We need to distinguish between orders and volume shipments.
I agree with your logic in your post. I am not an expert in battery testing, but I understand that these batteries must meet a 500 cycle charge/discharge spec. When testing the customer can get 3 cycles in per day of charge/discharge, so a complete test of this spec requires about 166 days. If the customer has previously tested batteries produced on the same process, and has a curve showing the charge held as a function of the number of cycles, then when testing similiar batteries, the customer can compare against the previous test curve. The customer should be able to determine if the batteries will meet the spec without testing for the full 500 cycles. In the call, Lev said that the customers have been cycling their batteries for some time now (my note: some since late May, latecomers since early July), and he implied that they should be in a position to order batteries several weeks or so after receiving NI production batteries (from a performance standpoint).
I think they will capable of volume production in September. My point was that I had hoped for volume shipments in September. If the customers still are designing in the batteries into their products, we may see orders in September(or October), but the delivery dates might not be until November/December, or even later. Customers do not need to finish their design work prior to placing orders, but my guess is that they won't take delivery until they are ready to use the batteries. However, I agree there should be significant market pressure on some OEMs to take delivery earlier, and try to capture market share. These batteries should give OEM customers some competitive advantage in the market.
As for the 30 day quarantine on newly produced batteries, this will be the case for all batteries produced, simply to ensure non-specification cells are identified and removed prior to shipment, and will probably be in place for some time.
So my guestimated timeline:
August-September: Volume production begins sometime during this period- samples removed, tested, and sent to OEMs. (Q: Will Valence quarantine samples for 30 days? - my guess is no.)
September-October: Customers receive sample batteries from the production line and test for several weeks. Then, orders placed and contracts finally negotiated. Orders and contracts are subject to batteries meeting performance specs; tests for these specs will be ongoing until shipment authorized.
October-December: Finally volume shipments commence to customers. This depends on when the customer will be in a position to use the batteries. They will need to design in the batteries, test the product design, and probably modify their production line before being ready to accept deliveries. I have pushed my guess on deliveries back a bit based on Lev's comments that OEMs haven't designed the batteries in yet, and want to see NI production batteries prior to placing an order (which also implies some OEMs are delaying design work until they have NI batteries in hand).
The current stock price doesn't even reflect the impending startup of volume production, let alone orders or shipments. I still am very bullish on the stock, considering the risks/rewards. The stock will begin to climb just on the news of production, and more on the news of orders. We don't need to see final shipments in September/October. Still I was hoping we would, based on Lev's comments in the last conference call.
Paul |
