Nuvve Holding Corp (NVVE) 2021 Q3 法說會逐字稿

Good morning, and welcome to Nuvve Holding Corp.'s Third Quarter 2021 Earnings Conference Call.

It is now my pleasure to introduce Eduardo Royes. Thank you. You may begin.

Thank you. On today's call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. This morning, Nuvve issued a press release announcing its third quarter 2021 results. Following prepared remarks, we will open up the call for questions.

Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Nuvve's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in Nuvve's filings with the SEC and in the earnings release issued today, which are available on our website. Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances.

With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve. Gregory?

Thank you, Eduardo, and good morning, everyone. Thanks for joining us today to discuss our results for the third quarter. World leaders have been gathering in Glasgow, Scotland, discussing and debating difficult solutions. We, as global citizen, must implement to prevent the impact from climate change. Transportation electrification is obviously among the highest priority as this is close to 30% of U.S. greenhouse gas emissions. In electrifying transportation, we believe our vehicle-to-grid technology represents a mission-critical solution, as it allows us to utilize electric vehicles much more efficiently and cost effectively and for the [public group] and grid support while vehicles are parked.

In doing so, vehicle to grid alleviates the need for us to build as much as 40% more electric power generation capacity to support transportation electrification. It also provides a means for us to increase the economic value of renewable, help strengthen load curve and help deliver energy equity. Before I go over our latest developments, I want to share how thrilled we are about the $1.2 trillion bipartisan infrastructure bill that the U.S. House of Representatives passed on November 5. This set aside $7.5 billion to create a nationwide network of EV charging stations and expedite the adoption of electric cars this decade; $7.5 billion for electric buses and $65 billion to fund an investment in clean energy and renewables for the nation's electricity grid and promises to create a more resilient system. The bill also contains opportunities for grant funding for installation of V2G infrastructure. These are all markets to be exposed to leverage as we continue to execute on our mission.

At Nuvve, we are incredibly excited about all the work that we have and where -- and the important partnership we are building in a variety of segments across the broader EV ecosystem. We continue to roll out our proprietary vehicle-to-grid technology and services and advance our mission of electrifying the planet through our Intelligent energy platform. It has been a very busy year for Nuvve. Since entering the public market at the end of March this year, we have already made tremendous progress. To name a few of our highlights. In May, we introduced our V2G hub model. This serves EV fleets combining energy from multiple EV batteries to form virtual power plants to generate energy to be sold back to the grid and provide services that help with grid stability, predictability and resiliency.

Shortly after that, we followed with the announcement of our Levo Mobility joint venture with Stonepeak and Evolve and closed that transaction in the third quarter. As you know, Levo is delivering turnkey Fleet-as-a-Service solutions for fleets of all type of vehicles that we believe can facilitate a much more rapid transition to EV. The $750 million that can be scaled up to $1 billion is the largest amount committed to support fleet electrification.

Over the past several months, we have also formed and continued to advance our partnership with Blue Bird Corporation, the leading independent designer and manufacturer of school buses. The first electric school bus is produced by Blue Bird with our V2G technology we delivered earlier this year in Illinois. Through our Levo JV, we are also now providing our Fleet-as-a-Service offering through Blue Bird's nationwide distribution network, enabling their customers and dealers to have access to fully finance electric school buses, along with associated charging infrastructure, services and energy management.

Yesterday, we announced the latest advancements in our partnership with Blue Bird, an agreement for Nuvve to install up to 200 charging stations with dual dispensers for up to 400 buses at the Blue Bird delivery facility in Georgia, which will create a V2G hub that allows buses to act as energy storage assets while waiting to be transported around the country. I will speak more about that shortly.

Since March, we have continued to form an expanded partnership and signed new customer contracts with companies spanning EV fleet owners, utilities and EV OEMs. And our progress continued in the third quarter with new partnership across a wide range of market segments, including commercial fleets, buses, government purchasing, consumer vehicles as well as utilities. This is exciting because we are continuing to expand beyond our initial area of focus, shining new light on the tremendous potential we have in front of us.

Key partnerships and contracts we completed during this third quarter and in recent weeks, include: first, a competitively awarded contract with Sourcewell, a cooperative purchasing organization. Through these awarded contracts, government, education and nonprofit entities can leverage Nuvve technology and expertise to better manage their EV assets and future-proof their investments. Next, in October, we announced the first-of-its-kind V2G partnership in Iberia with Wallbox designed to reduce mounting pressure on the grid and offer users significant financial incentives. The partnership will incorporate Wallbox's pioneering hardware named Quasar, the world's first DC bidirectional home charger into our patented V2G software technology platform, GIVe.

In addition to reducing energy costs, Nuvve's V2G technology can help users transition a more sustainable lifestyle by helping minimizing their carbon footprint. By optimizing the charge and discharge based off the CO2 intensity, users can help offset CO2 emission by an average of 250 kilograms per car per year. The partnership comes at an opportune time when pressure on the grid is rapidly rising in the Iberian Peninsula, where household energy prices have risen by 35% over the last year. Giving residents access to this cutting-edge technology allows EV users to compound the positive effects of their investments in zero-emission vehicles and contribute to a cleaner planet.

Turning next to an update on our business in Denmark, where we operate through our subsidiary, Nuvve Denmark ApS. We continue to see the value and economic viability of vehicle-to-grid technology, which has been successfully demonstrated and deployed in areas where favorable market conditions. We are also pleased to share we've had 5 years of V2G operation in that country.

We also have a few updates regarding our Levo Mobility JV. Levo recently announced a partnership with BYD, a leading EV OEM. As part of the collaboration, we will integrate our vehicle-to-grid technology with a mix of BYD electric vehicles and jointly deploy up to 5,000 EVs over the next 5 years. By integrating our vehicle-to-grid platform with a variety of medium- and heavy-duty electric fleets, we can introduce these vehicles to the grid in a much more intelligent and sustainable way, help integrate more renewable energy resources and ultimately, accelerate the reduction of harmful CO2 emissions. We're excited about this partnership and look forward to growing it and delivering revenue in the near future. We also continue to build out the leadership team at Levo. And during the third quarter, a new Chief Commercial Officer, a new Chief Operating Officer and Chief Strategy Officer, were brought on board. These executives have impressive skill sets and experience that will help accelerate Levo's mission and drive further opportunities for growth.

And now I'd like to circle back to our latest announcement with Blue Bird from yesterday. This will be the first-of-a-kind V2G hub with many more to come. V2G hubs are the future of electric grid charging. We have to introduce EV to the grid in a smart, integrated way, and our intelligent energy platform allows us to do that by transforming electric vehicles into energy storage assets. Our hub model centralizes renewable energy generation, bidirectional EV charging stations and a suite of EV services while providing financing options to purchase EVs. This combination of centralized charging infrastructure and end-to-end grid support services make it easier for fleet to electrify by reducing large, upfront capital cost while our V2G technology reduces the cost of fleet ownership by enabling fleet vehicle batteries to store and sell energy and grid services, including from renewable sources back into the grid.

We are thrilled to announce our first partnership to make this vision come true. As I noted earlier, through this agreement with Blue Bird, we will install up to 200 charging stations with the dual dispensers for up to 400 buses at the Blue Bird delivery facility in Georgia, where electric buses coming out of the production line will be stored. I'd like to provide some additional detail on this agreement, which is a good model to use as we consider the potential revenue opportunity for Nuvve. I'm going to speak about megawatts under management, which is a metric we use to quantify the aggregated amount of electric power capacity from our deployment of V2G chargers, V1G chargers and stationary battery that Nuvve controls and can supply under ideal conditions. I will also speak to revenue per kilowatt-year, which is a negotiated amount paid by utility for providing grid services.

With 400 buses, Nuvve's system will create a capacity of up to 25 megawatts under management. Revenue per kilowatt-year paid by utilities for providing services to the grid can range from approximately $85 to $300 based on what we've seen in the market and depending on the region. At the low end of the range, with 25 megawatts under management, there is potential to generate in excess of $2 million in recurring grid services revenue annually for the V2G hub at the Blue Bird facility when fully deployed.

Of course, we expect our ramp-up period before we reach full capacity of 400 buses, but this provides a good picture of the potential. We anticipate finishing installation of the charging station at the Blue Bird facility by the end of next year, with the ability to begin generating grid services from Nuvve in 2023. Further, the contract term with the Blue Bird -- with Blue Bird is for 20 years, and we see opportunity to continue expanding the partnership as the company continues its efforts towards electrification. David will speak in more detail about our megawatts under management and potential future grid service revenue as he discusses our backlog.

To sum things up, we are extremely pleased with the partnership we've created, the new contracts we signed and the continued progress we are making. As we have discussed previously, the transition to electric vehicle is among the largest microeconomic shift to be experienced in our lifetime, and the market for V2G is over $6 trillion. Our vehicle-to-grid technology and services help make electric vehicles more affordable, catalyze EV adoption and helps integrate renewable energy. In essence, we are bridging the gap between transportation and energy.

We are continuing to roll out V2G charging stations, building a network of infrastructure to expand the use of our technology and services, which over time, will generate significant long-term revenue with a high degree of visibility. We're increasing megawatts under management. We have a growing backlog and an even faster-growing pipeline as a result of strong demand and contracts we've signed with key customers, all of which are strong indicators of future revenue potential. We believe we are well positioned to capture the tremendous opportunity ahead of us in the market. Let me now turn the call over to David.

Thanks, Gregory. I want to echo Gregory's sentiment that we are very pleased with the progress we are making that will drive future revenue over the long term. In the third quarter, we generated total revenues of $1.2 million compared to $1.3 million in the third quarter of 2020. This was a decrease of 13.3%, primarily due to a decline in grant revenues, offset by higher charger sales. During Q3 of last year, we earned revenues on a grant project in Japan that was nonrecurring.

Compared to the second quarter of 2021, our revenues increased by 19%. Product and service revenues through the third quarter of 2021 represented 59% of total revenues compared with 33% in 2020. We expect product and service revenues will continue to become a larger mix of our business and grant revenues will be a smaller mix. Margins on products and service revenues was 43.2% for the third quarter compared to 94% for the third quarter of last year. This year-over-year change in margins was a result of a change in sales mix of DC chargers, AC chargers and engineering services. DC charger gross margins generally range from 20% to 25%, AC charger gross margins are approximately 50% and engineering service gross margins are 100%.

Total SG&A and R&D expenses were $8.2 million for the third quarter of 2021 compared to $7 million in the second quarter of 2021 and $2.1 million in the third quarter of 2020. This increase over the second quarter of 2021 was primarily attributable to increased payroll expenses, recruiting fees and incremental expenses associated with Levo. Levo incurred $0.5 million in operating expenses during the third quarter. Other income and expense increased by $432,000 from $46,000 of income for the 3 months ended September 30, 2020 to $478,000 of income for the 3 months ended September 30, 2021.

Other income and expense included private warrants, which are revalued each quarter based on (inaudible) closing stock price and resulted in $556,000 of income for the quarter. Preferred dividends associated with the issuance of $3.1 million of Levo preferred shares was accrued at $39,000 during the quarter and subsequently paid in October and (inaudible) was accrued at $100,000 during the quarter. Accretion represents the difference between the estimated future redemption price value of the outstanding preferred shares and the carrying value of the shares. Net loss attributable to Nuvve's common stockholders for the third quarter was $7 million compared to $0.7 million for the third quarter of 2020.

Now turning to our balance sheet. We had approximately $40.7 million in cash as of September 30, 2021, and remain in a strong position with the funding from the transaction and our pipe investment. Inventory increased to $6.2 million at the end of the third quarter from $4.2 million for the sequential second quarter. This increase was due to the receipt of 4 electric school buses, which we intend to lease to several school districts, along with the additional inventory build of high-power DC chargers. Given existing industry-wide supply chain constraints, we intend to carry higher inventory levels in the coming quarters, and we have entered into purchase commitments with key suppliers to help ensure that we have sufficient inventory on hand to meet customer demands.

During the quarter, we capitalized $3.1 million in deferred financing costs associated with the $750 million capital commitment available to Levo. These costs will be amortized to additional paid-in capital as we deploy capital. To pay for these transaction costs, Levo issued $3.1 million of preferred shares to Stonepeak and Evolve. The preferred shares were classified as mezzanine equity of $2.6 million and the balance of $0.5 million as a derivative liability, noncontrolling shares. The preferred shares were classified outside of permanent equity on the balance sheet of mezzanine equity as a result of the contingent put right redemption features available to the preferred shareholders. We determined that the redemption features embedded in the preferred shares are required to be accounted for separately as a derivative liability from the redeemable preferred stock because its economic characteristics and risks are considered more akin to a debt instrument, and therefore, not considered to be clearly and closely related to the economic characteristics of the redeemable preferred shares.

During the quarter, we used $10.1 million in operating cash flows, of which $5.6 million resulted from a net loss, excluding noncash charges and the balance of $4.5 million primarily resulted from higher working capital used to increase inventory levels and pay for the transaction costs associated with Levo. We generated $2.6 million in cash from financing activities during the quarter, which included $3.1 million in cash from the issuance of preferred shares. We used financing cash flows of $0.5 million for the transaction costs related to Levo's formation.

Now I'll discuss our megawatts under management and estimated future grid service revenues. Megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V2G charters, V1G chargers and stationary batteries that Nuvve manages and can supply under ideal conditions. Currently, our megawatts under management include chargers and batteries located throughout the United States, Europe and Japan. During the third quarter, we added 5.5 megawatts under management, increasing our total megawatts under management to 12.4 from 7.9 megawatts at the end of the second quarter, representing an increase of 79.7%. The 12.4 megawatts under management was comprised of 1.4 megawatts from DC chargers, 3.9 megawatts from AC chargers and 7.1 megawatts from stationary batteries. At the end of the third quarter, 4.1 of the 12.4 megawatts under management included customer agreements, allowing for Nuvve to earn future grid service revenues.

As we continue to sign agreements like the one with Blue Bird, which create future V2G hubs, we will further expand our megawatts under management. As Gregory mentioned, we expect the hub at the Blue Bird facility will bring in an additional 25 megawatts under management over time, and we expect to begin generating revenue from this deployment in 2023. This brings me to estimated future grid service revenues associated with our megawatts under management and megawatts to be deployed, which is based upon a combination of contracted grid service revenues and merchant-exposed revenues. Contracted grid service revenues results from negotiated revenues per kilowatt-year to be paid by the utilities. Merchant-exposed revenues is projected based on a number of factors and inputs, including the types of vehicles connected to our network, the expected [user experience] for those vehicles, the length of term of the customer agreements and the geographies of the deployments.

As Gregory mentioned, depending on the geographic regions of our deployments, the grid service revenue opportunities will vary. Currently in the markets where we are focused, we are seeing these grid service revenues ranging between $85 per kilowatt-year up to $300 per kilowatt-year. These revenues include a combination of contracted services and merchant- exposed services. Given the long-term nature of our customer deployments, these revenues are generally recurring over a period of 10 to 12 years.

As we expand the number of charger deployments and increase our megawatts under management, our ability to earn future grid service revenues will continue to grow. Going forward, we will provide periodic updates to our megawatt management and ranges of revenue per kilowatt-year we are seeing in the marketplace. We have posted a presentation to our Investor Relations website with more detail on these metrics. We hope today's discussion was helpful, and look forward to discussing any questions you may have today or in future discussions. And now I'll turn the call back to Gregory.

Thanks, David. While it is still early in our journey, we are making significant progress executing on our mission to accelerate the electrification of transportation through our proprietary vehicle-to-grid technology and services. We continue to be very pleased with the momentum across our business and the solid foundation we are building through our expanded partnerships and increasing customer contracts. While adoption will take time, our backlog, pipeline and megawatts under management are robust and growing, which is a strong indication of the future revenue we will generate while delivering value to our customers and shareholders. We look forward to continuing to update you along the way as we dive further into our journey.

With that, I will now turn it back over to the operator to begin the question-and-answer session. Operator?

(Operator Instructions) Our first question comes from the line of Eric Stine with Craig-Hallum.

It's Aaron Spychalla on for Eric. First, for us, on the BYD, can you just provide maybe a little more details on kind of expected timing as we look out over the next 5 years on how that might roll out? And then maybe talk a little bit about how that might be jump-starting things with -- in the market with other OEMs looking to gain traction there.

Yes. I mean we -- Aaron, Gregory here. We are looking at it as a portfolio of vehicles. We are actually -- we have some projects underway with BYD on the East Coast. And so now we have engaged in -- the first phase, is always a technology integration, right, to make sure that: one, the vehicles and the charging stations are all able to talk to the platform; and then two, we go through the qualification of that implementation. But in parallel, we also have some commercial deployment that are underway. Used trucks is an interesting category of vehicles that we've talked about in the past. So that would be one example.

All right. And then maybe second on Wallbox. Can you maybe talk about some initial traction there and kind of the planned rollout? And then just help frame kind of the opportunity there and kind of how you see that contributing to the P&L over the next handful of years?

Yes. I think this is very interesting, right, because this is a market that is -- that has been closed so far for our grid services. When I say closed, I mean, it was limited to basically large power plants in order to provide those grid services. There has been change recently. We have a project right now in Spain with different partners, where we are helping setting up the regulatory environment. And we've done that many times already in our history. And so two aspects to me that are very important. One is opening a market where we'll be able to access different value chain going from providing ancillary services all the way to basically providing a vehicle-to-home type of services, the whole range.

And the other thing that's interesting to me that the partnership with Wallbox is such that this will address the consumer market, which so far, as we've always said, we've been very, very focused on the fleet market. We obviously are not underestimating the consumer market. We've already said also that we will do that with partners. And this is a perfect example on how we are executing our strategy as it relates to expanding across a variety of segments and to focus on our core competency, which is aggregating the vehicles, making sure they are ready for the drivers while delivering a high commitment to the grid and while protecting the battery at the same time.

Good. Good. And then if I can sneak one more in. Just maybe on the competitive environment. I mean obviously, you're starting to win a lot more biz. Can you just kind of talk about what you're seeing there, why you're winning? I know there's a lot of guys in the market that talk about V2G but aren't really at the end of the day. So maybe just kind of talk about that a little bit further.

Yes. And that's very exciting to me, right, because on the one hand, as you said, V2G is a subject that is now becoming at the heart of EV deployment. There is an awareness that is building that EV deployments could have a significant cost if it's not done in a smart way. Now the benefits we have is that our technology was starting to be developed in 1996 by the -- with the Professor Willett Kempton at the University of Delaware.

During all this time, there has been significant work in order to deploy -- to develop the technology and then to deploy it around the world. We've also -- when we -- when I started Nuvve and the University of Delaware had developed some very key IP around the implementation that Willett Kempton has developed. And that IP was based on a working platform because in 2009, that platform has started to participate into grid services in the PJM region.

Since that, we've been building more and more services. We, I think, have an understanding that nobody else has, and I think this is why we are recognized as the V2G leader around the world, not just here in the U.S., but also as we were just now discussing in Europe, either in the Nordics through our joint venture with EDF, in U.K., France, Italy, Belgium and Germany, or in the Iberian Peninsula as well as the deployment that we have and the work that we've been doing with Toyota to show an early investor in the organization in Japan. So I think all those reasons are making us really the leader. And because we just have more experience, we have a much deeper understanding on how all those things have to work together.

(Operator Instructions) Our next question comes from the line of Craig Irwin with ROTH.

So Gregory, I wanted to start with the financial impact of Levo on the P&L, right? So this is a quarter you closed the partnership and really started. You mentioned $0.5 million impact in the quarter. Is it fair to take the August 4 start date and approximate a run rate of around $0.75 million a quarter in expenses? And then can you maybe share with us what the cost was prior to August 4 to set up and initiate this joint venture?

I will let David address this question.

Yes. Craig, I think our expenses that we show, which were $0.5 million this quarter, it will be about that amount in the fourth quarter, maybe a little bit more. So running $0.5 million, maybe $600,000 in the fourth quarter.

Okay. Excellent. And then cash expenses in front of the official launch? Were there any expenses you can call out?

Yes. You can see those that we capitalize included in deferred financing costs. So the total amount was around $4 million.

Okay. Excellent. Excellent. Then 200 buses, 25 megawatts, you're obviously looking at 125 kilowatts a bus. And that seems to be what most of the school districts would probably ask for. When we step back and look at the bigger picture, the total Levo joint venture, if it does satisfy the $750 million entirely with school buses. And President Biden seems to be doing the right things, but I know Levo has other customers as well. But just assuming it's school buses, that means you could have as much as 375 megawatts under management once it's fully invested. I mean is that a reasonable expectation? Or should we be potentially looking at smaller batteries and a broader mix to generate a slightly lower megawatt number?

I mean I think the trend we have seen so far is the batteries on the school bus, I think it's the heart of the question. The Blue Bird school buses have a battery of 155 kilowatt hour. I think this is serving most of the routes. Now you have routes sometimes that are slightly longer or special trips that would be needed to be covered. And so I think we're still on the low side of the size of the batteries. I think 200 kilowatt hour, maybe more than that. Maybe -- this is where we think the numbers are going to be, which is why we decided on that deployment to go with 125 kilowatt charging stations.

Now keep in mind, those are 2 dispensers on those. So the first implementation will be a switch, so it would be 125 on one side and 125 on the other side. But still, it gives us a little bit more flexibility in how we are using the current buses or buses that are maybe running at 200 kilowatt hour. I think between 200 and 300 kilowatt hour, that's probably where all the school bus would end up. But you're right. I mean hey, there is 480,000 school buses in the U.S. If you have 60 kilowatts on that, that's 25 gigawatts. If you put -- if you consider $100 per kilowatt-year, that's $3.5 billion of grid services that those vehicles would be able to provide.

And so this is why we are here, right? It's a gigantic market. We are at the bottom of the hill. I think we are putting all the partnership in place in order to support our vision, and we are executing on it. We're extremely focused on execution. And I hope this blueprint that we've been putting together will help us to expand. But finally, V2G is at the heart of many players, as Aaron was saying, and it's at the heart of the infrastructure deal as well. And so that's really what's very exciting for us, is we look at now all those vehicles are potential revenue generation sources for us.

So then when I -- I talked to Blue Bird about this a number of weeks ago. They had suggested that working with Nuvve and putting these systems in their manufacturing facility would allow them to hold inventory of EV school buses and to condition and exercise the battery, so that the battery is not impaired from sitting idle for months while the full batch of buses is prepared for delivery.

Would you expect full participation of these vehicles in grid services while they're parked in a lot as they bring vehicles off the line and they wait for their full allocation of different customer orders so they can deliver? Or is there potentially maybe a percentage of participation that we could see, given that the functionality will be used for a couple different things?

So that now there are a variety of grid services, I think this is what you are aiming at also, right, the grid service and the capacity. As we talked about here, we took -- the $2 million of annual revenue is based on an $80 to $85 per kilowatt-year. This is very much in the low end of the range that we see. And that means the limited amount of discharges that will happen at very specific times, especially when you have coincidental peaks, for example, on the system. Usually, those goes with like maybe 50 discharge a year or less. So it's not as it's extremely straining on the battery because it's a limited number of discharge that you do every year. Does that answer your question?

Yes. No, that's perfect. That's perfect. So then if I could ask a question about timing, right? So I know Phil Horlock was very excited about the opportunity in EVs and the support from President Biden, and what this is really going to mean for our children in different school districts across the U.S. Can you talk about the probable time line for the hardware installations and the revenue recognition around that?

Yes. And the installation, as we said, with the whole setup will happen sometimes in 2022, towards -- probably towards the end of 2022. And we are targeting to be up and running in early 2023. And the model we have is a limited number of buses initially and the scale that goes all the way to the 400 spots that we'll be covering on the parking lot. So there is a time line and a rollout that goes between 20 -- end of 2022 for the full installation, and then 2023 to 2025 in order to fill up all these spots and then we reach full capacity. This could go faster, but we wanted to have a conservative approach.

I think your question goes along the line up. We consider potentially trying to recognize more of this deployment early, but two things. One is our core business is really the vision of hubs is a long-term recurring revenue that it develops with such a deployment. In this case, it's 20 years now with $2 million-plus per year of revenue on that specific site, potentially being a lot more than that.

So the other piece is that there's still quite a bit of uncertainty on supply chain we have. The good news is we have inventory of charging stations, and we've been very careful in placing orders early on. But there is still some uncertainty in delivery. And therefore, this is also why we didn't see the need of trying to recognize as much as possible upfront, and rather to go on the path of building and helping our investors understand the true core of our business model, this recurring revenue that we are able to build and not based on the cost of the infrastructure and the maintenance, which we undervalue that those assets are providing to the grid.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Gregory for closing remarks.

Thank you. I want to thank everybody on the call today. I think, again, what I need to emphasize is this hub, which is really at the heart of our strategy. And the first one with Blue Bird is really the blueprint of the deployments that we are targeting. And not just in parking lot of manufacturers, but also in (inaudible) and other places. And I hope that we'll be able to share some progress on further deployment that we are working on in the near future.

Now to look really at the size of the business. We've talked about the school buses. But when we look globally at all the vehicles and the target that we have of converting vehicles into electric vehicles, 2040 could be a time where we have 3,500 gigawatts, if you have to account for 7 kilowatts per consumer vehicle. And if you consider, again, $100 per kilowatt-year, that's a market of about $420 billion. If you consider $240 per kilowatt-year, that's $840 billion market size. And so we have a gigantic market in front of us. We have very exciting opportunities. We have been very focused on fleet.

As I shared with you, we are also starting to look into the consumer space at the same time with a different approach than anybody else because of the capabilities of our platform. So we are very, very excited of the progress, and we look forward to sharing more about our progress in the near future with you. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and enjoy the rest of your day.