one project would be somewhere in the $500 million-$600 million range. There's huge opportunities. We've really established a strong leadership team there with Ole Hoefelmann from Air Liquide and David Bowe, who work in Nel, to really exploit the market, exploit is not a real good word, really engage the market. We have sales folks across the world, Europe, the U.S., as well as working with SK in South Korea, and for use in Asia. We have activity going on in Oceania. It's really a global sales effort. I think the fact that we can actually put stacks out there. The remarkable thing about what we've done with the gigafactory, it's really the team, people like Dan O'Connell and Keith Schmid, is that we have a footprint that can be leveraged over and over again. There's 256 pieces of unique equipment. Just like how Sanjay has designed the hydrogen plant, the view is this is a modular setup. We can build smaller and larger plants using the same methodology over and over again. I sit there in awe with how the team thought about that. Great. Thanks for the color, and best of luck on all the exciting opportunities. Thanks, Aaron. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Amit Dayal with H.C. Wainwright. Please proceed with your question. Thank you. Good afternoon, everyone. Good afternoon, Amit. How are you? I'm good, Andy. Great color on the call so far. That's good. Great. Just one question with respect to sort of the margin challenges, et cetera. Can we assume that the bottom was in with the 2Q gross losses and we see improvements going forward? Sure. I'm going to let Sanjay take that since really that was the challenge. Sanjay, you want to go through that? Happy to do that, Andy. Hey, Amit, how are you? Short answer to your question, Amit, is yes, you should expect margin trend to improve as we go through the year and obviously into the 2022. As Andy mentioned, and as he alluded in his opening remarks, as well as the details we provided in our shareholder letter, let's just take a step back and think about what really happened here in Q2. First, obviously, we transitioned from, as Andy talked about, from Air Products to Linde in terms of all the hydrogen we're sourcing from our industrial gas company. That's one. That was a pretty substantial cost, transitioning that. That really was almost two-third of the cost of increased hydrogen molecule in Q2. Second thing we had was one of these unprecedented event where a plant went down for almost two months, where we actually had to mobilize our high-pressure tube trailers to support our existing industrial gas partner, more importantly, make sure that any disruption that did not happen to our end customer, and any disruption was very minimal. As you heard from Andy, many times, we're a very customer obsessed company. That is our top priority, that is our top focus. Guess what? That cost us money as well. On top of that, we had to go, even ourselves, pick up hydrogen from the other location at the higher prices. When you really look at our Q2 and sort of the margin impact, it was multiple of these factors. One of these unprecedented event from a force majeure perspective, how long this plant stayed down, and how it continued. The industry had almost 50 tons of capacity that was disrupted for almost two months. That's obviously all have come back online. Not only just that, Linde's added over 30 tons of capacity in Texas, which obviously helps the market. You will see as our green hydrogen plants come online and the cost numbers that we've talked about, that will help the entire industry, obviously our customer and Plug Power as well. Short answer to your question, yes, Amit, I think Q2 hopefully marks the bottom here, and short of any major force majeure again in the second half of the year, we should really see this trend to improve. That's really good to see and hear, taking care of customers is a big priority for you guys right now as you sort of commercialize everything. That's good to know. Just one more question from me, maybe Sanjay, directly for you. How far away are we from green versus gray hydrogen parity? Amit, you've heard us say this many time. Out of the gate, when we will have our first liquid hydrogen plant come online in summer of 2022, we plan to sell that green hydrogen at the same price that our customers are paying for gray hydrogen today and still see pretty meaningful improvement in the margin profile. The way we see it, the time for green hydrogen is today. It's not five years later, it's not 10 years later. You have to keep things in context. When you talk about hydrogen, when we're referring to our green hydrogen at parity with gray hydrogen, we're strictly talking about liquid hydrogen in the market today. We're comparing liquid green hydrogen with liquid gray hydrogen. If you then start to think about green hydrogen for the gaseous hydrogen, you have to compare that with the gaseous gray hydrogen. From our viewpoint, I think price will continue to go down, but the time is here, it's now, and our goal is to make sure we make hydrogen ubiquitous that's green, that's cost competitive with gray hydrogen out of the gate starting in the middle of 2022 and keep making improvements thereafter. Got it. Thank you so much, guys. Appreciate it. Amit, as you know, it really all comes down to the feedstock. I think the work that Sanjay and his team has done to procure long-term, low-cost PPAs is really the reason that green hydrogen will be on parity with gray hydrogen in the near term. It really comes down to what's the cost of the feedstock. Thank you, Andy. Yeah. Thank you. Our next question comes from Chris Souther with B. Riley. Please proceed with your question. Hey, guys. Thanks for taking my question here. Maybe just one last one here on the fuel cost in the quarter. Is anything in that $31 million additional cost, incremental cost you talked about something that would continue to repeat in the next couple quarters until we get that internal supply starting to come online? If you back that out, your fuel margins go to mid-teens, and that would obviously be a huge kind of incremental step here. I'm just kind of curious, how good can we get those margins before the internal capacity comes online? Yeah. Chris, I'm going to let Sanjay answer it, but it's good hearing from you, Chris. Sanjay? Thank you, Andy. Hey, Chris. How are you? Couple of things. You're right, obviously, we would not have two-third of what happened in this quarter. Obviously, the transition away from Air Products and the cost associated with that. That certainly would not repeat itself. That's one. Second item here is, look, and we fully expect the price of hydrogen from our-- We obviously have a very strong relationship with Linde. We are working with them on a variety of different things, even beyond just the supply of hydrogen. We do have a partnership to go and provide them with our plastics vehicle as well as the Class 8 vehicles. We are obviously in a constant dialogue to see how we can continue to drive the cost of hydrogen down so that we can continue to propel the growth of multiple end markets. That should be an incremental positive as well. On top of that, our capacity in Tennessee goes from 6.4 - 10 tons a day by the end of October. That will also help from the overall cost perspective. Look, direction of the price will go down. One big caveat that we cannot handicap at this point in time until our own capacity comes online is there another force majeure as we go into the peak season to support our customer in Q4 of this year? If there is one, that could certainly be a negative impact. We will be using a lot more of our high-pressure tube trailer. Price could be negatively impacted by that, but short of something like that, you should absolutely expect directionally fuel margin to start to go up, and certainly will be meaningfully better as our capacity comes online. Is there anything you would like to add, Andy? No, I think that's right. I mean, what we're doing, and what we did the last quarter, was making sure the hydrogen economy will happen soon. I think that it'll have great incremental benefits, Chris, and you'll see huge improvements. I kind of want to take a step, I haven't had a question on policy, and I think that one item people should remember when listening to our discussion today, we're not even pricing in the opportunities in the U.S. associated with items like the infrastructure bill. The infrastructure bill includes $8 billion for hydrogen hubs, for generation of hydrogen for natural gas networks, for generation of hydrogen to blend in the natural gas networks, for on road vehicles, for fueling stations. No company in the world is better positioned to take advantage of that large opportunity. On top of that, when you look at reconciliation here in the U.S., there's work going on which would allow the tax credit to extend for 10 more years. There's work going on which would suggest a $3 tax credit for green hydrogen. These are all game changers to make sure that will really be another accelerant to this hydrogen economy. Quite honestly, it's going to be green, especially with green hydrogen lower cost than gray. The world's going to change much more rapidly than people can imagine. We're out there at $1.7 billion without all this exciting work going on in the U.S. and Europe, as well as the potential in Asia. I think the pie and the opportunity to accelerate this company even quicker, and this hydrogen industry even quicker, is really, really important. It's critical Sanjay gets these hydrogen plants online, both from a cost point of view, but also how you make this pie as big as possible, as rapidly as possible. When the President of the United States sitting there saying he wants to see 30% of vehicles in 2030 being zero emissions, whether they hit it or not, those kind of goals and those kind of aspirations are just completely in line with Plug Power's broader vision. I don't think anybody could be better positioned. That's great to hear. Maybe just the next one on the HYVIA JV, and kind of the strategy as far as hydrogen supply in the French market. It sounded like the ACCIONA deal is more around kind of industrial and on-road type stuff within Spain, Portugal. What are the plans for kind of French production of hydrogen for you guys? Is that something that's on the table here, or are you planning on kind of supplying from Spain? Absolutely, Chris. Yes and yes. Chris, if you look at the HYVIA JV, it does include using our electrolyzers to generate hydrogen for customers. That'll be controlled 100% by Plug. It includes fueling stations. It includes, of course, the vehicle and aftermarket service. We do believe that we will be developing fueling hydrogen generation in France and throughout Europe over the coming years. We'll be leveraging our electrolyzers. I would expect that you'll see announcements of activity in France. We will be supporting some of the French activity, especially initially with the liquid hydrogen we're putting in place with ACCIONA. What's really interesting is there's a real huge opportunity there, because in Europe, the availability of liquid is not nearly as significant as here in the U.S. I think that people are beginning to realize for storage capability, just at customers' sites, you need to have liquid. With the plant we're building with ACCIONA, we'll become a major player in liquid hydrogen almost overnight. I think the applications there and our ability to build on that based on our experience here in the U.S. will really help us grow that market even quicker. Got it. That's great. Maybe just the last one here, if you could talk about the timeline for the bus powertrain and fuel cell module kits that you guys are working on with that new partner. Are any OEMs in kind of advanced discussions to purchase the system? Are there plans beyond North America for collaborating with those guys or others on the bus side? Sure. I mean, BAE has a global footprint. They already have units from Plug Power, and they have a huge sales network, Chris, that not only includes the U.S., but globally. We think they're a great partner. Yeah. That's great. I'll hop in the queue. Thanks, guys. Okay. Thank you. Our next question comes from Jed Dorsheimer with Canaccord Genuity. Please proceed with your question. Hi. Thanks. Good evening, Andy. Good evening, Jed. How are you? Good. I guess first, the force majeure. I guess what triggered the force majeure shutdowns during the, I guess, the first half of the year or the quarter? Sanjay, do you want to take that one? Sure. Happy to do that, Andy. Hey, Jed. How are you? Good. Good. Jed, what happened is, sometime first week of May, there was basically a plant outage at one of the plant essentially supplying one of our key industrial gas suppliers. That was supposed to be a two-week event, but essentially they had some additional mechanical issue where the plant that was supposed to come online did not end up coming online for additional two weeks. It would start and stop. They ended up having some additional challenges. That's really where it went from what was supposed to be a plant outage, industry being an allocation, to an absolutely and completely unplanned event triggered by some of the additional mechanical challenges. Typically what happens, Jed, is industrial gas customer do have certain amount of storage on site to deal with situation like this. If it was something that occurred, like for the two weeks and storage was depleted, plants comes online, then you probably wouldn't feel the pressure, like the pressure that was felt in the industry at that time. Furthermore, there was additional plant that was supposed to come online, typically in the commissioning phases of this plant, plus or minus three, four weeks are things that tends to happen. The new plant in Texas ended up coming online really by the end of June rather than in the beginning of the June. We were anticipating that that plant might even come online a little bit sooner. Now, on top of that, you had some other industrial gas customer where they also had additional ramp-up issues in terms of their facility. Even in our Tennessee plant, we had about 18-hour outage because our feedstock supply got curtailed by our feedstock supplier, Olin. You had all this trifecta of an event that basically took what was supposed to be something somewhat manageable to an industry event where you almost had about 50 tons per day of capacity that was essentially offline. Looking back now and given where we are today, we're really looking at a situation, not only that all of that capacity have come online. One, we're adding capacity in Tennessee. Two, Linde's obviously added this big capacity in La Porte, Texas. Industry obviously has a lot more hydrogen to support some of the activity to really weather the storm like the one that we just faced in May, June, and really some part of July as well. That's really what happened here, Jed. Well, thanks for that extra color. I really appreciate it. Sure. Okay. Sure. Okay. Maybe Sanjay, probably more directed at you here, too, I guess. Andy, happy to broadly-. I'm not insulted, Jed. I guess if I think of costs, and I split that between the costs associated with the building of the plants and CapEx that are weighing on you because you're not producing anything from these plants. If I start to look at the materially higher costs that you're incurring, how much do you attribute to the overhead burden that should abate as you start to ramp production? How much are tied to manufacturing inefficiencies that you hope to improve as you go along? I'm just wondering, is it an even split or is it more of 70% on the CapEx burden right now? Let me take that question in two parts, Jed. Where this is somewhat meaningful today for us is really in the expansion of our Tennessee plant. We have 6.4 tons of capacity. Obviously, we're adding more storage. We're adding more human resources. We're obviously spending more in CapEx to take that to 10 tons a day. Today, the cost of that molecule is not what we anticipate it to be on a fully loaded plant. Which is really going to have to be about at 10 tons a day versus it being at 6.4 tons. Frankly, Jed, that is not the biggest contributor in terms of what really hurt our fuel margin or the higher cost of the fuel in Q2. I fully recognize the point you're making. You then start to think about what is the impact to our cost of hydrogen when some of the newer plants come online, you know this pretty well. A lot of that is really going to flow through the CapEx. It is going to become more about the CapEx. The only additional hiring we would do would really be training the plant managers at our Tennessee facility before the new plant comes online. From the higher labor cost perspective, it would not be that meaningful. Having said that, there is one thing that we are doing, even though this is going to add to the cost from a labor perspective as well as, and you could argue that's a slightly higher cost of hydrogen in the near term, is given what the industry's gone through and given how important it is for us to make sure, which is what we have done all along, that hydrogen is available all the time, 24/7 for our end customer. We have actually gone ahead and planned so that we're adding more assets in form of high pressure tube trailer. We're adding more liquid tankers even before some of these plants come online because we can react if there is another force majeure like this in the month of October or November when our customers are going through the peak season so that their work is not disrupted. Is that an incremental cause that is going to be flowing through the fuel margin here in Q4? Yes, it is. It would still not be as pronounced as what we saw in Q2, given we're dealing with so many factors at once. That's an incremental color I can share with you right now. That's really helpful. Hey, if I can squeeze one more in. Sure. I heard today a new manufacturing process on catalytic decomposition of methane from garbage. Just curious, your thoughts on that. I was unfamiliar with it, quite frankly, or always thought of it as more R&D. Other commercial companies seem to suggest that it's more closer. Curious, your thoughts on that as obviously from a competitive perspective, it would have impact. Yeah. Essentially you're feeding with RNG, right? Yeah. Right, Jed? Yep. I think one has to step back and think about the availability of RNG nationwide. I know from some experience with it, I think regardless of what the issue is, I think that's a bigger issue. I think where are you going to get feedstocks in this scale? Great. Thanks, guys. Okay. Take it easy, Jed. Thank you. Our next question comes from Bill Peterson with J.P. Morgan. Please proceed with your question. Yeah. Thanks for taking my question, and nice to speak with you, Andy and team. Oh, thanks, Bill. Yeah. My question is, you announced this Plug Symposium. We're certainly looking forward to hearing more about the progress. I fully understand the move to virtual, that's definitely understandable, but it was delayed by a month. I'm just wondering if the delay is related to any sort of production move in timing, or any other delays. How does the manufacturing plan compare to your original plan? The reason I'm asking this is, you didn't speak to it, but it's pretty apparent that supply constraints are impacting a number of industries and perhaps maybe some lead times have been extending. I'm just curious if there's anything that's just changed in your manufacturing plan. It hasn't. I think that's a good question, Bill. I was there yesterday with our board and it is proceeding as planned. I think, look, to ship $126 million last quarter and to ship over $150 million in the third quarter, boy, we've had to really push hard. When I was sitting with the team yesterday and we were reviewing the scheduling activity, we're on schedule and we're on plan. The equipment's coming in. For example, one of the key additions to that plan is the metal stamping equipment for our stacks. I know we were in Europe last week, signing off on the equipment before it was shipped to us. Let me just put it this way. I think during this crisis, project management, supply chain management has become incredibly You have to be at it all day long and intense, and the team there is doing that. I can tell you, every day at 8:30 in the morning, I go through any supply chain issues and understand what we could do to make sure we can support our customers. We've been successful, and we'll continue to be successful at doing it. That's great, and somewhat of a lead in to my next question. A lot has been asked about the hydrogen cost and those things, but I'm actually curious more about how we should think about your margin trajectory here in the second half and into next year as it relate to more the systems cost. You got close to 20% here in the June quarter. How does that progress as we move through the year and into next year? Mr. Paul, I'll let you take that one. Thanks, Andy. Thanks for the question. Yeah, I think if you're talking about equipment in general, I think routinely over the last few years, we've hit the 35% mark. I expect it to continue to hit that mark routinely. There are ebbs and flows, things like the freight impact in the global supply chain, material cost impact from the supply chain issues with the COVID. There's ebbs and flows. There's also the new product ramps that are going on. I expect it to get a little stronger with the volume, particularly with the volume in the second half. It's one and a half times the first half. I expect as we move into next year, it's going to continue routinely in that 35% plus margin as we move forward. Thanks for that color. Okay. Great. I think we got one last one here before we have to sign off. Yes. Our final question comes from Greg Lewis with BTIG. Please proceed with your question. Yeah, hi. Thank you for squeezing me in here. I'll just keep it to one. Andy, I wanted to touch a little bit on your comments around the infrastructure bill. That's a huge opportunity, and kind of looking through it looks like they're trying to set up a couple hydrogen hubs, with some of that being natural gas focused, a little bit being clean energy-focused, and a little bit being nuclear. As you think about positioning Plug to win that business, knowing that, hey, you're going to do what you're going to do. You're not going to be beholden to the government. As we think about natural gas and that blue hydrogen opportunity, is that something that Plug is going to be targeting? Just because it's not green hydrogen, we're just going to stay on the sidelines for that opportunity? I think that we certainly are very interested in the apps that will support that hydrogen. I fundamentally believe that green hydrogen wins in the end because of cost, I think because of the environmental impact. That is a real good question, Greg. If you take a look at, for example, Senator Carper's bill, the delta between support for blue hydrogen versus green hydrogen is dramatic. Quite honestly, I think that in the House, even the Biden administration's not all that committed to carbon capture. The opportunity for us, we believe, is in green. We know when you speak with people like Amazon and Walmart and Home Depot and others who are targeting net zero, Microsoft, you're not going to get there with carbon capture. My belief is that if you look out, when you look at the cost of renewable energy, I think carbon capture is going to go the way of coal. Okay. Thank you for the thoughts. Okay. Sounds good. Thank you. Well, I really appreciate all the call, all the questions today and the engagement. We have the Plug Power Symposium, as I mentioned, coming October 14th. Not only will we be updating 2024, we'll be telling you about 2025 and everything we have going on, from our energy business to our electrolyzer business to new markets like on road vehicles, and of course, our base business in material handling. I really appreciate everyone taking the time tonight. You can register next week, so please register. Thank you, everyone. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation and have a wonderful evening.