I mean, 100 million vehicles, if you take away China, there’s still a significant amount of vehicles that are shipping. To get penetrated into their fleet, that changeover is coming over pretty soon to start delivering that. And soon after that is of course, regulation will step in if you can see a significant advantage to safety. Thanks, Sumit. The next question is, what’s the sequence with the automotive companies for an RFI? Is it RFI the first phase or RFQ the second? And what is sort of the — if you could just walk us through the process of design winds?
Sumit Sharma: Sure, sure. RFI is a phase where they solicit, they have a need, and they solicit a wide, CASA-wide net. They reach out to all the LiDAR companies that are known entities, and they give their requirements, some loose requirements, and they try to get where is your state-of-the-art technology right now? Where are you, right? What’s your production capabilities? What’s the maturity level? What’s your liability? They want to know what product would you be proposing to that? Then typically from that, it would be a down select, but it would still be a handful of companies that get into the RFQ, the first-run RFQ. And then there is a deeper dive into the various concepts of your technology. They want to know how your technology works.
They want to get in the middle of it. They want to see data. They want to understand all the different things. But they also want to disclose to you about what they want to do with it, what their unique needs are. We’re not selling screws and glue, even not commodity products. How your customer is going to use your technology is slightly different every time. And we, of course, work with them to accommodate them. But that’s where a huge amount of technical alignment starts happening. In parallel, of course, we start making some non-binding and binding, depending on the OEM, commercial proposals of really where we are going to be. From that phase of the RFQ, you go to another phase where they even down select even further. They do a even deeper dive.
And then, of course, they get, you can go on forever, but essentially it starts converging down to like one or two companies, which is the last one. And you start, you have like binding offers and detailed understanding of what the thing is going to cost. And they want to know breakdowns and understand like, what the future would be if they were to pick you. So, and then after that is, they nominate somebody. And the good point that I see so far is that right now, for the volumes that we’re talking about, they’re looking for a sole supplier. So, they really want to understand the quality and manufacturing capabilities and partnerships, your supply chain, and understanding that how are you going to be able to, like if they pick a sole partner, how are you going to be able to supply the volume in all the regions that they may want to expand to in the future.
So this entire thing has to be put together. It’s not, you can imagine that the technical part is very detailed, but I would say the commercial package and the financial diligence is probably significantly more involved than even the technical. We are very fortunate, we have great engineers and they can walk people through, they can get the excitement, they have mastered what they’ve created. So, we can get the confidence in the technical side. But the commercial side, they need to believe that the company has a plan to be sustainable for a long period of time. We can get to start a production and beyond that. And what our strategy would remain to make sure that the prices we’re giving you right now are affordable for them, but also it’s sustainable for us.
So, I think that that’s kind of a general process, how you get to a nomination or a design plan.
Anubhav Verma: Thanks, Sumit. I think the next question is probably on [indiscernible]. It’s about what are OEM’s most important requirements, including financial due diligence for these nominations? So, I think I touched based on this, but let me elaborate that. So, I think what OEMs are looking to do is extensively model how the business and the revenue streams will evolve in case of multiple wins over the next several years. And this also includes the direct sales channel that we talked about earlier. They want us to project the headcount by geography and the predictability into how the cost will fluctuate in terms of the volume ranges that they have given us. This also involves who will maintain the inventory and where will the locations be and how even the shipping will happen to the different production plants across the globe.
Because as I discussed in my prepared remarks, we are required to have manufacturing capabilities or production facilities in Asia as well as to supply to the Asian business of these OEMs. And I think most importantly, modeling, how will the company be capitalizing and most importantly, lowering the cost of capital, right, because as you can imagine, as the company starts to generate traction, we will be reducing our cost of capital and moving on from equity to debt financing. And as the company generates cash flow, a lot of other options open. So, I think what the OEMs are looking for is a clear path as to how the company becomes a more traditional company as the entire LiDAR business and LiDAR industry becomes more mature and the companies move towards a traditional company with lower costs of capital than just equity.
The next question is, are there any automotive requirements that only MicroVision can provide and none of the other competitors?
Sumit Sharma: I think the way to think about it is that OEMs put together what they need. For example, this question actually comes up often, right, about the dynamic view LiDAR or let me just describe. For example, they’ll give you a field of view and they’ll give you regions of interest of what resolutions they want at what ranges. All right. So, if you think about it, what they’re actually describing there’s a dynamic view LiDAR, right. That’s exactly how technology works. That to maintain these high resolutions and these narrow fields of view in flight, we accumulate all the data and we pump it out. So, from my vantage point, I’m going to look at a teardown of anybody, any of our competitors technology. I’m sure they’ve done ours as well.
When I look what’s inside, they’re just running a static view. I mean, there are four channels or some number of channels that are pointing in different directions. Okay, statically taking in whatever noise that they have and the field of view is fixed. So, therefore the resolution, the far range is much harder for them to achieve. They have apertures. They have MEMS that are in the smaller aperture size, so they’re not even able to reach those kind of ranges. So, everybody technically says the same thing, but if I look at it, from my vantage point, a lot of these things have been written with dynamic view LiDAR in mind. If you think about MOVIA, it’s a 2D sensor, it’s got — it’s a big cell and a spot array, known technology, but customized by our team in Hamburg to actually create something very unique about it, right, which gives a cost advantage long-term.
So, it’s what they want, but if I have to say it’s one requirement, what is one requirement that they want somebody to provide? It’s actually cost. It’s something that is small and low power. You’ve got to meet it, right? So you can see the size of our product, we’re talking about the SRL, we’re talking about MOVIA, these are small, they’d be low power, with their ASICs in there, right? It’s actually the cost. It’s to say, are you scalable? Can you put a production line in that’s not going to cost us $40 million, $50 million and you’re trying to amortize that, right? It’s a reasonable production line. They can go at high volumes at a very high quality and deliver that because no OEMs wants a product that is going to be $800 or $1,000 per unit and somebody trying to drive their price up, not getting to economy of scale.
We are pricing it aggressively and the reason is because we can achieve economy of scales a lot easier because the products are truly running on a semiconductor active aligned, automated line. These kind of automations exist. So, that’s like a core benefit we have. So, I would say if there is like a real advantage our technology has, all the specs, I can talk about it all day. I love it. But it’s a real commercial proposal we’re making. We can start hitting price targets that they have dreamt about and nobody has achieved them yet and we’re going to do that at profitable gains for the company after so much R&D invested to get to this point. So, that’s what I’m more excited about that. That is an automotive requirement, but it is really a commercial agreement that they feel like is sustainable.
Anubhav Verma: Thanks, Sumit. I think this next one probably I should address is like, on the revenue guidance for Q4 2023, which markets and products will contribute the most and how much will be software versus hardware?
