Hello, welcome to the EnerSys Tech Talk. I would now like to turn the call over to Lisa Hartman, Vice President of Investor Relations.
Thank you, Tia. Welcome to EnerSys Tech Talk, focused on our intelligent battery solutions and software technology. Joining me today are Jørn Tonnemyr, EnerSys Senior Vice President and Chief Technology Officer, Mark Matthews, EnerSys Senior Vice President of Specialty Global, Drew Zogby, EnerSys President, Energy Systems Global, Harold Van Es, Senior Director of Marketing, Motive Power Global, and Andrea Funk, EnerSys Executive Vice President and Chief Financial Officer. We may be making forward-looking statements on today's call that are subject to uncertainties and changes in circumstances. Our actual results may differ materially from these forward-looking statements for a number of reasons. Our forward-looking statements are made only as of today. For a list of forward-looking statements and factors which could affect our future results, please refer to our recent 10-K filed with the SEC. Following our pre-prepared remarks, we will be opening the session for questions from the audience.
At any time during the webcast, you may submit your questions by clicking Ask a Question in the top right corner of your screen. The slides for this presentation are currently available in the Events section of our IR website. As a reminder, this is a technology talk and we will not be taking financial questions or providing customer updates, updated views on the supply chain or current market conditions, as those topics are outside the scope of this call. Now I'll turn the call over to Jørn.
Hello, everyone, and thank you for joining. Our customers have always expected a very high degree of quality and reliability from our products. No matter if that's in material handling, moving products from A to B or in an over-the-road trucking application, being able to crank that truck and get that delivery moving to a data center to a telecom site. To add to that reliability, of course, is what if we can monitor? What if we can not only build that great product that we built to the day in terms of the electrochemistry and on the systems that we're building, but what if we can also communicate that real-time data to the customer to create that extra layer of capabilities, stickiness of our ecosystems, and again, the reliability to our customer. Can they really start that truck?
Can they go up with their cell phone or other device or cloud management device to figure out how well is my battery system or my asset working? What we've done at EnerSys is developed a number of platform to monitor our systems that we develop. One of those is on the lead-acid side. What we're doing on the lead-acid side is creating systems that allow us to measure everything from voltages to temperatures, and then from those, being able to calculate variables that are interesting to the customer. These may be the ability to, say, to crank a vehicle. Those might be the ability to determine the state of charge. If we look at material handling, really, in the end, they buy our systems to move product from A to B reliably.
In order to do that, they have to have some type of fuel gauge. Imagine that you have a car without a fuel gauge on it, and you say, "Well, I can maybe make five trips to work with that, and then I'll fuel up." Nobody wants to have that type of situation. What if you have an excursion? What if you have to go somewhere? You would really be having this anxiety. Do I have enough fuel? Well, imagine having a lift truck and having to move those parts, those, so that material for that Christmas order from A to B, and not knowing if I'm stuck on aisle B and I can't move my truck anymore. You have to have that reliable capability for that state of charge, that fuel gauging measurement in order to provide to the user.
This is what they expect off of EnerSys products. There's a next aspect to it. Can we start to use that data in a much more global manner? Can we use that data in order to start to tie in ecosystems, in order to bring in prognostics, in order to bring exceptional added value to our products via that data offering? Some of that is what will be discussed today by my colleagues. I'll first introduce Mark.
Thank you, Jørn. I really appreciate getting the opportunity to talk about batteries and talk about EnerSys and what we do, and particularly the intelligence that we're putting into these batteries, 'cause they are incredibly game-changing. I think as we got into this conversation, I wanted to highlight on why people choose the ODYSSEY battery. You know, running the transportation team, we get to deal with a lot of customers and a lot of different people that have different opinions on how batteries should operate and how batteries should be managed. We start by understanding what value we bring. EnerSys, we do something very unique on the lead-acid side, and that is the Thin Plate Pure Lead. That technology is game-changing within the lead-acid industry.
It provides, you know, orders of magnitude, performance, improvements, 3x the life of an existing lead-acid battery, and we'll talk about that in a minute. One of the reasons we wanna be intelligent is to be able to build the confidence of our customer base that that technology is gonna perform the way they expect it to. This first couple of slides here, I just wanted to walk everyone through why it's important that we have this capability and have this smart battery on what is traditionally most people think of as a, as a dumb flood battery in their car. That's not what it is anymore. The industry's evolved, and how we've tried to go after this industry is to create value at the fleet level.
When we go out and we try to show who we work with or how our battery will operate, we go to someone like Penske, and we work very closely with them so they understand that even though the battery is more expensive, the battery has significant capabilities that they can't get through other products. It's gonna have a better cold cranking amps. It has larger capacity. It's gonna run longer. It's gonna enable them to power all the things that are in a hotel load. Your TV, your refrigerator, all those things in the truck now require battery backup to provide that. That kills traditional batteries. There's been a lack of confidence in the industry. We introduced Thin Plate Pure Lead to accomplish and move forward.
The fleets have embraced it with a great excitement. The fleets then influence the OEMs to design it into their battery. Ultimately, our goal is to, as we've won this upfront win, we wanna put an intelligent system in place that allows the battery to be tracked over time, so that when it comes for replacement, we have stickiness there. One, the customer has confidence that the battery's lasted as long and performed the way it's supposed to. Secondly, that when they go to replace it, they're looking for an EnerSys battery with our intelligent capabilities inside, so they can see that benefit long-term. We've created partnerships throughout the supply chain to make sure we're not only capturing the front end, but also the replacement cycles down the road, as these trucks will last 10-15 years.
On the next slide, you kinda get a feel for what it is that we do from a total cost of ownership, what TPPL enables. Thin Plate and Pure Lead actually enables a lot. The first thing it does is it lasts a lot longer. You're gonna get 5 years versus 20 months. You're talking about something that's lasting 3 to 4 times the traditional batteries. That's only getting worse as electronic loads continue to move forward on these vehicles. The second thing is it prevents downtime. What we really are important to us is that every time a truck that's carrying goods, and you can imagine how much freight it's costing, it goes down, it needs to be jump-started, it needs to be towed in, that creates downtime.
That means that that asset at our fleet level is not getting utilized the way it needs to. Our job is to show, to give confidence that battery is gonna work every time, but also show people, through intelligence that that battery is gonna perform long-term the way it's supposed to. Finally, we really look to work with our partnerships that own these fleets to say, "We're also gonna manage your warranty issues." If something's wrong with the battery, if the battery's been beaten up or misused, both the OEM and the fleets wanna understand why. We can use these intelligent batteries to manage the warranty claims and help manage not only the warranty claims, but also learn from those issues that they have to correct other problems within a truck that are causing the batteries to fail early.
Those are all elements of what we wanna put in this ecosystem. For example, we've been told more than once that we've seen up to 80% or more reduction in warranty claims for batteries that have this intelligent system in it. These are real savings that we're demonstrating to our customers. The question we had to ask ourselves going back when we started to develop this program is, what information are we gonna provide to the fleets and provide to the owner-operator of a vehicle that indicates that their investment in a high-end battery is paying off? That's really what, on the next slide, started us with the ODYSSEY Connect. What this is a battery monitoring system.
Everyone's familiar, you know, as we all have cell phones, we all got more familiar with how to manage our battery and when to charge and not to charge. Imagine having four or five or six of these in your vehicle and trying to manage all this, and your livelihood tied to the performance of that battery, making sure it starts and operates every time. What we've done is we've created an ecosystem to help people manage that. The people that invest these batteries, this ODYSSEY Connect system is really an inserted chip into the battery. It's just a small microchip in the battery that monitors and stores information. Then there's an app, associated app that goes with it, and you can get that through Android or Apple, that starts to indicate several things. We'll walk through what that app indicates.
The first thing we decided is, what information do we want? Jørn, myself, and all our battery guys, well, we want every bit of information you can possibly get because we like that. We tried to just, to find what really the end user needs to go forward. That's what we started to do. From day one on the next slide, you'll see that first thing we do is keep track of the battery status. When the battery is built, from the day it leaves the dock, we start to record information on that battery. We're recording the state of health of the battery, the state of charge, what voltage and temperature, how it's being charged, state of charge graphs for the last six days.
We're gonna have a history around how this battery is used, what it's been exposed to, and then we communicate that via Bluetooth. No longer are you popping the hood, freaking the battery out, taking it to a battery tester. You're literally opening your phone, opening our app, and it's starting to tell you what you need to know. The first thing we wanted to do as we put this ecosystem together is to make sure we have a history of the battery, so we can say, how has it been used and what can we learn from it? That's the starting point. The next thing we wanted to do on the next slide is to give you battery health on the go.
Probably the simplest thing this particular out-ecosystem does, the Battery Connect system does, is tells you, is your battery good or not, right? You can pop open your phone, flip it open, and say, "Yes, I have a good battery. No, the voltage is too low," or, "Heads up, there's something wrong in your system, the battery's not performing how it's supposed to." From our standpoint, you know, we're talking about Class 8 vehicles here, and we're talking about, you know, fleets. I can relate to this very easy to having a 19-year-old daughter, right? You buy her a car, and I probably should have bought a better car, but her battery died the first time, and she's on the side of the road, and I'm running out.
If I could have had this app with me to walk her to the car before she leaves on a road trip and hit it and say, "Yeah, your battery is good." I don't have to worry about the midnight call and the panic that comes with that. That's the kind of confidence that we're trying to give. I think, you know, when you're buying advanced technology like Thin Plate Pure Lead, as we evolve into lithium long term, these are the type of information that people wanna know. They wanna know that the investments they're making in these products is gonna result in the return, which is the reliability and uptime that a fleet manager wants. That's the first thing we do, is tell you what the battery is, battery health is on the go.
The second one, this is the next slide. This is where, you know, I get more excited, is now we start to talk about the detail. Now you're starting to talk about what's really happening in the battery. What's the charge profile look? What voltage and temperatures does it look? This helps us in a lot of ways. One, it helps us as we collect data with our partners to say, "How is your battery being used? What can we do long term to take that data back and make the battery better in cold environments, or you're seeing hotter environments than we expected?" We're understanding the state of charge in increments. We're really starting to get into the detail.
That enables us not only as EnerSys to continue to improve the product, but also for the customer to understand or the fleet manager to understand, yeah, this is how the product is being used, right? That's a, that's a big one for us. Then kind of next level down is to detect anomalies. This is where when you see the warranty improvement that we see with a Daimler, we see or other customers, and we're seeing people say, we've gone from, you know, 3%-4% warranty claims down to less than half a %. It's because of this. It's not because we're preventing warranty claims from happening. Is that when we have an issue, we have the ability to go in and look at that data and put our teams together to understand what went wrong in that vehicle that allows us to...
The battery didn't fail, but something else in the vehicle caused an issue. Was it an alternator issue? Was it a charge issue? Was this battery stored in inappropriate heat? Is there something else going on that's caused the battery to fail early? We can now detect those anomalies and correct them at the vehicle level and hopefully at the fleet level. What we've done at EnerSys is create a real stickiness with the OEMs, and this was almost an unintended benefit, that we now have more information about our batteries than anybody else does, which enables the OEMs to see the value in this information moving forward. We'll talk about that means long-term for us.
In the short term, what it does is it provides savings to the fleet and allows us to correct vehicles who continue to chew through batteries because they have an issue in them. We can really address a real problem that's causing downtime in the fleets, and we're doing that by understanding how the battery is being treated because it is a central part of the electrical system. We can really do an analysis starting there, and you do it on your phone, and you can do it in a matter of seconds. You can get into this information, and we can utilize our people to look at that. What does that mean long term? If you go to the next slide, where do we see this taking us? We've created this Bluetooth capability. We've built this app.
It's been a lot of excitement in the industry around what we've created, and there's opportunities for that on a lot of fronts. The opportunity in the short term is to continue to roll this out in different product lines, so everybody who buys an ODYSSEY battery, you know, years down the road, has the ability to understand what's going on with their product. If they get it at a local retailer, if they're buying it in bulk, they can understand how their battery is performing. That's the vision we have for this product line. In the short term. Go back one. Sorry. In the short term. I gotta get this last point out before I turn it over to Drew.
In the short term, what we wanna do is we're working closely with the truck builders as batteries become a larger and larger part of the overall system. Even as we move to EV, there's 48 volt systems that are gonna require our technology. We wanna continue to integrate this intelligence that we're learning into the actual vehicle itself. We wanna turn it to the CAN bus, the telematics piece. We wanna look at individual performance and in banks of batteries. If batteries in series and parallel, what does that mean to us? We're continuing down the road of after we've proven the capability through Bluetooth, how do we take this intelligence we're putting into the battery and make it even a more significant part of the vehicle? We do that for two reasons. One, because it makes sure the battery is utilized right.
Two, people become used to this technology, and when they replace this battery, they're only gonna demand it has an ODYSSEY and this ODYSSEY Connect system in it, because that is what's enabling them to operate at a higher uptime than they traditionally ever have been able to. That's the future where we see this going. It seems relatively straightforward to put this intelligence in. It hasn't been done before on these type of levels, particularly for lead-acid batteries. I think what it's enabled us to do is take the TPPL technology in these markets and really build a confidence level with the customer around it and build a future around these product lines as we continue to evolve this technology to meet the end customer needs.
It's been an exciting game-changing technology for us to prove the value of our electrochemistry that we have in the battery. With that, I'll turn it over to Drew, and he can talk about what we're doing in ESG.
Thanks, Mark. Good to be with everybody to talk about this intelligent battery capability that we're bringing into the Energy Systems markets. You know, the network operators, in particular, look to all the elements in the network and want to be able to manage them both from a monitoring and performance standpoint, also asset tracking and, you know, preventative maintenance readiness, et cetera. The lead-acid battery has never been able to have that capability per se in the past. Bringing ACE capability into the Energy Systems markets like telecom, cable, and even data center, allows us to have now an element management capability that can tie into the overall network management capabilities and systems of our customers.
This intelligence gives them a readiness reading, a current monitoring of performance dataset, and really important actually, asset tracking, just knowing where the asset is, what's the age of the asset, and when's the last time maybe the asset's been seen. We do a tremendous amount of preventative maintenance in these markets, which is a just-in-case kind of maintenance. It's very expensive, and it's not very structured. Having this intelligence for the backup battery systems provides a kind of a just-in-time capability, so that we can, through the performance management systems that the customers deploy, bring the knowledge of what's going on with their backup capability into that mix. It's a very key feature set that the customers are looking forward to bringing in, you know, to their operations and looking to EnerSys to lead that.
It's also something that can be consistently deployed using smartphone apps. Our customers will be able to basically provision and set up the site very efficiently like they do with a lot of their other network elements. It provides a great capability and ease of integration. More importantly, it provides that bridge to lithium, to the advanced technologies for which in our backup or float applications, the benefits of lithium versus lead-acid in a lot of cases are not that pronounced, but a lot of the intelligence inherent in lithium battery, 'cause in essence it's a piece of electronics, it's a key part of the overall power system, has not yet been able to be replicated with legacy lead-acid technology.
With this advanced lead-acid technology and the ACE capability, we're now able to bring that bridge to future deployment of lithium, but also in the applications where lithium does not fit, the capability and the dependence and utilization of that intelligence is provided, and it is very much attractive to a lot of our key customers. You know, we have data center customers that really need this intelligence but are resistant to put lithium into their sites. Well, now we can do it with TPPL, which they like, but they want that intelligence. All across 5G networks, we have remote cell sites, and wanting to keep track of those assets and keep track of the maintenance protocols and timing is now able to be done at the battery level, not just the power system level.
Across all the rest of our traditional wireline network operators, this now becomes a much more consistent element to fit into the overall network management and data collection and preventative maintenance protocols that they have. Great value here. Very consistent with the EnerSys complete power system approach that we're taking into the key markets. Creates a lot of close interactions with the customers, and it gives us, again, you know, let's say that longer term stickiness with not only our batteries, but the complete network powering solutions that ACE functionality is very complementary to. With that, we could go on quite a bit with energy systems and this functionality, but that's enough for today, and I'm happy to turn over the presentation here to Vanessa for a little touch on the motive utilization of the technology.
Thank you, Drew. Thank you, Mark. Thank you, Aaron. Like we've heard from both Mark and Drew, you know, customers want integration into their vehicle. They want to be able to access information on the fly on their phone or perhaps in another system about how those assets, how their batteries are performing for them. Are they doing well? Do they need to be replaced? What steps can they take to improve and optimize the performance, get more life out of the battery? Motive power is no different, right? We have the same challenges with our technologies, be it advanced lithium-ion, advanced Thin Plate Pure Lead, or our traditional lead-acid offering, right? In motive, while we're not currently using the issue, we've been using a technology called Wi-iQ, which we've had and developed by EnerSys back in 2014.
We're on the fourth generation of that product now, as we've advanced it and, you know, it does things like can communicate with our chargers and with trucks, and so we can integrate those batteries. Again, it can be anything from lithium to TPPL to lead-acid. By putting a Wi-iQ on it, we can integrate it to the truck and do things like prevent the lifts from lifting and slowing the drive wheels down on the truck if the battery's at a lower state of charge and the operator has ignored, "Go back and charge me." You know, those red light buttons that come on and tell them to go and charge. You've got things like that. We also do things with doing an E Connect mobile app. You heard Mark talk a lot about that for the ACE product, for the ODYSSEY.
We have something very similar for flooded products that integrates with our Wi-iQ. Again, I can, be it an operator, be it a manager, be it one of our own technicians, come in and quickly find out how that battery's working. That information also goes to the cloud. Through our Xinx battery operations management system, we can work with customers, and the customers can also look at it on themselves to figure out how they're doing. Do they need more batteries? Do they need less batteries? How are those batteries operating? We tie in with our chargers. Our chargers provide the exact right charge profile for that technology that's plugged into it by looking at our technology. It's this smart ecosystem that we combine everything. Again, it's all part of this connected world that we're looking at. Next slide, please.
Just a little bit further detail on the E Connect. You can see, I think I've touched on most of these points already, but to Mark's earlier point, you get some great graphs for those that want them. If you don't, it's some pretty basic information in there that tells you what you need to do because, again, stickiness to that customer really depends on who is using the product. Is it an operator? Is it an engineer that may be overlooking an enterprise, where they have to make those power decisions? Is it a buying team or is it EnerSys?
We also tie this information into our Wi-iQ or sorry, our EnSite modeling software, so that when it's time to evaluate a facility or perhaps replace technology because they've updated or replaced their trucks, we can come back and say, "Okay, well, we take a look at how you've used those batteries in your application over time," pump it all into the model, and then can make a prediction for them on what we think will give them the best total cost of ownership by most likely selecting a hybrid solution. Could be a lithium, a TPPL, or a flooded option mixed in together with the right chargers to give them exactly what they need. Next slide, please. Here's an example of what we can do with a real basic approach, which is we take that Wi-iQ information.
Again, it's the same device that we're using for all of the other things I've talked about, but here we connect it to our Bluetooth to a Truck iQ that sits on a truck, and it gives a real basic operating performance to that operator to let them know what they need to do. Go back and recharge, or I can still go, "No, I can go and make another couple of runs and move what I need to do before I get to break and before I go back and charge." Some real basic technology here, but, well I shouldn't say basic, it's fairly advanced, but the way we portray the information is very, very usable. In the backside, all this information then becomes used when there's an issue like.
Like Mark was talking about earlier, it's not meant to be that tattletale device, but it's really meant to be that device that our team works with our customer to design a solution that prevents them from having problems in the future. To Jørn's very first point, that's why customers work with EnerSys, because we can do this. We've got the technology and the people that give that customer that great experience. Lisa, back to you.
All right, we'll turn it back over to the operator for Q&A.
Thank you. If you have joined via the Zoom application, please use the raise hand function to ask your question. If you have joined via the audio line, please press star nine. If you are viewing from the webcast, you can submit a question on the Ask a Question tab on the top right of your screen. We will now pause a moment to assemble the queue. Our first question comes from Noah Kaye. Please unmute yourself and ask your question.
Good afternoon. Thanks EnerSys for doing this talk. Really interesting elements here to touch on. I guess maybe Drew, can you talk a little bit about how these readiness and performance monitoring capabilities optimizes your service network for the telecom and broadband customers? I mean, how much of the benefit is maybe here around cost reduction potential for you in terms of just the logistics and the dispatch savings versus maybe driving revenue events?
I would say from the customer standpoint, they do fairly regularly scheduled preventative maintenance visits, for instance, to a lot of these sites, not knowing, you know, exactly what the state of the asset would be. We can save them quite a substantial amount of operating expense by having this data available to them, so they can scan and profile the asset status, age, et cetera, as the means to target where their preventative maintenance is gonna go. That is a justification of the premium they would pay for the product. We like that mix. They like that mix. If we have the preventative maintenance contract with them, this can become part of how we would be able to actually secure that business.
If we have in it that we can monitor and use the data to give executive reports and drive the actual on-site maintenance visits, or more importantly, right when an asset is ready to be transitioned but before failure, we can do that kind of preemptive replacement and without it becoming a failure kind of drill. It is an opportunity for us to generate, you know, I think a tighter relationship on the PM side and also gives the customers, I think, a more secure way to look at that readiness of their energy storage or backup of that network element. Does that-
Yeah.
-resonate with you?
It does. This is a follow-up. I mean, how prevalent, if you can help us all understand, how prevalent today are those types of preventative maintenance contracts, you know, for providers, with the telcos for systems like this? Is this really a kind of a new growth opportunity for the company, or would it just sort of build on kind of existing penetration that you have?
It builds on existing business that we have. We already have a fairly significant preventative maintenance business, both in the outside plant portions of the network and in the critical facilities. In both cases, the battery element of it is a key piece that is part of that maintenance, call it the maintenance protocol. By having this additional data that we can, you know, mine and basically segment into executive reports, that gives us, you know, asset tracking capability, aging, et cetera, it's something the customers really depend on, and it will just allow us to expand some of that preventative maintenance business and also to keep those contracts and also to keep the customers from being motivated to take that work in-house because they wouldn't have the same necessarily access or ability to manage that data like we can.
Yeah, great. If I can sneak in one more, this may either be for Mark or Jørn or both of you. You know, you had mentioned the 48 volt architecture, even in an electrified truck. I was wondering if you could maybe elaborate on the potential value of the ACE functionality, in an electrified truck, how that might be advantageous, and if you can describe any testing you've done with the system, specifically in electrified trucks.
This is Mark. It's a great question. You know, when we talk about electrified trucks, we're talking about two things. We're talking about true potential battery EV trucks. We're also talking about hydrogen EV trucks as well. 48 volt systems have already been really early adopted with some of our partners into some of the hydrogen trucks 'cause just the runtime is much longer. Those are still electric trucks that don't have emissions as traditional trucks do. They've created a 48 volt system that powers the overall electronics of the vehicle. You're talking about, you know, steering, power steering, lighting, those type of things that are all at the lower voltage systems in those vehicles. We've actually started to be integrated in several of those new opportunities.
They like the ACE, they like the potential of ACE, particularly integrated ACE, to the CAN bus of that system, so they can report not only on the high voltage system, but the low voltage performance as well, because a lot of the safety and security things are tied to those 48 volt systems that we're putting back. It's really a redundant system to the overall high voltage EV or hydrogen fuel, hydrogen fuel cell application that we're seeing. Yeah, it is, it's very early on for us. We've been designed in to one significant partner that's started to grow that market, and we're early on in testing with several of the other OEMs that see the value of Thin Plate Pure Lead in those applications.
It's a perfect fit, in that 48 volt solution for us.
That's extremely helpful. I'll step back. Thank you.
Our next question comes from Gregory Wasikowski. Please ask your question. Thank you.
Great. Thank you. Thanks everyone for doing this. It remains pretty cool and very helpful for us. Thanks again for taking the time to do it. Very, very similar question to Noah's last question. I was just gonna ask about, you know, the energy transition and kind of the evolution of heavy duty trucking and, you know, the application of ODYSSEY Connect through the different directions that that could move in. I was just curious, I guess taking it one step further, you know, is there a certain type of technology that, you know, EnerSys kind of benefits more from, or would like to see it move in a certain direction?
You know, if you look out over the course of the next, call it 5 or 10 years, and you see, you know, significant fleet announcements transitioning to one technology or the other, you know, does any direction kind of benefit EnerSys more than another one, whether it's battery, electric or hydrogen fuel cells, RNG or biofuels or just remaining, you know, with like a traditional diesel? How do you guys see that?
I think this is Mark here, and I'll take a shot at that question. Obviously we love the hydrogen fuel cell piece because we've had some early on success there. We also see that there is an application for our batteries, both TPL and lithium in these moderate range voltage applications in this 48 volt system. You know, we've seen, you know, emissions regulations drive requirements for a little bit higher voltage systems. We've seen, you know, some secondary systems on the larger EVs. We also know that just continual improvement of traditional combustion engine, there's a long runway there for us. I mean, it is, these are massive loads, particularly on the over the road truck eight applications with hotel loads.
Those are massive loads and massive requirements for a traditional or for a new, EV type solution. We see this as an evolution of regulations on emissions as we can help in that with our, with our Thin Plate Pure Lead and the moving away from any kind of auxiliary power source. We also see then that moving into fuel cells and ultimately to the battery electric systems. We see there's a, there's a place for EnerSys solutions throughout that. We're trying to be as chemistry agnostic as possible. I know Jørn and his team have built some great lithium solutions that Harold's taking advantage of in Motive right now. We are ready when our customers are ready to start to move lithium into that forefront.
Right now, template pure lead does the job and it's gonna do the job for the foreseeable future. As those new battery systems come on, we're obviously not gonna be the drive chain, but anything else on that vehicle that requires power, we're comfortable doing either in template pure lead or lithium.
Yeah.
I will say the ODYSSEY Connect helps a lot there. Yeah. Yeah.
Yeah.
I'm not just a Mr. Chemistry. I'm a chemistry guy. The Connect helps, right? That's good.
Right. Mark, you kind of alluded to this already in terms of, you know, kind of what's next for ODYSSEY Connect. kind of beyond the, the vehicle, chemistry itself, you know, the vehicle like fuel application itself. you know, what could be next in terms of, expanding the ecosystem within the vehicle itself or connecting to other, systems, auxiliary systems or, you know, different ways to connect with the vehicle? You know, how do you, how do you see that ultimately evolving?
What's happened is over the last several years as that APU system or that auxiliary power system, which was, you know, obviously fuel is basically a generator that was attached to do the off cycle loads, if you will, has been removed. More and more batteries have been added to a Class 8 truck, to a large vehicle. You've gone from having a starting battery to now, well, you know, in the military terms we call a silent watch battery, but that's really what it is. It's a battery that's powering the electrical loads when it's not running. What they've done is they've started a series of parallel batteries, right? You're seeing, you know, four, six, eight batteries on a vehicle. That creates a complexity around integrating all those and understanding how those are operated, how those are changed out.
That's, I think, where you saw the real need for ODYSSEY Connect to be more further integrated into the vehicle ecosystem, more than just the Bluetooth capability that we have now, but really integrated to the CAN bus, where you can see how these batteries are interacting, how they're performing, when we need to change the entirety of the system, and also how they're being electrically managed and charged. It becomes more complex once you get several of these connected in these different configurations. I think that from our standpoint, the connect and the intelligence we're adding to these batteries are only gonna create a further integration to what we know as battery providers to folks like Daimler and others that we work really closely with.
I mean, we tell our teams all the time that we'd like to be considered the battery or the battery arm of these companies, right? These OEMs, we've done that in the Aerospace and Defense field, now we're doing that in the automotive field, where we want them to come with us to be the battery experts to manage not only the data, but also the electrochemical improvements that are needed, you know, as they evolve their roadmaps going forward. That's really where we see the focus on, is the complexity of the battery integration has increased. With that, intelligence is gonna drive our stickiness into those environments.
Got it. Okay, thanks, Mark. One more, if I could, on E Connect and Motive Power. Last call, we talked a lot, I think it was last call, talked a lot about wireless charging within material handling. I'm assuming, you know, software systems have pretty seamless integration into all things wireless charging, but maybe if you could talk about that or any other added features when it comes to, you know, the software for wireless charging.
Thanks.
Sure. We're gonna show our wireless charger at ProMat, coming up in Chicago, which is the large material handling show here at the end of March in North America. We'll also show it over in LogiMAT at our trade show over in Germany, which is our European trade show at the end of April. Yeah, you know, all of the motive technologies that you're seeing do work in this ecosystem. You know, in the wireless charger, for instance, you've got a portion that's on the truck and then the primary or the charging equipment that doesn't sit on the truck. As those two come together, they wirelessly communicate and the battery know...
The charger knows what battery is on there, not only chemistry, but voltage and capacity so that it charges correctly. That's no different than when we put a Wi-iQ onto any of our batteries. Again, an advanced lithium, an advanced Thin Plate Pure Lead or a traditional flooded product. Again, the Wi-iQ charger talks through Bluetooth to that charger to say, "Hey, I'm a Thin Plate Pure Lead battery. I've got this much capacity, this voltage, and charge me correctly." 'Cause, you know, it's not just plugging it in and charging it. It's charging it correctly for the chemistry and the voltage that it is. All of that does exist. Our E Connect works with all of it. We have some other technologies that allow us to pull that into the cloud so that we can monitor as well.
Sometimes it's through a service program, sometimes a customer will do it as a subscription, we'll do it as well just to keep an eye on it. Yes, it's all part of that same ecosystem. It has to be 'cause, you know, I think you're hearing that from Mark, you heard it from Drew, certainly, Jeroen started off with this. It's expected, right? Our customers are expecting this anymore, that's really what we have to bring.
I would maybe add to that is, the wireless charger is our first device that's in our next generation set of products from EnerSys, as we start to create a compatible, interconnected set of platforms. It uses a System-on-Module. It has its own software stack that's associated with it, and that software stack will become general. This is one that's in wireless charging and the top end of that software stack, its application is a wireless charger. The IoT stack that's connected it and eventually also the AI stack, the communication stack, the CAN stack and so forth, they're all generalized product. The next product that's coming out will be on the telecom side. It also, again, uses that same stack setup.
What that enables is then once we look at the cloud resources moving in, they're all parsed. The information is all very much the same information. We can start to look at this at a much more enterprise level of all of these interconnected devices. What we're seeing is just the beginning of a next generation of software interconnectedness by EnerSys.
All right. Thank you, guys. I'll pass it back.
We currently have no raised hands, therefore I'll pass it back to Lisa for any webcast questions we have received.
Thank you, Tia. We do have a couple of questions that have come in on the webcast. The first is asking, is the battery monitoring technology included as a standard feature with purchase of the battery? Is there any potential aftermarket subscription revenue associated with this?
I can start from a transportation perspective. It is included in the overall purchase of the battery. We charge, you know, a premium for this battery and this capability. It's obviously well accepted by our customer base that it's part of that. We don't do a service monitoring for transportation. It's all included in the cost of the battery. Yep.
For Motive, in some products it's included, in others it's not, and then the monitoring is a subscription-based service.
Phil, in Energy Systems, again, it would be a premium option on the battery, and that would include, you know, some of the functionality certainly, but any kind of ongoing monitoring or maintenance services would be an add-on, sale that we would make.
All right. another question that's come in, kind of a broader question asking about our technology and, do we have any comments regarding iron flow battery technology or other industrial power and utility end market opportunities as the grid becomes more driven by wind or solar?
I'll take a go at this one. That particular chemistry, we haven't been looking at it at EnerSys, but we're certainly always very interested to see what new systems are out there. Flow batteries are one of them, but at this point we're not too, I would say it's not fitting into our market profiles that we currently have. That said, though, we are doing some work on VPP, so virtual power plants and OpenADR. For instance, I think Dave mentioned in our last analyst call that our DC fast charger now is OpenADR certified. This allows as the starting point of allowing our products to participate directly onto the grid and eventually becoming grid resources. It's the starting part of this path.
It's a very interesting path for us and lots to explore.
Great. This next question is for Drew. Again, a broader question around 5G, and some of this we covered in our recent call, but the question is asking what stage we're in on 5G megatrends and what % of the small cell towers do you think are already installed versus future complete network?
I think that, first of all, we touch upon this quite often in our quarterly calls, and we'll certainly be touching upon this in any investor events we have coming up in the future 'cause it's a big topic. The 5G deployments are moving at a particular cadence right now where you see macro sites being reinforced or put into place so they're able to monetize the various spectrum that the different carriers have. The small cell deployment that was initially anticipated prior to, let's just say, the rearrangement of the markets with COVID and things of that sort have been pushed out. That now is starting to become a very active piece of our business.
There is densification still being done on the LTE portion of the network, and there's now very defined plans that both the tower cos like Crown Castle and et cetera would be, you know, working on behalf of the network operators and the network operators themselves, both to increase capacity through densification on their 5G spectrum, that would be mid-band spectrum, and then certainly as millimeter wave spectrum comes back into the mix and the kind of the requisite small cell deployment around that. Certainly, we see that's gonna start to grow at a much faster clip and a much wider deployment than we've seen in the past. I don't think we're gonna get into numbers or any specifics right now on this call.
Technically, we certainly have a great suite of products to support that, and we also, you know, are building that into a lot of our future, you know, business forecast as we see that e-evolution or let's just say that that portion of the network's starting to become more critical to the, you know, the build-out plans that all the operators and tower cos are gonna be deploying.
All right. Thank you, Drew. Another question that's come in from the webcast. Could you discuss how the software intelligent technology is developed? One software development group serving the three divisions or are separate groups at each division? If the latter, how are best solutions practices being shared?
What we try to do is, and I alluded to it with the System-on-Module when we're speaking to the wireless, everything is starting to uniform on a particular stack. All three businesses use very similar electrochemical technologies, right? That's also part of one of the pillars within EnerSys. There'll be a lead or flooded technology, a Thin Plate Pure Lead or a lithium technology. As such, we know very well how to monitor these systems. We know very well what failure modes are necessary and so it allows us to create that much more generalized platform. What we're doing today is a lot of the core components of that technology.
For instance, a lot of the diagnostics, the AI component, the training of the AI component, the deep learn and so forth that we're moving into, that's all held within EnerSys. As that moves then up to the top level, the application layer. For instance, in Harold's example, if he has a lift truck, their state of health algorithms and so forth, and the prognostics from the lithium systems or TPPL system will flow in, and that's the same TPPL system that then Mark uses for his system. Therefore, the failure modes are very similar at that level, and then they'll just be served directly into their applications for whatever needs their customers have. This has always been the premise of EnerSys.
We're very wide in our product portfolio, we're really strict upon how we set up those technology platforms to keep ourselves extremely concise. That's why we can have one software pillar to service all three LOBs.
Thank you. One more from the webcast. What role do you see sodium-ion batteries playing in the motive power industry over the next five years? What are the pros and cons of this technology relative to TPPL?
It's a great question. Sodium ion for those who are not aware. This is a replacement of the lithium on the cathode side with sodium. The sodium, though, presents a number of the benefit, of course, of sodium, it's all around us. It's in salt, for instance, right? There's huge amount of sodium and everyone is looking at the pricing of lithium and how this is moving. The problem, though, is that the lithium is really just a component of a lithium cell. For instance, in a typical lithium battery, the lithium's only found right now today on the cathode side. In the systems that we're using, the NMC systems, it's lithium nickel manganese cobalt oxide.
If you look at the overall BOM or the bill of material, it's about 20%-30% of that bill of material is the actual lithium. If you just have some savings just on that 20%-30%, which might be 6% or so by going into sodium, say that they're 20% cheaper by putting this all together in a cathode chemistry, that doesn't have a very large impact. There's larger impacts on the generalized overall system of the side, particularly when we look at much smaller capacities that we have motive power. This doesn't speak to, say, if I look at hundreds of megawatt-hours of grid-connected supply. That's a very different argument.
For the systems that we're looking at for motive power, the sizes are small enough that the difference between sodium-ion and lithium-ion based technologies is insignificant from a price level. There's a huge difference on the performance level. We do know that from a sodium-ion, the energy density is significantly less. This means that you have less runtime. One thing that Harold's team needs is more runtime on those vehicles that we can pack more energy in, into that area. Our method moving or our premise moving forward is higher energy density system, and sodium-ion for us is not that solution.
Runtime is king, as it was once told to me by a person that runs a very large automotive plant.
Yeah.
Runtime is king. I've never forgotten it.
That's all the questions we have on the webcast. Tia, are there any other hands raised in the queue?
Hi, Lisa. We have no further questions at this time, so I'll hand back to you for our closing remarks.
All right. Well, thank you everybody for joining us. We look forward to discussing our Q4 and full year fiscal 2023 results at the end of May. With that, have a fantastic day, everyone. Thank you.