Winnie Dong

Winnie Dong asked for a detailed breakdown of the gross margin walk, specifically inquiring about the interplay between geographical sales mix, material cost reductions, and pricing pressures. She also asked about OpEx spending trends for the quarter and future projections.

Answer

CFO Jean-François Mady explained that Q3 gross margin was impacted by pricing pressure, higher production costs due to duties, and an adverse mix effect from selling more Polestar 2 and 3 than Polestar 4. He noted partial mitigation from product cost reductions and fixed cost reductions, highlighting tactical Polestar 3 sales in the U.S. due to expiring tax incentives. Regarding OpEx, Mr. Mady stated significant fixed cost reductions (around -10% year-over-year in H1) were achieved through marketing optimization and headcount reductions, with a target of 2,000 employees by year-end from 2,500.

Winnie Dong asked for a detailed bridge walk for gross margin, seeking clarification on the pros and cons of geographical sales mix, material cost reductions, and pricing pressure. She also inquired about OPEX spending trends for the quarter and future outlook.

Answer

CFO Jean-François Mady explained that Q3 gross margin was disappointing due to continued pricing pressure, higher production costs from duties, and an adverse mix effect from selling more Polestar 2 and 3 than Polestar 4. He noted tactical sales of Polestar 3 in the U.S. to destock before tax incentive changes. Regarding OPEX, Mady highlighted a significant decrease in fixed costs (around 10% in H1) from optimized marketing and headcount reductions, aiming for 2,000 employees by year-end, with acceleration planned for Q3 and Q4.

Winnie Dong asked for elaboration on the three sub-tiers within the Molecular Universe enterprise description, what customers seek from these tiers, and a reminder of other recurring revenue subscription options. She also inquired about the background and growth potential of UZ Energy, and which revenue streams (UZ Energy, Molecular Universe, OEM partnerships) SES AI is most optimistic about for growth in the next two to three years.

Answer

CEO Qichao Hu detailed the Molecular Universe enterprise sub-tiers (one, two, three) as differing in multi-database size, model depth, and knowledge, likening them to PhD, postdoc, and senior scientist levels based on answer depth and time. He noted that enterprise one and two are cloud-only, while enterprise three and higher joint development tiers offer both cloud and on-premise solutions, with joint development involving training 'Molecular Universe in a box' on user data. Regarding UZ Energy, Mr. Hu explained it serves behind-the-meter commercial and industrial ESS, with SES AI integrating Molecular Universe's 'predict' feature into UZ's BMS to improve safety predictions and reduce customer complaints. He projected UZ revenue to at least double next year from $15M-$20M this year. Mr. Hu expressed optimism for significant growth in drones (using the Chungju, South Korea facility for non-China pouch cells) and EV (using Molecular Universe for electrolyte discovery and Hyzen JV for manufacturing), expecting total revenue to at least double, if not triple, next year.

Winnie Dong asked for elaboration on the three sub-tiers within Molecular Universe's enterprise offering, customer needs driving these tiers, and other recurring revenue options. She also requested background on UZ Energy, its market, growth potential, and which revenue streams (UZ, MU, OEM electrolyte production) management is most optimistic about for the next 2-3 years.

Answer

CEO Qichao Hu detailed Molecular Universe's enterprise sub-tiers (one, two, three) based on database size, model depth, and knowledge, offering cloud and on-premise solutions for larger clients, including joint development. He described UZ Energy's focus on behind-the-meter C&I ESS, highlighting how MU's 'predict' feature enhances UZ's BMS for safety and end-of-life prediction, improving customer satisfaction and data collection. He expressed optimism for UZ to at least double revenue next year, significant growth in drones (Chungju facility), and EV electrolyte supply via the Hyzen JV, projecting total revenue to at least double or triple in 2026.

Winnie Dong of Deutsche Bank inquired about the strategic rationale for acquiring Uzi Energy, SES AI's plans to leverage the acquisition, and the company's broader M&A strategy and pipeline.

Answer

Qichao Hu, Founder, Chairman & CEO, explained that Uzi Energy provides essential hardware integration capabilities for the Energy Storage Systems (ESS) market. This allows SES AI to combine its Molecular Universe AI platform for material discovery (LFP, sodium-ion) and its PRECISE health monitoring system with Uzi's hardware. Hu emphasized that this integration provides access to high-quality, real-world battery data, which is crucial for enhancing the AI model. He also confirmed that SES AI remains open to other M&A opportunities that can leverage the Molecular Universe platform across materials, production, and various applications.

Winnie Yan Dong of Deutsche Bank asked for the rationale behind the new share buyback authorization and requested a preview of the pricing structure for the Molecular Universe software platform.

Answer

CEO Qichao Hu outlined a five-tier pricing model for Molecular Universe, combining recurring software subscriptions with service-based fees for on-premise deployment, custom model training, and full-service material development. CFO Jing Nealis explained that the share repurchase program is considered an efficient capital allocation tool, made possible by the company's strong balance sheet and growth outlook, and will not impact its liquidity runway.

Winnie Dong of Deutsche Bank asked for details on the revenue potential from the Urban Air Mobility (UAM) customer pipeline, specifics on the SoftBank agreement, help in sizing the AI business opportunity for 2025, and the company's progress on pooling cell data from peers to enhance its AI models.

Answer

CFO Jing Nealis stated that specific contract details with UAM customers like SoftBank are confidential but confirmed the project will begin in November and run into the first half of the next year. While declining to provide 2025 guidance, she noted 'tremendous interest' in the AI solutions. CEO Qichao Hu clarified that for electrolyte discovery, SES generates its own proprietary data, but for AI in manufacturing, it does receive and utilize cell data from its OEM partners, covering both lithium metal and lithium-ion chemistries.

Winnie Dong asked about the OpEx trajectory, specifically how to think about the inclusion and future spend for autonomy training. She also inquired about the anticipated production cadence for the R2 launch next year, particularly between the first and second halves.

Answer

Claire McDonough, CFO, explained that Rivian's philosophy is to drive efficiencies to self-fund strategic areas like autonomous driving training. She noted elevated R&D spend leading up to R2 launch due to prototyping and validation builds, with external spend expected to normalize in 2026 despite continued autonomous training ramp-up. For R2 production, she stated that salable builds and deliveries would begin in the first half of 2026 with limited volumes, followed by increasing production in the second half of 2026 and into 2027 to optimize the Normal facility's 215,000-unit capacity.

Winnie Dong inquired about the OpEx trajectory, specifically for autonomy training, and how to anticipate it going forward. She also asked about the R2 launch production cadence for next year, particularly the split between the first and second halves.

Answer

CFO Claire McDonough explained Rivian's philosophy of driving efficiencies to self-fund strategic areas like autonomous driving training. She noted elevated R&D spend leading up to R2 launch due to prototypes, which will normalize in 2026 despite continued autonomous training ramp-up. For R2 production, she stated salable builds and deliveries begin in H1 2026 with limited volumes, increasing significantly in H2 2026 and into 2027 to optimize the 215,000 units capacity.

Winnie Dong asked about the headwind from China mix on Aptiv's growth over market for the full year and what to expect for China mix into 2026 based on bookings and pipeline. She also requested an update on Smart Vehicle Architecture (SVA) bookings, customer engagement, and how OEMs are approaching SVA development (in-house vs. outsourcing).

Answer

Kevin Clark (Chair and CEO, Aptiv) stated that 85% of current bookings are with China local OEMs, focusing on the top 10, especially those with export ambitions. Growth in export revenues with these local OEMs is up 84% year-over-year. For SVA, Mr. Clark reported active engagements with roughly 20 OEMs, with booking opportunities over the next couple of years in the range of $5+ billion, primarily for zonal controllers. Activity is stronger in China, with some slowdown in Europe and North America, but picking up. 2025 SVA revenues are projected at $150-$200 million, growing at about 10% into future years, reflecting some push-out in software-defined vehicle adoption.

Winnie Dong asked about the factors influencing Mobileye's Q4 expectations, including any potential impact from recent chip supply issues. She also requested more details on the Lyft robotaxi program, including its launch timeline and economic structure.

Answer

Dan Galves, Chief Communications Officer, clarified that Q4 volume reflects full-year alignment rather than a trend, with no material impact from chip issues expected. Nimrod Nehushtan, EVP of Business Development and Strategy, stated that the Lyft robotaxi program, in partnership with an automotive producer, is in advanced testing stages for Dallas-Fort Worth, with launch details to be disclosed soon.

Winnie Dong asked about Mobileye's Q4 expectations, including any market factors or potential chip supply issues impacting the outlook. She also requested more details on the Lyft robotaxi program, specifically its launch time and economics.

Answer

Dan Galves, Chief Communications Officer, stated that Q4 volume should be viewed in the context of the full-year volume, not as a trend, and that seasonality was affected by tariff timing. He added that no material impact from chip issues is expected in Q4, but a small buffer is included in the guidance. Nimrod Nehushtan, EVP of Business Development and Strategy, confirmed that the Lyft robotaxi program in Dallas-Fort Worth is in advanced testing stages with an automotive producer, and the launch date will be disclosed soon.

Winnie Dong asked about the joint development of ceramic separators with Konin, comparing it to the Murata collaboration, and sought details on the nature, economics, and technology transfer of the Murata agreement. She also inquired about the new customer billings metric, its conversion to revenue/cash, its role versus revenue guidance, and its relation to past revenue recognition investigations.

Answer

Siva Sivaram (CEO, QuantumScape) explained that partnering with specialized ceramic manufacturers like Konin and Murata is crucial for scaling separator production using the Cobra process, leveraging their manufacturing expertise and balance sheets. He noted Murata completed its initial phase and moved to a higher-level agreement with volume commitments, while Konin also progressed to a more detailed relationship, emphasizing the need for two suppliers due to the large market opportunity. Kevin Hettrich (CFO, QuantumScape) defined customer billings as total invoices issued, highlighting its importance as an operational metric for customer activity and future cash inflows. He clarified that for the VW PowerCo deal, cash inflows benefit shareholders and are reflected on the balance sheet, but a liability is created due to the related party relationship, which accrues to shareholders' equity upon relief rather than impacting the P&L, with other customers having different accounting treatments.

Winnie Dong from Deutsche Bank inquired about the joint development of ceramic separators with Corning, seeking to understand its similarities and differences compared to the existing Murata Manufacturing collaboration. She also asked for more details on the nature of the Murata agreement, including economics and technology know-how transfer, following the successful completion of its initial phase. Additionally, Dong asked for clarification on the new customer billings metric, its conversion time to revenue or cash, and how it relates to previous discussions on revenue recognition.

Answer

QuantumScape CEO, Siva Sivaram, explained that both Corning and Murata Manufacturing are crucial ecosystem partners for scaling high-volume ceramic separator production, leveraging their manufacturing expertise and balance sheets. He noted Murata's progression to a higher-level commitment and Corning's similar path, emphasizing the need for two complementary suppliers given the large market opportunity. CFO, Kevin Hettrich, defined customer billings as total invoices issued, serving as a key operational metric for customer activity and future cash inflows, while cautioning about potential timing differences to cash. He detailed the three sources of shareholder value: collaboration monetization, long-term licensing, and value sharing from ecosystem partners. Hettrich also clarified the specific GAAP accounting treatment for Volkswagen Group PowerCo billings, where cash inflows create a liability that accrues to shareholders' equity without impacting the P&L, distinct from other customer payments.

Winnie Dong inquired about the new Joint Development Agreement (JDA) with a second automotive OEM, asking what steps remain before a full licensing deal. She also sought clarity on the milestones for the new $131M PowerCo agreement versus the original $130M, and the accounting treatment for the initial $10M payment.

Answer

CEO Siva Sivaram explained the new JDA follows the same 'playbook' as the PowerCo deal, focusing on adapting QuantumScape's core technology to the customer's specific needs before a full technology transfer. He clarified the new $131M is distinct from the prior licensing prepayment and is intended to monetize near-term joint scale-up activities. CFO Kevin Hettrich confirmed the initial payment will improve the bottom line but will likely not be treated as revenue, with a full accounting update to come.

Winnie Dong of Deutsche Bank inquired about the specific division of responsibilities between QuantumScape and PowerCo in the B-sample development and testing phase. She also asked for more details on the economic structure of the PowerCo agreement beyond the disclosed $130 million royalty prepayment.

Answer

CFO Kevin Hettrich stated that specific economic details like the royalty rate and outperformance share are confidential to protect both parties in future negotiations. CEO Siva Sivaram clarified the roles, explaining that QuantumScape provides deep expertise in solid-state battery technology, materials, and processes, while PowerCo contributes its extensive experience in manufacturing scale-up, industrialization, supply chain management, and factory operations.

Winnie Dong inquired about the potential size of adjacent commercial markets, updates on customer engagements in those sectors, and sought clarification on the 'unfavorable economics' mentioned for Iris sensor shipments.

Answer

CEO Paul Ricci stated that while the commercial markets are very large, he was not prepared to provide specific sizes or customer names, but confirmed the Halo platform would be leveraged. CFO Tom Fenimore explained that due to lower-than-expected volumes, Iris sensors are currently sold at a loss, and the company is taking actions like transitioning production to Thailand to improve unit economics.

Asked for an update on the 2025 EBITDA positive target and the future gross margin profile for the BEV trucks.

Answer

The company aims to achieve positive variable margin per truck by the end of 2024, which is the key step toward becoming EBITDA positive as volume ramps in 2025. The gross margin for future BEV production has not been guided, though the initial 100 units from inventory will have a positive cash contribution.