Dakota Semler: Absolutely. So one of the things that getting to positive gross margin, positive GAAP gross margins enables us to do is seek more traditional debt financing options out. So we’ve been having some really positive dialogues with various types of non-diluted capital providers, although the interest rates and rates in these kinds of markets are still high. As we continue to grow and ramp volumes, it will be essential to have access to that sort of capital for working capital and funding growth of inventory to support our backlog. The other thing we’ve been doing and considering is evaluating other strategic opportunities that exist in the market, whether that be equity capital opportunities or other strategic collaborations that bolster up the balance sheet or minimize our cash use. So we’re looking to any kind of transaction that would help create synergies for the business and build up a better cash liquidity balances.
Unidentified Analyst: Great. Thanks so much.
Operator: The next question comes from Mike Shlisky with D.A. Davidson. Please go ahead.
Mike Shlisky: Hello. Good afternoon. Thanks for taking my questions. I guess I wanted to start off. I’ve asked this question before, but now that’s upon us, the ACF rule starting January 1st. I guess maybe a two-part question. At this point, are there any other providers of the step van types that you make that could possibly deliver the vehicles in the quantities that are needed for next year besides Xos? Is there anybody else out there that could compete on the forced EV adoption for next year? And then maybe secondly, how you started seeing at this point, now that we’re just, a month and a half, two months away, elevated incoming phone calls where we have to get these like vans or at least POs for a van ASAP to either get them this year or at least show that we’re trying to get them and apply for an exemption. Just kind of curious as to what the customer voice has been recently on that.
Dakota Semler: Yes, absolutely. So, Mike, in response to your question, I believe there’s one other company that might be able to create a solution that would be compliant with the ACF rule in the step van market. But we don’t work with them and don’t know if they’re capable of producing the volumes that are necessary for the market. So that obviously still remains to be seen. I think when you look at the customer list and customers that we’ve worked with in the past and are now working with in some of our new deliveries that will take place in Q4, including to the leading parcel delivery companies in this space, I think it speaks to us having the most reliable, durable product for their operations. So we’re excited about it.
It amounts to thousands of units that will need to be on the road by the end of 2024. And as we’ve shared previously in other earnings calls, a big part of that is going to be infrastructure and getting the trucks delivered before the end of the year. So we’re starting that process with several of our customers, even as they’re taking delivery of trucks. Even as they’re taking delivery of trucks now, planning out infrastructure for next year.
Mike Shlisky: Okay. I guess I was trying to get a sense of the sense of urgency among those customers today. Is it getting a little more stronger? I mean, I guess I’m trying to figure out how serious are they about complying with the rules or are they all trying to find exemptions at this point?
Dakota Semler: Yes, I would say there’s been some dialogue coming from industry trade groups around challenging the rules and not complying. Although CARB has shown in the past that even with those kinds of challenges, they’ve still issued citations and have issued notices to comply to large fleets that haven’t met the rule. So when it comes to large national accounts and large fleet customers in California, they’re known to work within CARB’s rules and comply with them. It’s generally the smaller fleets that you don’t see as much compliance with. And that’s because they have a lot of risk. If a large parcel delivery or a uniform rental company can’t operate within the state of California, it’s one of the largest markets for most of these fleets. So they need to be able to have continuing operations and they’ll pay to comply and make sure they can legally operate.
