Good morning and welcome to the HYZON Motors’ Second Quarter 2021 Conference Call. As a reminder, today’s call is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

At this time for opening remarks and introduction, I would like turn the call over to Darla Rivera, Investor Relations Manager of HYZON..

Good morning and welcome to HYZON second quarter 2021 earnings call. I’m Darla Rivera, Senior Manager of Investor Relations. On today’s call are Craig Knight, our Chief Executive Officer and Mark Gordon, our Chief Financial Officer. We issued our results today in a press release that can be found on our website hyzonmotors.com in the investors section.

As a reminder, our comments within this call may contain Forward-Looking Statements. These statements are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the Company’s future operations, and financial performance, including the impact of the COVID-19 pandemic.

Actual results could differ materially from those predicted in the forward-looking statements. HYZON Motors Incorporated assumes no obligation to update them in the future as or if circumstances change. For more information, please refer to the risks uncertainties and other factors discussed in our SEC filings.

Additional information concerning factors that could cause actual results to differ materially from those discussed during today’s conference call or in this morning’s press release can be found in the Company’s definitive proxy statement.

Filed with the SEC on June 21st its registration statements filed on July 20th and other documents filed by the company from time-to-time. During this call, we also refer to certain non-GAAP financial measures including EBITDA. More detailed information about these measures and reconciliation to the nearest U.S.

GAAP measures is contained in the press release issued this morning, which is available in the investors section of our website and was furnish on form 8-K with the SEC. And with that, I’m pleased to turn the call over to Craig Knight..

Thanks Darla and thank you to everyone for joining us this morning for our inaugural quarterly earnings call. Today marks the start of a new chapter for HYZON as a public company. July was a busy month for us.

We successfully completed the merger with Decarbonization Plus Acquisition Corporation with 94.8% of the shares purchased in favor of the merger with a major 7.4% of common shares being redeemed for cash.

Following the vote, we completed our business combination which resulted in a primary capital raise of $555 million for HYZON prior transaction expenses. This remarkable achievement of closing our transaction with such overwhelming support from DCRB shareholders was a validation of our strategy and an investment in our future.

We officially began trading under the ticker HYZN on July 19th on the NASDAQ. With over $500 million of cash on hand, we will continue investing in our growth as we drive towards the future of net zero emissions. I’m excited for this next chapter and extremely proud of our entire team’s tenacity and commitment to get us to this point.

We face the future with a strong sense of obligation as a public Company. Recapping our commercial status, we expanded our backlog under contract or MOU to $83 million, with additional customer uptake in both Europe and Australia.

I’m also very excited to announce we delivered two additional municipal service trucks in Europe just last week, making three heavy trucks delivered since the middle of July. These are the seed sales we have always talked about, which leads to much bigger things down the fact. We announced just this morning.

In a separate press release we have signed an agreement with TTSI in California to trial our first [Hydro] (Ph) Class A Fuel Cell Electric truck here in the United States, commencing in Q4 this year.

It is fair to call this announcement the tip of the proverbial iceberg in relation to negotiations happening right here in the states and we are extremely confident in the desire of U.S. corporations and government agencies to move towards net zero emissions.

This belief has been further validated by the actions being pursued by the federal administration to reduce vehicle emissions in the United States. And we are excited to be part of this pivotal moment in the U.S. We expect HYZON to be an important contributor towards 2030 emissions reduction goals, as they pertain to heavy vehicles.

HYZON has also announced several strategic partnerships to enhance our portfolio and further develop and deliver on our business model. Our latest investment of $2.5 million in Raven SR will allow us to secure negative carbon score hydrogen supply from up to 250 hubs.

We remain committed to facilitate the build-out of hydrogen production hubs across the U.S. to enable the quick and easy adoption of hydrogen powered commercial vehicles operating in a back to base mode.

HYZON is also broadening our addressable market by targeting very high power on and off road applications and very long distance heavy trucking, as illustrated through the recently announced partnership with Chart Industries relating to on vehicle liquid hydrogen systems.

As mentioned earlier, we expected our cash-on-hand about a $500 billion will enable us to advance our plans to ramp-up our operations globally. We believe our manufacturing scale up in New York and Illinois remain on-track to be fully operational in the first half of 2022.

As we build out our capabilities to bring American made heavy vehicle fuel cell systems to the market, which we believe will allow us to be at the forefront, as fuel cell electric commercial vehicles are adopted to meet increasingly aggressive transition plans.

We believe the decarbonization of commercial transportation is dependent on hydrogen powered electric propulsion. With that, I would like to turn the call over to Mark Gordon, our Chief Financial Officer to comment on our quarterly financials. Over to you, Mark..

Thanks, Craig. Good morning, everyone, and thank you for joining us today for our first earnings call. We finish the quarter with total operating expenses of $9.3 million and a net loss of $9.4 million, resulting in a net loss of $0.10 per share.

Our second quarter operating expenses comprised of $3.5 million in R&D and $5.8 million in SG&A expenses, which were both significantly below the internal plan as we prioritize cost control with the merger closing two-months later than originally expected.

HYZON also reported EBITDA of negative $9.1 million significantly above our plan as we manage costs, and focus on business drivers to execute our commitments. HYZON add may come to the public market with nearly a two decade history of prudently managing costs, with operating and capital on behalf of our shareholders.

We intend to continue this tradition and we expect to reach free cash flow by 2024 without needing to sell additional equity. Our asset light business requires substantially less capital than some of our peers and we are grateful to have a fully funded business model. As Craig mentioned earlier, we have cash-on-hand in excess of $500 million no debt.

The cash was deployed to scale up our operations globally and build out teams as we remain on-track to reach our forecasts of 85 vehicles shipped by the end of 2021. We look forward to achieving our goals and anticipate recording our first revenues in the third quarter.

In the last six months, our backlog under contract or MOU has grown from $40 million to $83 million, and we fully expect it to grow further. We believe the momentum towards hydrogen continues to celebrate that we are fortunate to be in a leadership position. The first HYZON development vehicles built with U.S.

sourced vehicle chassis are currently under test in the first Class A demo truck are slated for trial in Q4 North American customers. The feedback from early customer deployments in Europe and professional driver engagement in the U.S. has been excellent.

Three points of note; first, the driving experience for truckers is a large improvement over diesel with the vehicle providing a silent ride and superior acceleration.

Second, we are well on the way to reaching total cost of ownership parity with diesel and in the state of California and in Europe with the various subsidies and escalating cost of diesel. We believe we are there now. And finally, our fuel cell electric heavy vehicles are green with the only emissions being wired.

The Biden administration’s focus on the transition to electric vehicles is a positive development for the United States and we attempt to be a leader in this transition with our hydrogen powered fuel cell electric vehicles.

Our investment in [indiscernible] will enable us to create hydrogen from municipal waste, with minimal to no dependence on the electric grid as well as with natural gas prices and corporate is making new highs as we speak.

We believe an energy transition solution which is not dependent on the auto strange electric grid will become increasingly important globally. Overtime, we believe the market will recognize the unique solution HYZON brings to decarbonization.

Our equity not trades at just three times the cost we raised our stock merger, we are committed to controlling our costs than anticipate delivering free cash flow in just a few years. Overtime, we believe the investor universe will recognize and reward us with superior relative and absolute stock performance.

We believe our stock recent downward movement is completely unwarranted and HYZON significantly leads undervalued compared to peers. I encourage you to look at the video posted to our website this morning to see the Class A truck pulling a trailer in upstate, New York.

We are excited to be a leader in first mover zero emission heavy duty commercial vehicles. Now I will turn it over to Craig for some closing remarks..

Thank you, Mark. So while the past year has been transformational for HYZON, I’m very excited to further build out our global management, technology development and operations teams of provided an update on some recent hires.

We recently appointed Parker Meeks a former McKinsey partner and seasoned energy professional as Chief Strategy Officer to lead our hydrogen supply strategy. We also appointed Shinichi Hirano, with over 30-years of experience in automotive fuel cell technology as Chief Engineer.

In addition, we have added seasoned professionals in both Europe and Australia, as those markets are moving at a rapid pace and we need strong local teams to catch those waves, I’m very confident in our teams, they are instrumental in achieving and delivering on HYZON’s plan, as we collectively have hundreds of years of experience in hydrogen fuel cell technology, and heavy automotive.

HYZON’s technology positions to be a first mover in net zero emissions commercial transportation, we are committed to enabling our customers to achieve their sustainability goals and drive towards a cleaner future with vehicles on the road today, and then - shipments in four continents scheduled to take place by the end of the year, perhaps this year.

As laid out, HYZON has much to execute on several impactful events yet to come in 2021. And we remain committed to our 2021 sales outlook and shipping 85 vehicles by the end of the year all while proactively dealing with the challenging global supply chain issues and COVID-19 resurgences with the Delta variant increasing around the world.

Thank you all for being part of our continued success. And we look forward to continuing our nearly 20-year journey to decarbonize the commercial transport industry. We appreciate your support and attention..

With that operator, we can open the call up to questions..

Thank you. [Operator Instructions] Your first question comes from the line is Rob Wertheimer from Melius Research. Please go ahead..

Hi, good morning, everybody. So, I had a question for us on supply chain, which you just touched on Craig.

85 trucks this year, do you have line of sight on acquiring the chassis and what is the risk points that you see around that whether if your own sort of technology, technology solutions and/or the actual trucks that that come in?.

Sure. Obviously, no call at the moment with anyone manufacturing anything would be complete without some questions or supply-chain challenges, and they are not insignificant.

However, some of these challenges started to emerge earlier in the year and we started taking proactive steps to order [Chinese] (Ph) parts, components, sub assemblies earlier than planned. So at the moment, we believe that the shipment of at least 85 vehicles is not a great risk for us, because of inventories, we have already secured.

And deliveries that to us from our vendors that are expected to take place over the next month or two. Given very early order confirmation. Most of the order - most of the work in progress orders go back to around April for us. We didn’t wait until the transaction closed to deal with sourcing inventory.

We were getting ahead of that curve in Q2, early Q2..

Okay, perfect. And if I can ask you another one. Obviously, we all watch the quarters, I know you used the comments for the quarter. I’m curious if you can just characterize what your conversations with customers are like. We have seen on the battery electric side.

I think there is some, maybe some limitations or some specific builds that need to be made to handle the duty cycle of specific order. Maybe it leads to some real test orders and people just feeling things out.

I guess are your customers just really curious about hydrogen or they are looking to do a test order and actually really followed on with something, are they looking for, something that really can scale in the next year or two? And then just, your thoughts on where you are competing well against battery electric.

And I will stop there and get back in line. Thank you..

No problem, Rob. Obviously, the comparison with battery electric is an important one, because ultimately this transition from fossil fuels to electrified non-fossil fuel vehicles is a great challenge for everybody.

With the billions of fossil fuels vehicles around the world, we do believe that the world and fleet operators need every possible successful or capable solution to be part of the future vehicle systems. So, we definitely believe that, there is a place for battery electric vehicles in the future vehicle landscape.

However, it is our view that all of the high utilization commercial vehicles will move to hydrogen, starting with the heaviest, high utilization, high loading - type scenarios. And then as hydrogen is more available and provides a very affordable driven mile cost on commercial vehicles, lots of vehicles will gradually shift to hydrogen as well.

So, I’m pleased to see while we target the really low hanging fruit in the near-term, those very heavy high utilization vehicles scenarios are operating in back to base modes. We target them first.

What we do by penetrating those segments is we make adjacent and additional vehicle segments much more attractive by essentially underwriting the adoption of the infrastructure. So, we believe that will progressively penetrate more and more of the vehicle applications.

And to your question about whether or not you may very specific vehicle specifications, kind of customization on that kind of use case-by-use case, it is a little different for hydrogen fuel cell electric vehicles, simply because they function a bit more like a traditional vehicle.

The power is determined by the fuel cell and working with the battery. And the electric motor and the range is determined by the amount of energy stored in the vehicle, which is a simple function of the fuel side.

So therefore, the way we design and deliver vehicles, is not quite as specific as the way that the battery electric vehicles might be designed and delivered, really specifically for the customer use case, because carrying extra range capacity on a battery electric vehicle adds a lot of extra weight and make the whole operation less efficient..

Okay. Thank you. And I guess, so you don’t - the entitlement of hydrogen as it looks like right now in the market.

Is that limited to freight hauling? I know, you had a refused announcements to that heavy duty cycle, I guess some of the product was great year or two ago when we go to the hydrogen, and I don’t know how much you feel like it is freight versus a variety of duty cycles now, and I really will stop..

Yes. So, for us Rob it is all about availability of hydrogen in the near-term. So, you asked about customer adoption, so I will answer that as well.

Many customers are getting their hands on their first fuel cell vehicles, first fuel cell vehicles I have ever seen here in the next six to 12-months, that is a genuine kind of technology validation process. And the customers need to feel comfortable with vehicles function well in their use case.

In terms of the natural use cases, freight haulage, long distance is not really a target for us right at the moment, because that opens up a greater challenge for hydrogen availability.

Back to base operations such as concrete trucks, refuse trucks, urban transit buses, refrigerated food delivery trucks, port rage trucks, like for example, in this morning’s press release, we talked about the TTSI agreement. This is partridge, this is very high utilization.

You wouldn’t call it general freight application, because the trucks really don’t leave the region. But they run many, many hours a day, and they are typically quite heavy. So it is a good application for hydrogen. And we are not introducing the complication of having to find hubs and stations across the country.

And that is our typical focus area of those back to base type operations, rather than general freight..

Thank you..

Your next question comes from Mike Shlisky of D.A. Davidson. Please go ahead..

I wanted to ask first about the TTSI order very exciting stuff. Now, they have placed at least one other large order with one competitor already for both fuel cell and battery trucks. Of course there are other folks will be delivering their fuel cell trucks for quite some time.

But I’m curious as to what is their strategy over a TTSI? Are they looking to pit people against each other? So they come out with a new fleet of different fuel cell trucks when all is said and done, you think? And what is potential size range in the next couple of years, you think that they might - what percent might end up going battery or fuel cell here?.

So specifically about TTSI and Portage, right, Mike?.

Exactly..

Right. So your sound wasn’t great. So I was listening how to try and follow there. On TTSI situation in particular, TTSI is one of several companies serving the Portage, the LA Long Beach area of Portage application. These trucks run many hours of the day typical is to drive shifts every day. So somewhere around 18-hours to 20-hours of driving each day.

And basically TTSI is of the view that to shift those to driver shifts a day truck operations off diesel, they really need hydrogen. They don’t anticipate that battery electric vehicles will get them there. Now, there could be some operations that can be done with battery electric vehicles within the context of the TTSI business model.

I just know that for their highly productive trucks. They are to drive shifts a day and they are very, very busy indeed. So in our view, those are the types of applications that are a natural for hydrogen. And TTSI’s ambition is to understand all of the technology choices.

And they have been an early adopter of fuel cell technology, of natural gas technology, of battery technology, all these various technologies, because especially they are based in California and in an area with a strong mandate on air pollution abatement.

TTSI has been very proactive in evaluating all these various options to reduce local air emissions in particular, and they are obviously carbon footprint as well. In our view, the fuel cell electric class will prove this use case very handsomely, compared to any battery electric alternative. And the trial will start in Q4 this year with TTSI.

And only they know what the future of that looks like in terms of uptake, but with over 13,000 trucks going in and out of the LA Long Beach ports every single week. We do believe that this is a natural application and a fantastic near future ecosystem for hydrogen..

Got it. Thank you. And speaking of California, we had a big day yesterday over there with the with the voucher and subsidy releases.

Can you update us on whether or how far along you are in getting your truck approved for subsidies in California?.

Yes, that is a fair question. So, there is a certification process, we need to have carb certified vehicles for subsidy together to claim subsidies. This is a process, it does generally involve getting some outside help, some professional help. So, we have taken those steps, we have an engineering team working with consultants on this process.

It is not overly daunting. It is just a process. And it requires documentation requires back and forth. And it is a typical process that could take somewhere between six-months to 12-months. And It is already been started, so, when exactly will it be complete? I can’t tell you, because I kind of control the outcomes of the process.

But it is definitely underway. And it will be no more than, I wouldn’t think six-months to nine-months away..

You hop to be on the list for next year’s vouchers?.

We do expect to be approved. Yes, in 2022. Yes..

Excellent.

Could you also give us some sense, as you have gotten your funding from the merger? What the go forward cash burn might be on either monthly or on a quarterly basis?.

Mark, I might hand over to you on the finance question. I will just say that, as Mark mentioned, in the introductory comments, we are very focused on managing costs.

We are also very focused on earning reasonable margins, we are very focused on ensuring that all of the work we do under decent gross margin, because it is only through a decent gross margin sustained in the business from day one, that you will have a sustainable business.

And we will never stand here and talk to you about growing revenue without margins.

And Mark, do you want to talk about our spend rates?.

Sure. Just a follow-up on your margin first Craig. Because I think it is important. And I want everyone to understand this. When you look at how we guide for margins, you can see that our gross margin floats around 30% might be lower in the quarter because of mix shifts in sales in the business, but around there.

And we start off with a very high gross margin. And that is because our price point initially at the trucks is higher than we might anticipate, because customers are willing to pay out for the trucks to get them now. We anticipate the [AFP] (Ph) falling dramatically overtime and we anticipate fixed cost revenue in the business.

That is why we have the gross margin starting high and staying high. Now looking forward, as Craig pointed out, and we are very proud of our results this quarter, we were substantially ahead of our internal plan in terms of costs. And we anticipate really modest cash burn going forward.

So for the rest of this year, we think it is going to be order of magnitude less than $50 million..

Is that for the whole six months for the whole last six-months -..

Yes. Correct..

Okay. Well thank you so much. I will give someone else a chance. I appreciate it guys..

Thank you, Mike..

[Operator Instructions] Your next question comes from Steven Fox with Fox Advisors. Please go ahead..

Thanks. Good morning. A couple of questions from me if I could. First of all, Craig, the company has highlighted a bunch of road tests and seed sales. I don’t know if there is a sort of a way to put a rule of thumb around how long those it usually take before they turn into more volume orders and whether that is changing sort of the landscape.

But that was sort of the first question I had. And then I have a follow-up..

Okay. So, I wish there was a simple rule of thumb, if did not. What we are seeing though is a clear patent emerge in Europe in particular where the availability of hydrogen is at totally different level to what is in the U.S. We are now seeing the pattern of adoption changed quite a bit.

So, we have had some pretty interesting commercial anecdotes pop-up in the last month or so whereby doing a deal and supplying a truck to a certain customer generates a - with other competitors or similar government for example, agencies. And it is very interesting to see the rate of inquiry from competitors.

But sometimes it is not just the fear of missing out. Sometimes, it is genuine competitive issues. So, we are seeing companies in Europe start to use their decarbonization efforts to commercial credentials in various ways.

So, infrastructure contractors can qualify for bonus points on tenders and this sort of thing, thereby improving their competitiveness by buying our vehicles. So, I do actually think that our earlier assumptions around technology of renovation from those early seed sales, through to kind of fleet conversion type of buying.

I do believe that those processes are compressive.

So, whereas earlier I would have said, it is kind of a 12-mnth to 18-month process to go from getting your first fuel cell truck and trying it out and then maybe getting a few more and figuring out what fleet conversion will look like at that time, and then kicking off that kind of fleet conversion process. I actually think that is compressing.

It is certainly compressing in a market like Europe. I think it is probably still valid, for example, in the U.S. So I think 12-months to 18-months from seed sales to a reasonable level of weight substitution is probably a realistic timeframe..

Thanks for that. That is really helpful. And then just as a follow-up kind of a related question. In terms of the capacity expansion plans in the U.S.

how far ahead do you have to get with capacity in order to ensure the volume and sales? And if you could maybe just weave in, sort of an update on the Gen 3 tightened stack for next year and how that plays into what you are planning to add in terms of capacity. That would be helpful. Thank you..

Thank you, Steven. So, in terms of manufacturing, I have always said there are three kind of determinants to capacity to get vehicles in the customer’s hands.

The first is around manufacturing capacity of fuel cells and systems, and systems include things like hydrogen subsystems, for example, and some of the power systems, that is one determinant capacity.

A second determinant is the external supply chains, and that is a moment that second category of kind of capacity has been the major factor for manufacturers around the world for their ability to serve the customer’s needs. It hasn’t been unique to us that it is been a challenge for everybody.

And typically we don’t expect the external supply chains to restrict us like that longer-term. But then there is a third disseminate to capacity, which is vehicle assembly, and that is where, those are the asset light model of using third-party assembly in the U.S.

Fontaine Modification provided by Berkshire Hathaway that does custom building and outfitting of trucks. They can assemble tens of thousands of heavy vehicles a year plenty of capacity. So that is not usually a capacity constraint in our near to medium term outlook data.

So therefore, if you consider those three kind of capacity factors, you would think that the most important capacity factor will be our internal manufacturing, after the supply chain issues around the world are resolved.

So, in terms of fuel cell production capabilities, we have experienced the management team and several of our core people have scaled fuel cell production into the tens of thousands of units a year type of scale already through the parent Company’s activities for rising fuel cell.

So, that is very useful knowhow experience in real world experience in scaling up production capacity. You can’t underestimate the value of that experience. And then there are other vehicle subsystems which scale without too much complication, like scaling the assembly of hydrogen subsystems in the like, this is not complex.

So we feel good about our ability to meet the growing order book. So I’m feeling very confident about our ability to meet the capacity here in the next two to three years.

After that it starts to get more interesting, because the scale of the business really gets to the point where you can start to constrain some of the partners, for example, but we will deal with that a couple of years down the track. You asked about technology development, specifically the next generation fuel cell stacks.

We are in the process of validating next generation fuel cell technology and with one or two select customers in one of the most specific areas. It is not yet been pushed into the standard truck offering.

What we are offering in the market is a mature, proven fuel cell design, which is our Gen-2 truck stack, which I think you are familiar with, which has been proven with trucks in Asia and Europe already. And we see no risk to increase the risk of delivering vehicles, working reliable vehicles to customers.

We have seen a point to increase that risk, looking for some of the technology and performance advantages of going to the next generation stacks. And two we are absolutely certain that everything has been validated to the very demanding requirements of commercial vehicles.

So it is not only about the power we get from the vehicles, it is very much about the reliability.

So we plan to keep using our Gen-2 specs until our validation is done in the next generation stack, probably at least into like the end of 2022 and early 2023, we would have some the I think option to start looking at specific truck use cases that could use that next generation stack..

Great. That is all very helpful. Thank you so much..

Thank you, Steve..

Your next question comes from Mike Shlisky from the D.A. Davidson. Please go ahead..

I had one more I wanted to ask. Mark your comments about some of the first customers who have just received their vehicles, this month is with the way a drive.

I’m just curious, you can give us any kind of technical event as well, I mean, [indiscernible] and that is been people to go to stage or people give to get into downtown on and go without much of an issue in the early stages here?.

So as I said before your lines of sight line but you were asking about user experience from the early customers?.

No, I’m sorry, I was just following up.

Can you hear me better now?.

Yes..

I was just following up on Mark’s comments and how some of the initial drivers are pleased with the way that the truck drives, I was just curious, if you can give us some technical thoughts as to whether are they seeing a lot of check engine lights, or are there kind of technical issues, pretty much get in and go at this point without much of, technicians from the home base in Rochester trying to walk them through?.

Right, yes. So, I mean, obviously, we would love for every deployment of every vehicle to go smoothly without any issues. But the reality of the matter is, with engineering, assemblies and all the rest of it, you sometimes do have challenges and problems to deal with. But this is a typical engineered product kind of process.

Naturally, we do quite a bit of validation of the subsystems in the vehicle, and then the full working vehicle itself. One of the nice things about these types of vehicles is that they communicate with you a lot. So, you don’t tend to have many surprises from the vehicle.

So, for example, while there could be something we can observe in the vehicle that requires attention, will usually be able to see that remotely from operating data, as opposed to that leading to a situation where a driver has to go into a workshop and say, it stops working or it is making strange noises or it won’t pull the trailer anymore.

So, the way that you are confronted with system problems we will call them problems, if you like, or issues is quite different with these electric platforms, as everyone is familiar with electric vehicles are quite communicative, you can see what is going on in all the various parts of the system.

And it is no different between a battery electric or a fuel cell electric, we can see what is going on in all the systems in the vehicle. So, we believe one of the great benefits of going from diesel to electric systems generally, is that you minimize unplanned time off the road.

We had a great anecdote from a commercial driver here in the last week or so that the diesel trucks are so noisy, that you don’t realize there is something wrong with the truck, some simple mechanical thing wrong with the truck, or something shaking loose or something to that effect.

Because the track itself makes so much noise, you don’t hear it until it becomes a really big problem. So, one of the drivers said, well, for sure, you would know, you’d basically know even if a tie down strap was loose on these kind of trucks, because they make so little noise.

It hears a strap flapping, so it is really interesting when you listen to commercial drivers that have lived with driving trucks every day, and they are familiar with the factors involved.

So, we were told that not only do we expect that electric drive has less unplanned outages and all the rest of it, but just the fact that even millennial mechanical stuff in the vehicle will be detected a lot earlier before it ever became a major problem. Unlike is the case with diesel when you are operating a really noisy vehicle..

I just want to add a little color to the driver experience. So, we all know that our trucks have much better acceleration in diesel. But this is actually a safety feature of the trucks in the way. You imagine a class eight trucks trying to flow into traffic, they have a hard time doing it and it is much easier to do it with hydrogen trucks.

So, with that improves its calibration the vehicle is actually safer and easier for the drivers to drive. And then all the noise that Craig..

Yes, we have had that comment multiple times about it being much easier to pull out of an out of the driveway. Much easier to merge, so it just improves the life of the driver..

And then the noise of the vehicle. A lot of truckers now complain, they can’t listen to music, they can’t talk in the phone, you know with hands-free talking et cetera. But in our trucks, that is something that is really easy to do because it is completely silent, even truckers and one trying sleep.

In a diesel truck, it is very difficult to sleep, because there is so much sound or noise. And in our truck, they can go to sleep. So really not only our trucks greens and not only we believe that they are cheaper than diesel and certain jurisdictions already today, but from a drivers perspective, it is much better.

And as you know, we are having shortage of drivers right now. So, we think that drivers are really going to be excited to drive hydrogen trucks..

And so, some of the commercial drivers we have had come and driver the vehicles recently to give us their feedback, actually not some, every single driver said it will be much easier for trucking companies to attract drivers. If this is the kind of truck they get to drive, because it is so much easier and more pleasant than the diesel truck..

That is great color guys. I really appreciate that. I will leave it there. Thank you..

Thank you, Mike..

Your next question comes from [Nova Parks of Cody Brothers] (Ph) Please go ahead..

Hey, good morning. Just had a couple of things. I wondering and I apologies if you have touched on this already. But, the hydrogen hub build-outs that you are in an agreement with Raven.

At this point, can you tell us a little bit more about the pace of the build outs and maybe a little bit more about your commitment under the agreement and particular, I’m sort of wondering, looking ahead, if there is a point where the involvement with them strategically may be recent tailwinds down the road..

Sure. First off, we closed that investment few weeks ago. And we invested alongside in large, major oil company and large oil trading company. So, we are partners in the investment. And the first two hubs are going to be in the Bay area.

Hasn’t yet announced, where they are exactly, but we anticipate that announcement in the next six weeks, so you will have a great idea about where they are coming.

And we think also that, in the next six months or so, there will be other hubs announced and they scale up and as we scale up, we anticipate tens of hubs to hundreds of hubs completed with them. And in terms of first two hubs, we are spending a large portion of the first two hubs.

And we haven’t disclosed the capital that we are spending, but we have disclosed our plan over the next five-years. We are going to spend $150 million on hubs and stations. We are also anticipating, with the Raven.

We are anticipating after the first couple of hubs, that they will be debt financed to a large extent, because what you have is you have a hub and you have contract with vehicles, so you have recurring revenue, it is really a perfect thing to be financed by the debt markets. In the each hub, we have separate SPV non recourse to the parent.

So we are excited about this, we think it is going to be also an asset light approach..

You know, another comment on this approach, obviously, we spoke a little about our hydrogen hubs and how we are very strong believers in the localizing force of hydrogen, and therefore local hydrogen solutions for local vehicle requirements is the best way to start this business and generate scale.

And so we would like to call each of those hubs very strong nodes of a future network that you never build out a network that is poorly utilized as a return on investment.

You start with very strong hubs that offer really compelling investment returns, because we are coupling that vehicle off take, in other words, a hydrogen demand center, with the whole investment rationale for the hydrogen hub itself.

And so it is really important that people understand that every one of these hydrogen hub investments is highly viable, right off the back, because the vehicle off take can be secured with major fleet operators who have an extremely predictable use of fuel every single day..

I’m just going to amplify a point that I made in the prepared remarks. I mean, these hydrogen hubs, this waste to hydrogen raises not to do, where gas or biogas for hydrogen. But what is important from my perspective is really, this is a way to make hydrogen is not dependent upon the grid.

And one of the things that we are concerned about is, we are concerned about power prices increasing, globally. You can see it already in Europe, a number of countries are at all time high power prices and with call the natural gas making new highs with us to reduce the cost power prices around the world to go up.

And if we transition as fast as the easiest transition, and we rely upon battery electric, well that is going to put a huge strain on the grid. And that is going to cause power prices to go higher, which are regressive tax on consumers.

And so what is great about our strategy of waste for hydrogen is that we have a way of facilitating the energy transition, it does not strain the grid the way battery electric does. And so we think that we are going to be critical to the future of mobility, not only because hydrogen and fuel cells are the only solution for heavy duty vehicles.

But we also have solutions that are the energy is coming in different ways. And then we are coming for everyone else..

Thanks a lot. Very interesting point. And one of the things I wanted to just circle back to the supply chain again. I guess, do you have a sense and I imagine it is not an easy thing to pin down.

But do you sort of envision a horizon may be kind of a worst case horizon, by which time, will have turned the corner and essentially, not really have supply chain issues as a major wrinkle.

And I guess I’m also curious if in general, there is a part of a particular component or particular type of component that is sort of the most improved and availability since the issues began.

And then maybe what were components might be the most challenging, still?.

[Indiscernible] which is that the supply chain challenges are really driven by COVID. So, I don’t think anyone dares predict when COVID is over, but that is the driver of it, fixes itself, I think global supply chain if it is -..

I would be reluctant to make a global prediction of that, the resolution of supply chain challenges. What we have affected, obviously, local lead times or everything like, it was a deliveries recently, but there was a good question in there in terms of what is kind of getting better and what is not.

So, frankly, batteries continue to be a substantial challenge and some of the power equivalents continues to be a substantial challenge, we have started to get a little relief on some of the Chinese supply in Europe, for example, that started to improve a little.

But overall, we still have this issue that you can have a virtually complete truck that can’t go anywhere.

And we have had that specific example with a truck that was supposed to go out to demo before the end of Q2 in Europe, a particular truck with a particular spec, that was sitting there waiting on a couple of relatively minor power related components from third-party vendors.

And because it was a particular truck, we couldn’t substitute for another part that we had in that case. So certainly, we have been caught with some challenges, etc cetera, I mean it doesn’t affect our ability to get that truck out. This quarter, for example, we will be out this quarter. But It was announced when planned.

And that is the kind of thing we have been living with. But that is also why back in March or April, when we started to see some of these challenges around delivery times getting pushed out.

We started ordering, rapidly ordering ahead of when we were planning so that we could get hold of what we need to deliver on our 85 plus vehicle shipments this year..

Great. Thanks a lot. That is all for me..

Thanks. Sorry, I’m not the global supply chain guru to predict the light at the end of the tunnel, the middle of the supply chain challenges I really don’t for everybody that COVID is brought under control globally soon, and then we can have a more normal life again..

There are no further questions at this time. I would like to hand again to our speakers for any closing remarks. Thank you..

Thanks for listening to our call and we look forward to hosting another call in three months.

Craig do you have thoughts?.

Sure. I just want to say, we are literally a few weeks into this new journey as a public company. And we have obviously some substantial ambitions. We believe we are well equipped to execute on our plan. And we view it as management’s job to deal with the various challenges that get chime in our way.

So, we will do our very best to continue delivering the plan. We are going to be making every continuity and pushing everything that can be facilitated to make sure we continue to meet plan..

Let, me just also add that, the ACC Conference is going be at Long Beach at the end of this month. We are going to have a Class A hydrogen truck there for people to see. It drives, it has got a lot of power, it can go up hills and we highly recommend that people come-by and see our truck.

And we are open for business here in North America and all around the world.

So, we look forward to accelerating the energy transition to demonstrating our vehicle on the road now and let me also emphasize I said this in opening remarks, there is a great video on our website that we put out this morning that shows our Class A truck pulling a trailer and that is in p State New York and it is really worth looking at it..

Thanks a lot..

This concludes today’s conference call. Thank you for participating. You may now disconnect..