Good day, and welcome to the UBS Energy transition call with MicroVast hosted by John Wyndham. My name is Julie, and I'm your event manager. During the presentation, your lines remain on listen only. If you require assistance at any time, it's star and zero on your telephone, and a coordinator will be happy to assist you. I would like to advise all parties this conference is being recorded for replay purposes.
And now I'd like to hand the call over to John. Please go ahead.
Thanks, Julie, and welcome everybody to the latest installment of the UBS Energy Transition call series. So in this call series, we try to connect UBS institutional clients with energy experts and innovative companies that are in some way enabling or driving the energy transition. Today's call certainly fits that topic. We'll we'll be discussing next generation battery technologies with MicroVast today. Just a little bit of background.
MicroVast is a leading global provider of next generation battery technologies for commercial and specialty EVs. Some background, on the February 1, they announced a business combination with Tuscan Holdings, ticker THCB, and is expected on close to trade on the Nasdaq under ticker NBST. So very happy to have with us today on the call from Michael Vass, the president in The USA, Shane Smith, as well as Wenjin Mattis, the chief technology officer, and Sasha Kelterbourne, the chief revenue officer. In addition, we have from Tuscan Holdings, Alan Pinto. So before I hand it over to to Alan, just a quick logistical, items we need to go through.
First, there are slides to accompany today's discussion. They were distributed via email to preregistered participants about fifteen minutes ago. And then second, the format of today's call, will be some introductory comments by, Alan, as well as a presentation by Shane and his team. Following that, we will do some q and a. Julie, the operator, will provide you on instructions on how you can log in any questions after the presentation.
As always, if you prefer, do feel free to email me any questions directly, and I'll try to get them asked for you anonymously as time permits. And so if you don't see the link to the slides or if you have a question, best thing to do is just to email me. So most of you have it, but my email is johnjon.windham,windham,@uvs.com. And then lastly, a quick disclosure. As a research analyst at UBS, we're required to provide certain disclosures.
They were included in the email in in the original invite to this call. The short of it is, this call is not a recommendation to transact in any security. Full disclosure is available on ubs.com. Alright. With all that out of the way, let's get to the fun part.
Why don't I welcome to the call Alan Pinto from Tuscan Holdings. Thanks for being here, Alan. I'll turn the floor over to you.
Thank you, John. Thank you, and thank UBS for having us today. We're excited to present and tell the story. By way of background, I'm a partner at Interprivate Acquisition, which is a repeat stock sponsor. Interprivate, as some of you may know, effectuated the transaction with a company called AYVA, which is an advanced machine perception and LIDAR company.
That deal closed about a month ago. When we were looking at candidates for a merger with Interprivate, we have the good fortune of seeing a lot of great companies. MicroVast is at the top of the list. As a matter of, you know, capacity and timing, we moved forward with the AVA transaction, but we were quite resolute in not letting MicroVas go because we recognized some of the attributes that the company had, which really differentiated us, we think, in the in the landscape of electric vehicle electrification and, certainly, battery technology. We had a relationship with Steven Bogle, who's the founder of Tusking Holdings, who are our sponsor groups have known each other for a long time.
We collaborated on several things. And so when it was clear that Steven was as enthusiastic about MicroVest as we were, We agreed to port the transaction over to Tusking Holdings, and we shepherded the deal together. What really excited us about MicroVest is that the company has been in operation for a decade and has developed this game changing battery technology and has actually proven out their technical and performance advantages on the road over the last ten years. They have 30,000 battery systems on the road, including the iconic double decker buses in London. Those batteries have had almost no degradation of performance over the last seven, eight, nine years.
And what is really impressive to us is that when the company decided to shift their focus away from the Asian market that was usually more focused on price rather than safety and came to the western market, they very quickly landed some landmark partnership agreements and and contracts with the likes of CNHI via PowerChain. Those are billion dollar plus contracts. They have a strategic investment from Oshkosh here in The United States. We're building a new facility here in The United States. And what I think is key to the Western market is this focus on safety.
The company has a is fully vertically integrated from cell chemistries all the way to packs, the battery packs. And what has differentiated them, we believe, in the space is their is their focus on this sort of foundational technology, one of which being a gradient cathode, which allows for much greater energy density. And then in my view, most importantly, an aramid separator, which provides for thermal stability and safety, including in faster charging time that we think really differentiates them in the market. They they have been producing these batteries, as I said, in their facilities in China. They're expanding production in Europe and The United States, and we believe that the trajectory for landing landmark transact or landmark contracts and deals with commercial vehicle makers here in the Western markets is is pretty clear.
So we're very excited about the company. We launched the pipe with Morgan Stanley in January. We originally planned to raise $250,000,000. We upsized it to over 500. The company now has $800,000,000 of fresh capital to execute on their plan, and we think that the the next several years will will really start to put out the differentiation in the market.
The you know, this isn't a science science experiment. This technology exists. It's on the road, and they're also not using anyone else's technology. It's entirely theirs, and they're fully vertically integrated, which we think really differentiates them from their peers that are in the market right now. So with that, I'll pass it off to Shane, who is the chief operating officer and and the head of North America, and he will introduce the company and then further to Wenjong and Sasse.
So thanks for your time, and I I very much appreciate you guys having us.
Great. Thank you, Alan. Thank you, John, and UBS Energy. I we're gonna kinda try to reference the slide presentation throughout our discussion today. So we'll try to communicate that as we jump from slide to slide.
So we're kinda focused on slide six. I think the introductions have been made. And one of the things I wanna start with is our CEO and founder, mister Wu Young. Even though he's not on the call today, it's very important as MicroVest has started because it's foundational to where we are today. Mister Wu is a very gifted entrepreneur, and MicroVest is his eighth successful business, all which have been totally unrelated.
In 02/2006, mister Wu started MicroVAS in Houston, Texas by assembling a team of scientists that did not have a traditional battery background to encourage innovation. He keenly believed that the performance of the lithium ion battery was competing against the internal combustion engine rather than using traditional consumer battery technology as a starting point like so many other companies chose to do at the time. The three underlying battery features mister Wu envisioned fourteen years ago were fast charging to ensure mobility, long life to minimize the total cost of ownership, and the design for safety from the start given the insatiable demand for higher energy density. These features are foundational to the innovative technologies and products that we are shipping to our customers today. You If look at the next slide, which is slide eight in our deck, I believe it's numbered, you'll see it where it says microvasse at a glance.
You'll see that our batteries are integrated in more than 28,000 vehicles running in a 160 cities across 19 countries and have traveled over 3,800,000,000 miles. MicroVAS is a fully vertically integrated battery company, meaning we design, develop, and manufacture a complete battery system starting with the battery materials, cells, modules, packs, and the battery management system. Why is this important? It enables the leading battery cell performance that we offer today. It shortens the development life cycle and offers more flexibility when customizing a battery solution leveraging our breadth of capabilities.
Finally, a vertically integrated supply chain eliminates stack margins. MicroVac's experience in business started by concentrating on China, the largest and fastest growing electrification market at the time, where the battle for business was one dimensional, but lowest price won. Over the last eighteen to twenty four months, MicroVas has shifted its focus to the European Union and United States, where the battery performance of our products are highly valued, resulting in numerous customer wins. Our products and technologies have been validated by some of the largest OEMs in the world resulting in landmark contracts that could potentially exceed $1,500,000,000. MicroBlast is highly differentiated in four key areas.
First, we have a strong product portfolio with an existing customer base where we have one more business than we have capacity for. Having recently raised over $800,000,000, we have already initiated our capacity expansion plans to support our rapidly growing customer demand. Secondly, our battery solutions that have been on the road for over ten years allows us to move the discussion with our customers from a theoretical estimate to field validation. Very few battery companies can offer this level of proven data. The next area of differentiation is our battery components.
We manufacture a high temperature aramid separator, which the primary use for a separator is to keep the anode and cathode from coming in contact with each other. This product is essential in maintaining the margin to safety as the industry pushes for higher energy densities. Finally, MicroVas is the only company who can produce a full concentration gradient cathode material in high volume production. This technology once again improves the battery's margin to safety, enables higher energy density, and lowers cobalt content resulting in lower cost. Going to the next slide, you can see our footprint on or at least our geographical footprint as it is today.
We're headquartered in Houston, Texas. We have 1,700,000 square feet of building in Huzhou sign Huzhou, China, where we manufacture not only cell module and pack, but we also manager manufacture the four key components of the battery cell, the anode, the cathode, the separator, and the electrolyte. We also have a 170,000 square foot of building right outside of Berlin, Germany, where we manufacture module and packs. And then finally, we're in the process of converting an existing building Northwest of Nashville, Tennessee in Clarksville, where we will manufacture cell module and pack on in a seven 600,000 square foot building. Moving to the next slide, you can see the four key markets we're engaged in.
First, commercial vehicles. Commercial vehicles are made up of trucks, light duty vans, buses, trains, AGV, mining trucks, and specialty vehicles. In this case, you'd say, what's so unique about a commercial vehicle? Well, first of all, the asset's usually expensive. They traditionally operate in a predefined area often and are often required to operate twenty four seven to maximize its return on investment.
And so that also sets the type of battery specifications that are needed. Energy density has to be balanced with a with a long cycle life. Life is the number of times the battery is charged and discharged in its lifetime. And then you need to make sure that it's operating continuously, perhaps even longer than what a person's able to drive. So therefore, charging time becomes very relevant.
And so the batteries we make for these types of applications, we try to focus on ten to thirty minute charge time. We've also identified with our customers that the traditional commoditized passenger EV battery is not conducive for the commercial vehicle market. Therefore, we have to MicroVac has to manufacture these types of high performance batteries in order for these applications to get a return on investment or not have to be replaced sometime in its lifetime, the battery does, in order to just to match the life of the vehicle. We take the same product portfolio and and focus on high performance energy storage solutions, such as grid management or frequency regulation. Knowing passenger OEMs have plans to make their own batteries, we're engaged in providing battery components such as aramid separator and gradient cathode to the passenger vehicle market.
And then finally, we're using the same components for consumer electronic market so that they can increase the energy density or the time between charges for their devices. Probably as a follower of the market, you can see on the next couple of slides, there's no there's no problem with the size. When commercial vehicle is measured at $30,000,000,000 total available market, only 1.5% of it is electrified today. Looking at only 8.5% by 2025, that's still a 55% con compound annual growth rate. Not to mention that these commercial assets are fairly large vehicles.
So 30 to 40% of the value is made up in the battery itself. And as you can see, again, when you look at passenger vehicles, energy storage, and consumer electronics,
the size of
the markets are are are fair are really large. So without further ado, I'll pass it over to doctor Mattis.
Thank you, Jane. Hey. Good morning, everyone. Very nice to meet you today through UBS Energy Transition call. My name is Wendy Ann Matas.
I have been working on the development of lithium battery technology for over sixteen years. I hold 22 papers and 81 patents. In MicroVast, I'm responsible for the development of battery materials, cells, module, and the pack from the R and D to pre MEG production. As Alan and Shane have mentioned, MicroMaster has been dedicated in developing battery technology for electric vehicle for fifteen years. Following the global market, we have established R and D, production, and business started in Asia Pacific and expanded into Europe and The USA.
And we have been powering xPV worldwide for over ten years. On page 13, we demonstrated the comparison of our products with our peers, the largest ones in the world. As earlier noted, MicroVest is uniquely positioned in focusing on the commercial vehicle space. While most major peers are passenger vehicle focused. Why do we focus on commercial vehicles?
Because it's a earlier EV adoption, broader range of used cases, more stringent performance requirements, and resiliency due to use under harsher conditions. Passenger vehicles operate a couple of hours per day, while commercial vehicles needed to operate eight to twenty four hours per day. Therefore, the CD batteries needed to double to quadruple TD batteries cycle life and to offer faster charging and higher power capabilities. The total cost of ownership is calculated over longer lives that hiked the customer's focus on the performance. So the technology for commercial vehicle is more difficult but more profitable.
By the way, the CV market is massive. So CV is our prioritized choice with our current capacity. As a matter of fact, we are also supplying four passenger vehicles, which we will talk about on page 15. When applying our high performance battery created for CD onto PD, that would create amazing performance that we will discuss more in the next page. I would also like to point out that many of our peers offer single chemistry, while MicroVest offer all the major chemistry on the market, NMC, LFP, and LTO.
And our product in the first top three rows on page 13, that has been in production as early as ten years ago, and each of them outperformed their peers. These products are third party tested, market validated, both through customer wins and extended real world deployment experience as shown on page 10. Beyond the historical wins, we also have a robust pipeline of identified opportunities that Saishau would bring insight to you in the commercial session. The last role on this page is the next generation battery product to come, which have been validated by Argonne National Lab. This product offers 30% higher energy density comparing with the current PV technology and still yet offer the fast charging and the long cycle life capabilities.
This technology has won Michael Bach's R and D 100 award in 2019. It's like the Oscar award in all the technology awards. People do dress up to attend this award ceremony, And we were the only winner in the lithium battery field. There are more products in the pipeline such as solid state battery, lithium metal battery that can reach more than 1,000 watt hour per liter energy density, and 80 degree Celsius high temperature cells, which is highly appreciated by a high end TV company for their sports car application. On the next page, I'd like to put things in perspective.
So what type of BEV performance can we create with our product? On page 14, on the right, this page a general spec of a high end BEV in the market. If we replace the battery with micro max high energy product that has been in the production since 2019, the n m c dash two, the whole car can be fully charged in thirty minutes. And with one full charge, our battery can offer 20% more mileage and roughly three times of the cycle life. With these parameters, that would lead to about 1,000,000 miles of lifetime throughput, which is a three to four times of the regular EV.
But, of course, we don't need a 1,000,000 miles from a passenger vehicle. Not yet. But that's exactly our point. Our batteries are made for more demanding applications, and the PV commodity batteries cannot meet the lifetime requirements of a commercial vehicle. If a multiple replacement take place, that would greatly damage the total cost of ownership.
We want a billion dollar level business from one of our European customers. This is one of the such as significant ones that he will share with you in his discussion. I'd like to talk about how we want technically. Considering the size of this project, we were competing with all major players in the world. Amongst all of them, MicroMaster offered the highest energy density, and the MicroVest was the only one that meet the fast charging and the long cycle life requirements from our customer.
And our design to fit feature enabled by the vertical integration fit the customer's space claim perfectly. And the the same technology is also being evaluated by a number of the German PV makers and The US OEMs. So summarize, MicroMaster have developed the products for CV applications, which exceeds the performance of a PV commodity batteries and the demand to treat our superior product with real world deployment experience. An immediate question may rise, how? How did you do it?
I would like to summarize our technological success into three columns on page 15. Microvast has the broadest chemistry, the capability of manipulation all the way into the material level, and a whole spectrum of battery products, which have been verified and benchmarked that are highly differentiating. From the end user to chemistry, we have the complete approach, the full customization that leads to the faster development cycle product to market, higher efficiency, cheaper development cost, and better quality guarantee. So let's discuss each column in details. On the left, the heart of a BEV is battery pack.
All the energy in the pack come from the cells, and the performance of the cell fundamentally depends on battery materials. To build the best the highest performance battery, that's what the data MicroVac into the vertical integration, just like Apple building microprocessors. MicroVac has over one decade of designing and manufacturing expertise in battery components from a cathode material, anode material, to separator, to electrolyte, gaining an intimate knowledge of how they interact with each other under specific conditions. And that differentiated us from most of other battery makers who source their components from vendors. Also, it's important to note that cell makers do not have the right to produce the materials that they did not invent or have the license for.
While MicroVac has invented and manufactured all four key battery materials to ensure the unique performance in the cells and further into module and the pack and also to ensure the leading time. The material patents are the strongest patents that are legally protected for decades. And our success is founded on our deep technology portfolio, which is fully owned and protected by over 550 patents and thousands of know hows within the company. Amongst all the battery material MicroVac makes, two products stand out that no one else has in the world. The 100% polyaromide separator and the full concentration gradient to tackle the material.
I will talk about them one by one. So the current separator in the market are made of polyethylene or polypropylene. That's the same material as plastic bags and plastic bottles. Microvast manufacturers one of the kind, high temperature, 100% polyalumate separator that is based on the same material as bulletproof vest. Without expanding thermo, mechanical, chemical, electrochemical stability, polyarramate, this material itself is intrinsically non flammable.
It does not melt. It does not dissolve any solvent. It's extremely difficult to to handle, but MicroMaster managed to make it into 10 micrometer thick, several meters wide, thousands of meters long industrial separator product that increased the the thermal stability of the current separator from 160 degrees c to 300 degrees Celsius. That is nearly 600 Fahrenheit. Yeah.
So with this improvement that we run a US ABC project, so that's the organization come that's formed by GM, Ford, and Chrysler of award of $1,000,000 to benchmark our polyaromide sector. This has been publicly announced by US car. So one of the technical leaders has stated that the all Aramid commercial separator is the greatest breakthrough in lithium battery separator technology in the past twenty years. Another unique product is of microvascular is low concentration gradient cathode material. Cathode material offers all the energy in a lithium ion cell, and it takes more than 50% of the cost of a cell.
Microbiased is only one in the world who can produce the full concentration gradient to the cathode material in the industrial scale. As shown in the illustration, the FPG material differentiates from all the other homogeneous cathode material in the market. With this technology that we can be specific about the distribution of the transition metal elements. We can manipulate it at the atom level so that we can maximize the energy contained in the particle with high safety and the lowest cobalt content to minimize the risk and to minimize the cost. So the FCC material that we have been producing internally since 2018 that can offer 20% higher capacity than what's available in the market and still yet about 10% lower in cost.
This has been validated by Argonne National Lab, and we also won a low cost, fast charging US car project with this technology. Again, it has been validated by all the biggest rates in USA. So our technology is to supply these materials to passenger car makers and consumer electronics. This business strategy is clearly profit oriented to ensure the faster ROI. On the second column, have this whole spectrum of the sell product that has been verified and benchmarked.
This allows MicroMaster to access the application of all the industry. And with this promise that makes us less vulnerable to the commercial success of any single chemistry. We talked about the LTO and NMC in the previous slide, and we are currently supplying LFP to SAIC, Shanghai Motor, the largest OEM in China. In this project, we competed with the CATL, the largest cell supplier in the world. We won by performance and by price.
This one also demonstrated our production line has the high quality control up to the most stringent automobile standards. The last but not the least, the vertical integration. As I mentioned, to build the best, highest performance batteries drove a microvasse into the vertical integration, which confers significant competitive advantage to shorten the product development cycle to win the race in the technology evolution. And the two, that can minimize the cost to ensure the quality control from the materials to the end product, from R and D to mass production. And we can customize the solution to the client's need.
It also build a higher bar for our competitors to reach because material development takes decades. And it also give us the flexibility to work seamlessly with any customer. We can offer at the whole power solution level, at the tech level, module level, cell level, and in the future, at the component level. I'd like to wrap up this page by the by quoting one of our customer, a large integrator. They say, since MicroMaster can provide a fully integrated battery system based on industry leading components and chemistry, Some of their competitors do not offer the ideal chemistry.
The other competitors cannot deliver the performance of today, leaving Microbus with the preferred battery solution and a two year market lead for a new and growing application. On page 16, I'd like to give you a glance at Microbus mass production line from all the four key battery materials to standardize the cells module and the pack. So as for the material, we currently have a 3,000 tons per year of the electrolyte production has been running for ten years. And we have 2,700 tons per year annual material production, 600 tons per year of capital material production, and 5,000,000 square meter per year of production. And we also have the the video available online for you to review more of our company facilities and the business.
On the top right corner, there are two examples of our power system solutions that we offer for delivery truck and the commercial buses. We have invested in significant manufacturer capabilities to support existing contracts and the future growth. With that, I'd like to pass on to Sasha for him to tell you more about our commercial successes.
Thanks, Sanyon. Good morning, everybody. My name is Sasha Kesselborn, and I'm the chief revenue officer. Vertical integration as well as the variety of chemistries from hybrid over full electric to fuel cell battery applications and later to solid state and other future technologies are the basis of our commercial success, as my colleagues already mentioned. But I need to underline this once more.
Total cost of ownership calculation in our field of commercial vehicle solutions are very important. And with our battery technology, high safety, high energy density, as well as long cycle life, the TCO is easier to achieve than with classical mass market passenger car standard chemistries. Our chemistries are the perfect fit for commercial vehicle applications. And for today, over engineered for the classical car mass market needs, This top notch technology, fits incredibly good to commercial vehicles. But let me jump to a few strategic customer of ours and show you the proof of concept and start with SPT.
We signed an industrial and commercial cooperation agreement with FPT, the global powertrain brand of CNHI Industrial Group. We developed a full battery solution for FPT for commercial vehicle applications. We enabled SPT to design and assemble battery packs in house at their facility in Turin, Italy. We supply SPT with battery models, which we manufacture in our new facility near Berlin, Germany, and 10 to FPT in Turing, where they will be integrated into the locally produced battery packs. These solutions will be offered and integrated in CNHI industrial vehicles as well as to other third party customers.
The second customer I would like to mention is TEDF, the second biggest tier one supplier in the world. The tier one truck in the photo on on the photo, which you see on the left side of the of the presentation, is a joint project between TEDF and Microbus. In this partnership, Zedev is delivering the electric motor and the electric powertrain, and we are delivering the battery solution for this commercial vehicle. And, again, through that, we have a new full electric platform solution. Dana, we do the same concept.
This Magbus is a strategic supplier of Dana. Dana is delivering the powertrain, and we are delivering battery for electric platform solutions. Oshkosh agreed to make a $25,000,000 strategic investment to the pipe. We signed a joint development agreement highlighting future battery collaborations integration. This long term partnership will support OSCAR's technology strategy, which is focused on electrification and the development of advanced products.
All these customers are focusing on electric platform content, and this was the help of Microbus batteries. Let me mention another one. CargoTech, the port equipment customer. Applications run twenty four hours, seven days a week. These are really heavy duty applications.
And for this, you need a special chemistry, which Microbus can offer. Let me mention two further customers. One is a new one, Zafzla. Microbus was nominated as the battery supplier for the full electric bus, hybrid bus, as well as for the retrofit bus of the French bus OEM. Under this framework, its supply agreement, Microbus will supply up to 2,000 battery packs over the next three years starting actually since March 2021.
MicroMasters battery packs are expected to be certified fully with e v r r 100 by June 2021 so that the vehicle can conform the ECE regulation. This is a very important message. To underpin our business plan from the business development side, the big advantage is that we are able to supply everything from battery components to separator to combating components. As an example, separator, full concentration grading cartridge material, as well as model cell model and packs. Very important further to underline this this this this our business plan is that the Paris agreement and the written commitment on of the commercial vehicle OEMs is to be for seal free in 2040.
This further underpins our strategy. Very important. By 02/1940, everything will be for seal free, at least in Europe. The last company I want to mention that in my session is Gaussson. With the French company, Gaussson, we are also supporting a full electric vehicle platform concept with our battery solution.
This new concept will be presented to the market within the next eight weeks. I'm very, very proud of that. Same, we do, as mentioned already before, with FPT, with TEDF, and Donna. Powertrain electric motors are coming from the tier suppliers. The bad way is coming from MicroVest.
MicroVest and tier suppliers are synchronizing it jointly with the aim to have an optimized electric vehicle platform solution available on the market. And this is and this is part of our business plan. And with and with having said that, I will pass back to Shane. Thank you, Sasha.
With only couple more slides to go, we wanted to focus on our traditional bottoms up forecast that you'll see, I think the page number is 18, showing our pipeline forecast for commercial vehicles only. It's by customer, by product based on products that are already in production today. So see, we have four regions. We had the criteria of if you make the forecast, then then weight it. We had 50%, 75, 90, and a 100.
So we had con that showed a pipeline of 4,100,000,000.0 after we applied the weighted average to it. And then 100%, the criteria means you had to have a signed contract in place committed from a customer. We identified one point $11,000,000,000 in opportunities between now and 2025. Some of the contracts extend beyond 2025. So through 2027, we had $1,500,000,000 in contracted revenue.
Almost 25% each year in contracted revenue rated at a 100%. We see that growing also over time as we focus more on the Western globe where those long term contracts are more common. Finally, the you'll see the slide revenue and EBITDA margin by market segment. We simply brought the commercial vehicle, which is in blue, forward on the revenue by segment. You can see energy storage solutions.
We start recognizing revenue in 2022. We've already started launching that strategy. Just trying to give it time for the design wins to come in place in terms of revenue recognition. For combattery components, we start selling the Aramid separator and recognize revenue starting in 2023, and for the gradient cathode, not till 2025. Finally, EBITDA by market segment.
You can see that our margins in the past have been in tailored in China and Asia where low price wins. In Europe and The US, the battery is tested, run through its paces, performance is is is confirmed. And then, finally and most importantly, it's valued and paid for. So that's why you see the the growing EBITDA margin over time. On slide 20, I just wanted to show you these several bullets as you read those.
I do have some closing remarks I'd like to make. MicroVest has established itself as a battery technology innovator with field proven product portfolio that has been validated by multiple marquee customer wins. As we continue to shift our focus to the Western markets, we see a $30,000,000,000 commercial vehicle market opportunity with only 1.5% of the vehicles electrified today. We see European regulations requiring a 100% renewable energy by 2040. We see a potential $2,000,000,000,000 US infrastructure plan allocating a 174,000,000 for electric vehicles for opportunities such as 645,000 federal fleet vehicles, 50,000 diesel transit vehicles, and 20% of our school buses.
The funding also calls for 500,000 electric vehicle charging stations and tax incentive packages. With so many promising opportunities on the horizon, MicroVas is in a providential position to benefit from these significant tailwinds. We believe the electrification revolution is underway and will be an exciting and prosperous ride for many years to come. On that note, John, we'll turn it over to you for questions. Perfect.
Thanks so much for that. Julie, can you give participants instructions on how they can log in any questions live on the call? And then I'll get it started
off with the first few.
Certainly. Right. If anybody like to ask a question, it's star then one on your telephone. If you want to withdraw your question, simply keep star two. All questions will be answered in the order they received, and you'll be advised when to ask your question.
All other lines remain on listen only. Just to remind you again, it's star then one on your telephone. Thank you.
So really enjoyed the presentation.
I I appreciate all of
your comments. Maybe a few things to dig into. Something that really came across in your comments that I think is one mentioned about a two year head start as well as just having a lot more real world experience. Can you talk
a little bit through how that sort of helps in a
little bit more detail on the selling process and sort of the data you can provide to customers and how you protect that lead? Yeah. That that's a good question, John. First of all, when we go and I mentioned it earlier in my comments. When we go to the table and, let's face it, we serve a fairly conservative industry.
And when they wanna know, hey. We're not the first ones to buy your batteries, so we have to go through that process. And then second of all, since we in the commercial vehicle space, they're really interested in making sure, hey. Can your battery last as long as the vehicle? Ten, fifteen years is what we're kind of targeting.
And how do you know? This is where the precipice of the conversation gets real. How do you know your battery will last that time that whole time? Because they're measuring the total cost of ownership. Will they have to replace that battery one, two times, or is it really gonna last?
We can sit down and say, look. We have operational data. Eight, ten years on the road, we can actually show it to them. They're most of our competitors have to go and say, okay. Well, this is what we know for the last one, two, three years.
And then they kinda draw this dotted line up into the right saying, well, based on this trend, it it it will really make it. And so we are able to take that theoretical argument and make it an actual confirmation of and validation, and it builds a lot of confidence early on in the discussion. In terms of how do you keep that, well, we just keep driving performance higher and higher, shooting from if we're focused at ten and fifteen, then how do we get to 20? Like, how can we drive the energy density and then use less battery? So those are the types of things that we're we're driving for to keep that lead that we currently have today.
Got it. Great. Thank you. And maybe just a question on some of the you have said some pretty interesting strategic investors, but a little bit on the on the nature of the any off take agreements. Are they sort of fixed price?
Are they fixed commitments on volume? Just how does that sort of play out with with the partnerships and off takes? Thanks. Gus, you wanna take that?
Yes, sir. John, it's a good question. And in general, we cannot really do a deep dive even if we would love to because we are very happy about our our very positive, long term agreement, due to the fact that we have signed NDAs. But, but more or less, you know, you have various of different strategic agreements. Some are some offer you a minimum or maximum volume, and and then you go on a in a conservative style, and you you judge volume over the next years in order to be always on the safe side.
Others in certain areas, have price escalation formulas. In other areas, you have a certain price fix. So it really depends on on on on on the on the on the strategic customer. It really depends on on that topic. So certain p certain customers do want to have a certain volume guaranteed.
So so this is all negotiations at the end, but I cannot really focus on on on one key customer right now because we have a lot of NDAs which are tied, and I cannot do a deep dive in that in that context.
I completely understand. I appreciate that. Maybe just one more for me before we go to the line. It it it it seems with your geographic footprint, there's a specific strategy to be diversified. Can you talk about, you know, the pros and cons of having this sort of global production footprint rather than centralizing?
I would just comment quickly and then pass it on back to Shane. The the global footprint is very important for us to have at least three production footprints because in order to participate in global tenders of our customers, then this is the only way how to do so. With just one manufacturing, it's very difficult because the tenders require today a certain localization in in in different regions, and this is very important with this. And that's the reason why we are also going to the market in order to increase our our production capacity. But I will pass it back to Shane because he can give you a further insight there.
Yeah. Absolutely, Sasha. I totally agree with you. There's a logistical aspect. I mean, some of these packs can weigh a ton, couple of tons.
So being in close proximity to your customer has obviously a lot of advantages. And then whether we want to or not, there's a political element to energy as we all frequently read about. And so each each of these major continents want the want the battery built in their area of the region to avoid any form of the dependence. And then, also, sometimes there's there's tariffs involved that make it unattractive to build from one location. So for those reasons, these are the beginning of those three areas, and and I think we we have it in the right place, and we'll just continue to expand both in Europe, US, and China going forward.
Perfect. Thank you for that, Sasha and Shane. Julie, do you have any questions on the line?
We do indeed. We have two. The first one comes from the line of Michael Lauren. Please go ahead, sir. You're live into the call.
Thank you. This is a question for doctor Mattis. Doctor Mattis, are you using, polymers in your, modules? And, if so, what what are the what needs are the the polymer materials not meeting in regards to your critical requirements?
Yeah. So the currently, polymer is used in the module and the pack. Most of it is for the insulating and the aspects. So some of the polymers need to have high insulation property, and it's that would need to also have good thermal conduction. So the insulating is for the electrical aspect and some for the thermal aspect.
So with this new requirement coming from the thermal propagation, so polymer is one of the solutions to prevent that happening in the module and the tech level.
But you're not using the polymers for the the frames of the module?
We we do. We do use that for the frame and module. Mostly for one, it's easier for the customization and lighter weight, and it also supports the the electrical installation.
Okay. And where are you doing the manufacturing of the energy storage system batteries? Is that being done in Tennessee?
Yeah. This will be done in Tennessee. We are currently building two to four gigawatt hour from a cell to module to pack production in Tennessee. And this would just support the North American markets from the commercial vehicles to energy storage.
Excellent. Thank you very much.
Thank you, Michael.
Thank you for your question.
We do have one more,
and it's from, Cameron Kinder. Please go ahead. You're live into the call.
Hey, guys. Thank you for taking my time today. So two questions. The first is over the next two to five years, as more and more companies enter the space, are you guys thinking about maintaining adequate supply of the raw materials that are needed for cell development?
So, Cameron, the MicroMaster has been in this business for over fifteen years, and we have been in production for over ten years. And with that, we have created very good relationship with our suppliers, build multiple strategy to supply agreements with the key suppliers. So that that's one of the the key method we apply for global supply. And for the future supply, we have the the recycling strategy developed internally. Although some of our products has been running in the market for over ten years, but they are still maintaining above 85% of the retention.
So we we are getting prepared but have not received our text from the market yet. But when the time is ready, we will be able to recycle our own products because we also have our own cathode material production line. So with that technology altogether, we will be able to make the recycled products into brand new high energy density, better performance products.
Great. Thank you guys for that. And then the second one, just beyond the manufacturing side, as you continue to grow and scale this business that you as you mentioned, you've been in it for a long time. How are you potentially managing any potential risks from accelerated growth, particularly as it relates to manufacturing and what safeguards you have in place to really ensure smooth execution over the next three to five years?
Yeah. Cameron, so my callback, the planning is everything is melted together. It's organic. So we do not build the production capabilities without the high confidence of the order because the the valuation, as we previously mentioned, can take about one to three years depending on the application. And we have built multiple production lines.
With that experience in house, we will be able to have the production line started in time when we have that the contract in New Horizon. So everything is planned. We would not we would try to avoid any unexpected type of explosion, this type of demand. So it will be all planned altogether with the the sales, the production, the supply agreement that should be all in place.
K. Thank you, guys.
We'll also have some flexibility going forward. For example, we could ship cells from The US or China to Germany. We can ship all the product from China. So even if it's off by a month or two, there there'll be some inherent flexibility just by our our global footprint.
Got it. Yeah. That's really great to know, especially as geopolitical risk continue to increase over time.
Absolutely.
Actually, I was glad you to guys are already thinking far ahead. I'm happy to hear from you guys again, best of luck with the rest of the process. Appreciate it. Thank you.
Thank you, Cameron. We do have two more questions. The next question comes from the line of Will Stone. Please go ahead, You're live into the call.
Hi there. On one of the slides, you show that the batteries are compatible with four different cell technology cell chemistries. Mhmm. Is there gonna be a winner in terms of there's one that people adopt over time? Or or what's the thinking behind staying compatible with so many rather than hindering anyone?
I'm sorry. Can repeat? Yeah. So the I did not quite get your question. Were you asking as with all the chemistry in the market, what's more to come?
Yes. So you showed four different cell chemistries. I wondered whether there there's a kind of emerging winner, or or do they all have very different applications and and how you see that dynamic evolving?
Oh, yes. Yeah. So a great question. So we have a data for Spectra is to meet a quite a different demand in different industry. So what's dominating the passenger vehicle right now is mostly NMC chemistry.
That that's the major chemistry from the LG, Samsung, SK, and, yeah, Panasonic. Tesla use NCA. It's essentially the same chemistry. And the LSP is has a good market in the lower performance and low cost type of applications such as the the energy storage. And LTO is a very heavy duty product.
So with our technology, this full box can be fully charged within six minutes and it can do more than 20,000 cycles. And that's the product that we have sent out in the 02/2011, and it's still running and maintained above 85% of the retention. And it's also a great choice for start to stop battery for the HEV, mining trucks, the HEVs to move anything, including the huge containers, and also a good choice for the wind storage frequency regulation. And it's also the safest battery, the lithium batteries. So would it be consider to replace the lead acid battery in Manhattan, for example?
Yeah. So each technology have its unique selling point. Microbikes have all of them so that that that also to reduce our risk of any single chemistry would be winning one major application.
And and what prevents people just choosing the best chemistry? It sounds like LTI is is best in terms of its profile, but I guess is is cost prohibitive on that one?
Yes. LTIO has a lower energy density. So the energy density of the LTO, it's about half well, less than half of n m c dash two. Yeah. It's about one third, actually.
Yeah. So it's energy density we prevented it from putting into the BEV. But it would be a good choice for a smaller pack just like a HEV were a starter cell battery. But it's more durable. Yeah.
It's more higher. Yeah.
Perfect. Thank you.
Take your question, Will. We do have one more question, and it comes from the line of David Shi. I'll just pop you through now. You're live into the call. Please go ahead.
Great. Thank you. And thanks for the presentation. Curious about, a couple things. One, what form factors of cells are manufacturing?
And then with the Tennessee plant, which chemistries and foreign factors do you plan to manufacture there?
So we we make a pouch itself. Okay. So in the r and d center, we look into all three form factors. In our production line, we make a pouches out, the stacking pouches out. And in the Clarksville, Tennessee, we can actually make all chemistry started with NMC chemistry.
K. So any any thoughts about moving, say, to Prisonatics?
We will be very careful moving in there. We will check into the IT space. So the issue is being evaluated. Yes.
Okay. Thank you.
Thank you for your question. There are no further questions on the platform.
Okay. Great. As we're about a minute over, we're gonna start to wrap there. Before I turn it over to Shane and or Alan, if you'd like to make some closing comments, just to wrap it up, I wanna thank first of all, Julie, the operator, thank you so much for helping us today. Thank you to all the UBS clients for for the questions.
Really appreciate it. As we're a couple minutes over the hour, I would like to remind people, you know, these calls are really meant to be an introduction. And if you'd like to sort of dig deeper into micro dash, do feel free to reach out to me or directly to the company. I'm happy to connect you. And so with that, simply, just a reminder to participants on this call, we have a number of calls still coming up in April in the call series.
We'll be discussing recreational EVs with Tiger Motors on Friday as well as we'll be doing charging infrastructure, residential solar, improving EV efficiency, and electric and gas industry sustainability goals later this month. If you need details for any of those calls, do feel free to reach out to me directly. So with that, I'd like to before I hand it back over to you, Shane, I'd like to thank you, doctor Mattis, Sasha, and Alan for the presentation today. It's a very interesting story. I really appreciate you taking some time out of your day to share with the UBS and UBS clients.
So back over to you for any closing comments, Shane. Absolutely, John. We're very thankful for the invitation, UBS Energy, everyone that joined the call today. Perhaps, John, you said it well. This is an introduction maybe to MicroVac, and you haven't not too familiar with us.
But now we've gotten to know each other. We're off and running. It's an exciting time to be in electrification. And hopefully, this is the first of many meetings that we get to meet with your audience going forward. Thanks again, John.
Perfect. We'll wrap it there, Julie. Everyone have a great day.
Thank you, John. That concludes your conference call for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.