Nel ASA

Good afternoon, everyone, and welcome to this live Q&A webcast with Nel, hosted by Arctic Securities. My name is Daniel Stenslet.

I am the equity analyst at Arctic covering Nel, and I will also moderate this session. With me today, I have CEO, Jon André Løkke; and CFO, Kjell Bjørnsen.

Before we will move on to Q&A, Jon André will start with a brief introduction. But before we start, I also want to urge you all to use the chat function on the right-hand side to feed me with questions, so that we can wrap up with an interesting Q&A session here very soon.

So with that, I think we're ready to begin the presentation, and I'll leave the word to Jon André.

Wonderful. Thank you.

Thank you for having us, Daniel. This is a format that we haven't tried before, but it's very good to kind of test this out and see whether this is something that the investors would like.

So give us feedback whether if we should do this again. I'm here with Kjell Christian, obviously, our CFO, and we'll just go through a few of the kind of really high level topics so that we don't waste a lot of time talking about that, but basically move on to the Q&A.

So from a top line perspective, we were negatively affected by the COVID-19. We said last quarter that it -- that we expected the third quarter to be pretty much like the second quarter, and that's basically what happened.

So investors have been valuing their feed in terms of basically placing deals. The good thing is that we started seeing a pickup of activities after the quarter.

There was a lot of activity in the quarter, but primarily related to responding to an increasing amount of tender activities and RFQs, RFIs and those elements are basically also preparing for our future development because we do expect quite a significant step-up in activities, projects next year. So the backlog is solid.

We had close to NOK1 billion in the backlog, we reported that the backlog was approximately 60% higher or slightly more than 6 months higher than the same quarter last year. We do -- we did have orders flowing into the backlog in the quarter, but they were of a smaller size, typical smaller PEM systems that fall underneath the threshold for -- announced for separate announcements.

So they flow into the backlog, but you typically don't see them as a separate announcement. We have a solid cash balance, NOK2.5 billion, basically comparing us or making us ready, enabling us to prepare for the future.

Invest in the necessary organization and in the technology to basically deliver on the project that are coming in the market, the significant market momentum. If we then look in operations and sales, subsequent events, we secured a couple of R&D grants, both on alkaline and PEM, and I think it's important to understand that we maintain -- we want to have a lead safe positon on both.

We want to be able to push both alkaline and PEM systems. And not only are we taking significant steps on the current platform, but we also constantly looking at the next platform, what could be the next-generation PEM, what could be the next-generation alkaline.

So we basically have an internal raise basically on pushing this technologies forward. So these grants are good in that regard.

And then we had a number of subsequent events. We signed a station order from Everfuel bus station, a bus depot in the Netherlands, running Solaris hydrogen buses.

We sold 2 stations to ZE PAK in Poland, the first order from Poland. It's a combined station, car and buses.

We sold PEM electrolyzer, for a 1.25-megawatt electrolyzer contract value 2 billion -- NOK2 million -- $2 million , sorry. We were -- we saw the listing successful listing IPO of Everfuel, which is our partnership.

We have a minority stake in Everfuel. They are owner operators of the infrastructure.

So very important that they are well financed. We have a framework agreement with Everfuel to support them with equipment of €200 million.

So we're very happy that they are able to secure good financing. And then last but not least, two important events.

We signed an LoI with Statkraft for an up to 50-megawatt alkaline electrolyzer system to be installed in the middle of Norway, small city called Mo i Rana Industrial Park, where there's a company called Celsa. Celsa is a leader in recycling of steel products.

And they will basically introduce green renewable hydrogen and burn that rather than burning natural gas, and by that, reducing CO2 emissions by more than 60%. So that's a very encouraging project.

And just a couple of days ago, Iberdrola announced that we were the preferred technology supplier, preferred partner for the 20-megawatt electrolyzer PEM system that is going to be installed in Spain at -- together with the ammonia/fertilizer produced at Herøya. And so they're installing a 100-megawatt solar, 20-megawatt hours of battery and 20-megawatt PEM electrolyzer to support this important landmark project.

And that's just a start. I think they have a business to go up to 800 megawatts.

That's quite impressive. And here, again, you see the benefit of having a leading position on 2 platforms.

So we have both alkaline and PEM, and you see some customers want one -- the one solution, other customers want the other, and we basically try to allow the customer to choose rather than talking one up and the other one down and basically have the best technology available in both camps. So that's the highlights.

We -- what more should we say, Stenslet? A bit related to the outlook, maybe?

Yes, we can do that.

So very brief. We said that we will continue to invest in technology and organizations.

We do expect the market pickup, but we also said that COVID-19 will most likely also affect the remaining part of the year, at least. Maybe also into -- sometime into 2021.

We don't know exactly how long it last, but it does impact. Even though you see a pickup, more activities, we will not be allowed to travel as freely as we would like.

Customers may still feel a bit uncertain, maybe they want to place an order a bit later. So it's difficult to calculate and difficult to pinpoint, but broadly, we think that it's not going to be the same for Q4 and Q1.

And so I guess that's where we are. That's the summary.

So Daniel, maybe we'll pass it back to you, and you can see whether there are some questions that we can answer.

Excellent. So yes, we have received quite a lot of questions already, and feel free to keep sending questions.

I think I'll take the first one from an analyst colleague of mine, James Carmichael. When will we be in position to provide the margin guidance on the Electrolyzer and refueling station businesses?

Do you anticipate to see a margin difference between the two?

Yes, good answer for that, I guess, is...

Well, it's still too early to tell. There are too many moving parts now.

This is a market that's still immature. There's lots of also strategic pricing.

And we are scaling up our technology base. So from our side, it's very important to get the volumes and get the scale-up and the cost down.

And then the margins will come later. And it's too early to be precise on when that will be.

Yes. Now you're talking about operating margin.

Obviously, we have gross margin, but we do not exactly want to guide on what it can and cannot be because we don't have great visibility. But every project has a decent gross margin.

The issue now is that, obviously, we're carrying a lot of indirect costs because they are growing. We are hiring people earlier and doing all of that.

So -- but I agree with this, we will probably wait for some time to give specific guidance.

So we can definitely understand that it's too early to give that kind of guidance, but in the longer term, based on what you know today, would you expect the margin to be different in the two types of businesses? Or is that also way too early to say anything specific about?

Difference between PEM and alkaline, you say?

Yes.

Well, I mean, the price -- the cost level will, as far as we see in the -- at least the near and medium -- short to medium term, the alkaline will be more cost affected than the PEM. And it -- obviously, it also depends a bit on the competitive landscape on the different platforms.

Now so far, at least we are -- for the large alkaline systems, we are -- there are less players as it looks now. We know that [indiscernible] has an ambition to move into the space, but they have limited history in terms of doing water electrolytes, they could do alkali, but not water.

So that also plays an impact. I think it's a bit early days because the market is developing so quickly now.

And so I think we need to kind of sit back and wait a bit, see how this plays up out. But I think normally, you would expect, for kind of an industry like this, I mean, if you look at other industries, you should expect the gross margin in the range of 30-plus -- 30%, 35%.

That's what you need to be able to have a sustainable business over time, so.

And a follow-up from James. Are you seeing more incoming on large-scale PEM systems?

Have you gone early stage planning on expanding the PEM capacity?

We are looking at -- we are thinking about expanding the PEM capacity. We haven't done a lot of work on it yet, simply because we do have a building in Wallingford, which is kind of flexible.

We can add 1 and even 2 more shifts and get a lot more out of that facility. And we can streamline production even more inside the same building and get more out of it.

So we have quite a lot of flexibility at least for next year to be able to cover quite an increasing volume. When it comes to the size of the PEM system, they -- you very rarely hear talk about PEM systems, which are bigger than 10, 20 megawatts.

And on alkaline, you typically start at 10, 20 megawatts. And the most frequent number is now at least into the [indiscernible], maybe not in terms of number, it's kind of the 50 to 100 megawatt.

And we see projects up to 400 megawatt. So these two technologies, for the time being, are living in different worlds because alkaline is more cost effective, more efficient, but takes up a bit more space.

It's more mature, but it takes up a bit more space. But it's proven.

While PEM is more compact, more flexible, but cost more and is less efficient.

But if you look back to the history, 10 to 20 megawatts PEM order is a large order compared to the operating history and what has historically been delivered by everyone in the industry. So it's fair to say that across the value chain, we need to step up our investments in organization and technology and capacity.

And that is why we are funded as we are and while we are currently burning a bit of cash.

That's correct. So when we were talking about efficiency PEM versus alkaline when I think about efficiencies, how many kilowatt hours of electricity do you need to produce 1 kilogram of hydrogen.

Can you say anything about the difference in efficiency between the two in terms of that metric?

Yes. I mean, typically, I don't want to kind of be specific, be too specific here on whose platform, I'm talking about here.

But broadly speaking, there is a 10%-plus efficiency gap between the 2 technologies. And that makes a big difference when you are running a plant of a few hundred megawatts.

And when you calculate that over 10 years -- or over 20 years, that basically makes a big difference but this is not a static picture. It will move.

It moves from year-to-year, and we constantly have to monitor it. There are the 2 technologies are making improvements in different phases, both on CapEx and efficiency.

And now we see with the scalable alkaline, obviously, cost is dropping dramatically, and it's going to be very hard for any technology platform to keep up in the short term, but over time, I mean, as I said, this is an internal raise, and we encourage it in now for the full team to compete, really try to have an internal competition to be the most relevant for the future. But for many, many years, I think that the technology are going to be relevant.

I mean, you've also been in solar industry, and there are [indiscernible].

Can you elaborate on your collaboration with Kvaerner because that's primarily relating to alkaline electrolyzers and [indiscernible] electrolyzer module side. So are you currently working on any large-scale projects such as the recently announced LoI with Statkraft?

Well, just to clarify the picture, the collaboration with Kvaerner is not linked exclusively to alkaline systems. It covers all technology platforms.

And we use them where we need them. And that will be the case, both with Kvaerner and other partners that may come in the future.

That we will need to work with partners, being an independent company. We need to add on the resources and the capacity and the confidence that we do not have in-house.

And then typically, we start to work together with kind of in a tender. So we work together on the tender.

We decide this is a project where we think it's good to work together with Kvaerner. I mean, there needs to be room for someone.

So sometimes the project comes from another EPC company in Germany or in France or in Asia. And then obviously, there is -- we cannot force that partner or that customer to consider another.

So when we room, we basically say, this is a good project. Here, we can work together.

And then we start -- we try to work together from the tender effect and the RFI, RFQ. And then we build a concept where we deliver -- Nel delivers technology, Kvaerner delivers the EPCI services is near consumer construction, installation.

And then that becomes a total delivery package that we offer to the other at customers. And hopefully, we will -- that will be so attractive that some of these customers will select that group, that partnership for delivery.

Is it fair to assume that, that collaboration becomes more relevant at larger scale? I could imagine that...

Yes. Yes.

If it is a product, you can deliver it. We don't need such construction.

And it also will vary across customers and with the maturity of the industry. So at this point in time, this is still a relatively new technology to many of our customers.

So they have an uncertainty, and of course, want us as a supplier to take a broader scope. And we do not have all of that in-house, and therefore, we need to supplement with external resources on the things that we cannot and shall not do in the long run.

Regarding the same mentioned LoI would start after the 50-megawatt alkaline project. You said that you're targeting through this project, superior performance compared to today's solutions.

Can you elaborate on what that means, for instance, in terms of efficiency or other metrics that you're looking at or for such projects?

Yes. I think we will leave some of the form of the benefits also.

We've just announced that we're going to have a Capital Markets Day on the 31st, and we will share some of the stuff with you on that. But when you introduce a fully automated production line, what we do now at Herøya 500 megawatt, you don't only get benefit of introducing or getting the cost down because you have fully automation and scale.

You also get some other benefits. For example, when you're producing cells in the manual process, there is a broader variation between every cell.

This broad variation, that basically impacts when you put the cells together in a stack. And when you have -- when you automate that process and you can then narrow the gap and you can also determine where you should be within the boundaries within the upper and lower limits.

And that in itself is going to improve efficiency because you will have a consistent set of cells across the entire stack because you have an automated robotized production. So just one example of things that will come and that we will elaborate more on when we have our Capital Markets Day deep dive.

Excellent. And regarding the 20-megawatt PEM project we have Iberdrola, contract subject to mutual agreement on price and other details.

Is it -- is the case that the project is contingent on public grants or support in any way, or does stand on it's own legs?

There's definitely a grant component and funding component that needs to come in place as well. And this is a bit more advanced than the Statkraft, but we are still in serious negotiation that needs to come in place.

And we find it very encouraging that we've been selected as a preferred supplier. And we will do our utmost to deliver on the path that we need to do for this project to become a reality.

And a question from another analyst colleague, Gard from Pareto. You said Nikola already had started to pay on its purchase order.

Could you provide further comments on the payment structure for this deal? And could you be more specific with regards to CapEx guiding as you now have stated the cost for the Herøya expansion?

How will it be faced?

It was two very different questions. First of all, when it comes to the electrolyzer orders, there's typically a payment over time that makes our cost structure and the kind of commitment we do.

So there is a small upfront component to cover engineering costs that are specific to the project. And then more as we get closer and closer to production and final delivery and a bit at the end.

So then that's a typical structure, and we don't want to go into detail about any specific customer requirement. And when it comes to CapEx, we mentioned today the total, excluding internal hours and then a range including internal hours of somewhere between NOK250 million and NOK30 million.

And that is what we need to put in for the first line. And of course, we'll be looking at ways to improve that as we go further on to the next line.

There is a lot of, of course, start-up cost, when you go from a manual process to automating it, there's a lot of design that you need to do once. So we hope that we can get the delivery time down and also the CapEx down on the next line.

Great. And a follow-up on Nikola.

You seem to struggle a bit with their in-house technology development, and they appear to be somewhat reliant on third parties. How has your dialogue and collaboration with Nikola been over the past months?

Are they fairly up to speed despite recent events? And are you having a constructive dialogue with them regardless -- no, sorry, regarding the electrolyzer design and fueling station design.

Yes. I think the operational teams, as far as I know, they have weekly calls with the technical teams in Nikola.

And my impression is that the dialogue is continuous as it has all the way. They are discussing different options, different solutions, locations because if you install a station in one altitude or in one location in Arizona, it will be slightly different.

If you do it in a different location, close to sea in California, there are certain atmospheric elements that we need to take into account. So the teams are working collaboratively together still and in good spirits.

Okay. Very good.

Next question relating to the ferry opportunity. So recently saw this announcement regarding push for hydrogen-driven ferries in Vestfjord.

What type of scope do you see for Nel in such a project? Can you perhaps share some views on how you look at the hydrogen ferry business opportunity?

Yes. So we find it very encouraging.

And obviously, we have been pushing a lot on this project because we think this is one of the last -- Europe and the world is running away from Norway, and in Norway, this is a bit of a history lessons, but we started with a very good starting point because we were early. We had a lot of competence, not only now, but in many other companies.

And we were one of the first ones to install fueling stations and run hydrogen buses. So we were very early.

And then we basically gave up, and we gave the lead away to a lot of other countries. Now the -- one of the few things left is maritime applications, ferries, fast ferries, slow ferries, fish farming, some of those elements.

So here, we still have a chance. And that's why I think it's very encouraging to see that the government is actually doing it on the next on ferries, which is a very far stretch.

You cannot do it with batteries. There is no way.

You will actually consume 1 tonne of hydrogen per day per ferry. So 1 tonne of liquid hydrogen.

And I believe when they are at peak capacity, in the middle of the summer, you're up to 10 tonnes a day. So that makes for an attractive volume.

And this is one of the project that we have on the long list, all the way back when we established Glomfjord Hydrogen together with the Greenstat and Meløy Energi and Meløy [indiscernible] back in 2016. This tender was on the long list.

And the target. And since then, we have seen the dialogue related to this very progress.

And we, earlier this year, signed a letter of intent together with -- towards Glomfjord Hydrogen, signed a letter of intent with Air Liquide. So basically, Glomfjord Hydrogen's intention is to then produce the 10 tonnes of hydrogen per day as a starting point, but obviously increase over time because there are many other applications there.

That 10 tonne of hydrogen per day will be gases. It will be fed into the liquefaction plant.

Air Liquide will liquefy it, put it on the trailer, drive it out to border and dispense it onto the ferry. And then -- so we're working together with Norled, who is basically the leader in Norway.

They already are about to start operations of hydrogen ferries on the West Coast. And there are 2 other ferry operators that are going to compete, and hopefully, we can all then put this together in a nice package and make this fly.

So that's our plan, and we think this is going to be a very interesting project and showcase for Norway.

And if you look at what will be the concrete business opportunity for Norled, it will be delivering the electrolyzer. And then the birth aid that we've given to this legal entity is something that we've done in a couple of selected cases to help start a market when one exists.

And that is something we also may do a bit of in the future, but our core business is to be an equipment supplier.

Yes. So we are not only operators, but we know that there are many others that want to take that role.

For example, Greenstat. This is the perfect role for them.

They want to be upstream and produce hydrogen, Everfuel has the same role but downstream in the fueling stations and transportation. We try to help these organizations so that they can succeed in building their business cases and hopefully be successful using Nel equipment.

Excellent. And that takes us to the next question because we're seeing quite ambitious targets regarding green hydrogen all across Europe.

And what are the next steps from ambitions to actual projects in your view? Is it that the projects themselves are pending the right grants?

Or is it bottlenecks upstream or downstream or a combination of all three? Your thoughts around that would be helpful.

Well, I mean, I think it depends a bit on -- I mean, if you look really at the big projects, the 100 megawatt, 200, 300 megawatt, there are some bottlenecks still, but we have started to see smaller projects. I mean the 25-megawatt Iberdrola project is an example.

Yes, they will -- they intend to have some funding in there, but they are going to push forward very drastically on this, and there are other examples also where we may not be involved also smaller cases. When you look at the really big projects, there is still a bit of time.

There are many applications that has gone into the European Innovation Fund to seek funding there. There are also a number of proposals for IPCEI funding, Important projects with common European interest.

And the hydrogen-related projects in that category. So as these projects mature, you get funding in place, you obviously also need a customer.

I mean, producing a lot of green hydrogen in itself, without having a customer, it doesn't make sense. So you need to have a steel producer or an ammonia producer or transport, storage solution or some sort of customers.

So a lot of people are working to put all these pieces together. And to sum it all, we think that we will start to see some big projects next year.

We will start to see orders being placed next year. I'm not saying that we will be successful in winning all of those orders, but you will see them in the market.

Very good. And if we look at this from a company viewpoint, will the hydrogen expansion qualify for any grants?

Or is it more likely that you will have to apply for or receive grants on a project basis, you think?

The hydrogen expansion is -- here, we are -- there is kind of 2 different things. Heroya is a factory of producing electrolyzers.

Most of the grants goes to the end user. I mean the customer of the Electrolyzer, building the hydrogen plant.

So that's where we expect the majority of the grants to flow to, to our customers, basically.

Okay. Next question here.

What is the threshold for announcing an order? And also, which area do you see the key growth now?

Electrolyzers have historically been approximately 60% of sales, but now more of 50-50, should we expect that development to be at the current -- in the current composition? Or will it change over the next few years, you think?

When it comes to the threshold, we've been having -- compared to our market size, a relatively low threshold of about a couple of million euros, a couple of million dollars and for customer orders before we publish them. And that is because we see that those events often create a buzz in the market and could influence the share price.

So we will, of course, monitor that over time as the projects become bigger, we might also change the threshold. Do you want to take the second part?

Yes, the second part was whether the ratio is going to change. And now it was 60-40 and now Fueling has grown a bit faster this year.

But again, it depends a bit on -- we think that there's a huge potential in Electrolyzers, and the potential near term is bigger in Electrolyzer and is in securing spaces. Simply because you can do very, very large projects.

And we have a lot of capacity. But it is very hard to guess exactly when that order is placed and when the contract is signed and when it flows into the income statement, that is a bit hard to say.

So how exactly, which quarter, which the business is going to be bigger, it's difficult to say. But we think directionally, over the next couple of years, we think that the Electrolyzer division will grow faster than Fueling division.

Okay, very good. We have at least two more questions, but approaching the end here.

A question regarding your company pillars. And you mentioned global presence, specifically in the presentation this morning that there may be some countries or regions that you're not necessarily interested in being very active in.

Can you be more specific about which regions that is and why?

Here, I think we need to distinguish between Fueling and Electrolyzers because we look at it a bit different. On Fueling, we -- there are 2 qualifying -- at least 2 qualifiers.

First of all, the country must accept the international fueling standard. They must be capable of fueling 700 bar and using the J2601 fueling standard because that's our equipment abiding by that.

And that's one of the reasons why we haven't so far found China very interesting because they haven't really decided where to go. They are still doing 350 bar and those elements.

The same -- a bit of a challenge with Japan because they use special regulations and alloys to be able to qualify fueling systems. So that's why in Japan, we have a license agreement with Mitsubishi Kakoki Kaisha.

Number one, if the country accepts our products, so we don't have to reengineer the entire product to be able to sell there. Number two, we need to see a minimum demand.

We need to have visibility on at least 10, 20, 30 stations because when we deploy stations into a new market, we have to set up an organization. We have to set up installation, installers, people that can do the commissioning, people that can do service and maintenance.

So we need to have a certain organization there. We cannot sell a station into South America somewhere and just forget about it.

There needs to be some sort of support for that station. So therefore, we have selected North America and California specifically.

Europe, pretty easy to cover because we are in Europe, and we have offices around us. So most of Europe is available to us.

And Korea. And then we are waiting.

We haven't decided what to do, how to get in and when to get into China, into Japan, into many other. You do get the occasional request for a station almost from everywhere.

There is a guy in Chile, or there is a guy in India or there is a guy here and there that wants to be on the stations. But if it is 1 or 2 stations, we simply can't -- we can't act on that because it's just going to be too costly for us to maintain stations, a few stations, all over the place.

When it comes to the electrolyzers, that market is more global by nature from the beginning. And if you look at our history, we have delivered both from the U.S.

and from Norway to a wide range of countries all over the world. And there it is more a question of the complexity of delivering locally.

So if we are challenged to deliver in an area where we will need to deliver the EPC and getting local contractors is hard, that might be a project where we deem the risk to be too high. But it requires more to say no to a project on the Electrolyzer side than on the Fueling side.

Especially for the smaller business piece because it's kind of a -- it's a mature product that doesn't require a lot of support. So they will give you a -- they will call for a service package.

You may have a service engineer that goes there every second year, or every third year or something like that. But it doesn't require the same kind of support.

But it's different than what Kjell Christian mentioned, when you really go into this large EPC, then you are again back to the channels where who do I partner with. Moving into Australia, doing a big project.

We obviously need -- we need a local EPC partner in that for example.

Okay, very good. When it comes to large-scale projects and particularly in Europe, we've seen some announcements in the 100-megawatt scale and upwards, with start-up perhaps in the 3, 4, 5 year time frame.

On a general basis, do these project owners approach Nel as a potential supplier? Or how is this competitive process organized?

It doesn't go through tenders or more one-to-one discussions, et cetera?

Yes, I mean, most of the players try to kind of -- most of the end customers will -- there will be some kind of competitive element here. Very rarely, if someone calls you and say, you have this or no matter what.

But we could, for the same project, we can be approached multiple times. We can be approached by one EPC company or one energy company that wants to bid for this project, and they will say, we want to work with you.

And then we can be approached by an EPC company saying, "I want to get into this. Can you support me?"

And then we can even sometimes be approached by the end customer. So the multiple, very often, it's easy to kind of -- to structure that because, obviously, we cannot -- you have to be very transparent about this, and you have to then say no to -- "sorry, I can't, I need to go this way."

But we hope to always be relevant. I mean, if a big project happens in Europe, and we are disregarded, that will be -- first of all, I don't -- I certainly don't hope that, that happens.

And I would also be a bit surprised. I mean then there is -- then it must be because there is a supplier of another technology, which is also providing funding or the financing or something else, which is basically the catalyst to make the project happens.

Maybe then we would not be on the table at all, but most of the times, we will be approached some form or fashion to look at these projects and to contribute in some way if we can.

Okay. The final question here.

Can you share some insight into the manufacturing process of an electrolyzer? Is the challenge to make one very high quality, efficient electrolyzer?

Or is the challenge to manufacture a series of them in a low cost-efficient manner?

Well, it's a good question. I mean, first of all, there is a lot of trade seekers around how to make electrolyzers.

So that's the beauty between our industry and the solar industry where you used to buy, you could buy a Turkey factory. That you can't do here.

So we only know how to make our electrolyzers. There are a lot of trade secrets behind that.

If you want to kind of generalize, I think there is a big kind of priority that you have to make between efficiency and having a system that lasts for a long time. So you can put in a lot of power, really -- or output, sorry, output, where you can put in a lot of power, and you can make sure that, that is generating a lot of hydrogen, but you will then burn out the system very, very quickly.

So this is the technology hurdle that all of the players are struggling reportedly. And where we think we have found a very good balance.

We have equipment that has been sitting in the field for 20-plus years. So we have a lot of data and a lot of track.

We know the track record of the systems. And we have obviously done tweaks and improvements on the system, but we do have a lot of reference data.

And we have kind of -- we think that we have found a balance where we are able to have a high efficiency, high -- relatively high output, but a long lifetime. I mean you're making a big investment it has to last for 20 years.

That's the perspective you need to have. So that's an important kind of priority that they have to make.

And you have to kind of balance, which [indiscernible]. The other one is when it comes to automation, is that what you have done -- you have to remind me.

What was the question related to automation?

The question really was, is it making one good and then standardizing? Or is the question industrializing?

And I would say as a starting point, while you think more about it, we've been having a very manual process. So there is so much to take out, as Jon said earlier, just by making the product the same every time in a standardized way and a robotic operation without much manual handling.

That will take out a lot of cost of the -- for the value chain. And then you also have the element of just the fact that you get bigger, you get more purchasing power.

So subsuppliers can have more efficient processes and/or actually make tailor-made product to you rather than taking something to have off the shelf for another application. So in the short run, there's a lot of industrialization and purchasing benefits.

What we will do because we want to remain relevant not only for the 3 to 5 years, but for the 5 to 10 to 20 year is to put still a lot of investment into longer-term R&D and next-generation platform, figuring out after we built the first few industrial lines, maybe we need to take a step change because then the industry has reached some sort of plateau. And that is something where we need to invest without seeing the immediate benefit, but we believe that is important for the long-term value of the company.

Good. And maybe I can add one thing.

When you want to industrialize and automate, you have to have the right building block. And that, we said, on PEM, we haven't had that yet.

We've gone from a very small building block. We're now creating a bigger one.

But you need to have a building block and a design of a product that you can actually automate, that you can robotize. And that we -- that's the beauty with the alkaline platform.

That it is exactly that building block that you are able to automate. And that's why we are -- I would say, we are the first one doing this.

No one else is doing anything like this. Introducing a fully automated line.

You haven't seen that yet. And that's because they're missing this building block that you actually are capable of automating that requires a product design that allows you to pick up the pieces and move them around with the government.

And I think if that was the last question, then I want a last, nice little segue into and then reminding everybody about the Capital Markets Day.

Yes?

So where we hope to show you more faces from more of the management and also go on a deep dive into Herøya and the expansion there, what we're planning to do, which will now put some more slides and words around the things we've talked about in some of the questions today. And also, hopefully, give you a better insight to the sales process, what we see in the market, et cetera.

Good. I think that's going to be interesting.

So -- and obviously, at some point, we also want to invite people into the new factory. That is not going to be in January.

But hopefully, sometime next year, we can have a tour of the new factory, not only with customers, but also with the investors and analysts. So that will be good.

So I don't know Daniel, are we -- are we missing anything? Are we out of time?

We are probably out of time anyway.

Yes, we are. So looking forward to that tour of Herøya plant and the Capital Markets Day.

So that's it for now. Thanks for listening in.

And yes, I wish you all a good day.

Thank you, Daniel.

Thank you.

Thank you for having us. Thank you.