Earnings Call Transcript
Nuvve Holding Corp. (NVVE)
Earnings Call Transcript - NVVE Q4 2022
Operator, Operator
Good morning, and welcome to the Nuvve Holding Corporation Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Eduardo Royes, Managing Director, ICR. Please go ahead.
Eduardo Royes, Managing Director, ICR
Thank you. On today's call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. Earlier today, Nuvve issued a press release announcing its fourth quarter and full year 2022 results. Following prepared remarks, we will open the call up for questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Nuvve's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in these filings with the SEC and in the earnings release issued today, which are available on our website. Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances. With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve. Gregory?
Gregory Poilasne, CEO
Thank you, Eduardo, and hello to everybody joining us today. We thank you for joining our fourth quarter and full year 2022 results call. The fourth quarter saw a watershed moment for school bus electrification with the awarding of grant funding as part of the EPA clean school bus program in October. As discussed at length on our November call, we were thrilled to find out in October that Nuvve facilitated 10 of its school district customers in receiving 61 EPA clean school bus rebates as part of the first phase of this five-year program. Over the past several months, we have been working closely with the school district partners for which we were the grant facilitators, along with other potential customers with the application process we facilitated. Receiving grant and rebate money is just step one in the process of electrification. Recall that our recipients received $20,000 in hardware and infrastructure-based funding per bus. This translates into $1.22 million in funding for Nuvve high-powered chargers infrastructure and site design associated with the 61 buses, but customers have flexibility in how they spend it. Nuvve's bidirectional chargers have sold for more than twice the rebate amount. As such, some customers may choose to pay the difference to purchase the DC chargers, but more likely, we expect most to, one, seek more grant funding in addition to the EPA funding; two, stack their EPA rebate to cover the full cost of DC chargers with more than one rebate per charger; or three, apply their funding for the purchase of AC chargers. Recall that DC chargers are more expensive than AC chargers. However, bidirectional DC chargers provide significantly faster charging speed and, more importantly, allow Nuvve customers the opportunity to unlock valuable vehicle-to-grid (V2G) revenues using a proprietary platform over the life of the vehicle. We take a consolidated approach with our customers and partners, helping them to think through their projects strategically, which includes integration of their fleets with the grid in order to help them understand how to maximize the value they get out of their carbon dollars. We're able to do this because Nuvve is not just a technology company. We're an experienced team executing a time-tested and constantly applied process of deploying V2G-enabled infrastructure successfully across the world. With that said, we expect to receive the majority of the purchase orders for hardware associated with the EPA funding over the course of the second quarter and for shipments to then occur over subsequent quarters. As a reminder, the EPA Clean School Bus Program is trying to provide a total of $5 billion in funding by 2026. We expect to learn more in the coming weeks as applications are released for the 2023 phase in this program. We look forward to participating heavily in this trend as well and hope to outperform our phase one results. On the regulatory front, I want to update you on the regulatory tailwinds we continue to see for V2G as they underscore the critical role that V2G can and should play as vehicles occupy. California remains at the forefront of legislation to combat climate change and promote EV adoption, where more than 60% of the new vehicle sales were electric in 2022. Earlier this year, Senator Nancy Skinner introduced California State Bill 233, which invites yet another climate bill but one that is V2G focused. Specifically, the bill calls for the establishment of state-wide vehicle grid integration goals, higher incentives for bidirectional capable electric vehicles and charging stations, and a requirement that all electric vehicles and charging stations be bidirectional capable by model year 2027 in order for EV drivers to be able to reduce their energy bills while improving grid stability and helping to avoid power outages. While this legislation is still working its way through the stages, it must have to become law. This is specifically on new developments representing unprecedented policy support for Nuvve products and services and the recognition by policymakers of the importance of V2G as a reliability resource. Further, Nuvve will begin its second year of participation in the California Emergency Load Reduction Program, or ELRP. Recall that in March 2021, the California Public Utilities Commission, or CPUC, created the ELRP to pilot a new demand response approach to help avoid retail outages typical in California's hot months. In short, the ELRP pays electricity customers for reducing energy consumption or increasing electricity supply during periods of electrical grid emergency. The program is in effect from mid-October in the late afternoon and early evening hours with a maximum dispatch limit of 60 hours. In the summer of 2022, we launched our participation in this program by pairing our V2G technology and service with San Diego Gas & Electric (SDG&E). We kicked this off in San Diego in July at the Cajon Valley Unified School District and expanded in October to the Ramona Unified School District. This past August, during an unprecedented 10-day stretch that blew away over 1,000 heat records, this operational loan resulted in an export of about 1 megawatt hour of energy to the grid with impressive greenhouse gas reduction metrics of about 250 kilograms and 500 kilograms respectively. We look forward to being able to leverage the entire calendar ELRP program availability this year. Nuvve will have over megawatts of V2G resources participating in the 2023 ELRP season, by far the largest operator of V2G assets in California. Our North America sales and Grants & Funding teams remain at the forefront of these developments, ensuring that we are building and strengthening relationships with markets that have V2G programs such as ELRP in place or soon to launch. California, both through ELRP and other V2G opportunities, remains at the forefront. But we see similar opportunities in other major markets like New York, Rhode Island, Massachusetts, and Delaware in addition to those programs which exist outside of North America, including Europe and Asia. Also in the electric school bus market in February, Nuvve accepted a purchase order from the Los Angeles Unified School District, or LAUSD, to sell 24 V2G-capable DC fast chargers with shipments in the first half of the year. In fact, 18 chargers have already been shipped during the first quarter of 2023. This is our largest single DC fast charger purchase order to date. And as with many programs, we believe that these represent just the tip of the iceberg with respect to the eventual potential opportunity set. This order aligns with LAUSD's 2022-2026 strategic plan to modernize infrastructure for operational effectiveness. The school district operates the second largest school bus fleet in the country with 3,000 school buses. This is estimated to represent approximately 180 megawatts of electric school bus battery capacity if all 3,000 school buses of the LAUSD electrify, which we think is inevitable. Turning to other exciting developments at Nuvve since the last call. On our third quarter call, we discussed pursuing opportunities with third-party charging station OEMs, whereby we interface with a unidirectional infrastructure already in place to layer in our V2G platform. We view this as a means of accelerating the growth of grid services revenue in a way that is not reliant on us rolling out large-scale hardware and vehicles and which is working capital light for us. After several months of discussions and negotiations, we were incredibly proud to disclose our partnership with Circle K in the Nordics in February. Circle K operates across 24 countries with approximately 14,800 stores offering roadside transportation fuel. Through our agreements, Nuvve's V1G unidirectional charging management and power capacity market participation technology is expected to manage an initial 40 megawatts of EV fast chargers and 50 of Circle K service stations and three to five stationary storage sites in Norway and Denmark. We expect to begin to generate modest revenue in the second quarter and for a gradual ramp in the second half of the year. While hardware revenues remain the largest percentage of our revenue today and are likely to remain this way in the near term, we are increasingly excited about the faster growth trajectory of our recurring grid service revenue, as I will elaborate in a little bit. After we complete our first phase of integration with Circle K, we would look to work with them to expand to additional locations across the Nordic high-speed charging network, which includes more than 160 stores in Norway and Denmark and eventually other countries and regions. We applaud Circle K for seeking ways to monetize its EV charging assets through market participation with system operators in Norway and Denmark. Further, we were happy to hear a few weeks ago that Couche-Tard, the parent company of Circle K, is expanding their portfolio in Europe through the proposed acquisition of a portfolio of retail assets that covered nearly 2,200 sites as of year-end 2022. It seems to us that Couche-Tard and Circle K are going all in on transforming service stations into full-fledged service hubs with EV charging and we are poised to be a key part of this where our V2G technology can be a true differentiator. Our primary focus today is to ensure a smooth ramp-up of our operation with Circle K, making sure all of the key pieces of the technology are working together is critical. We want to make sure we are working closely with our colleagues to maximize uptime to drive a successful program with Circle K and their customers. To give you an idea of the scale, with 10 charging stations per site and 250-kilowatt charging capacity as standard today across 17,000 stores, this represents more than 400 gigawatts of capacity under management. We also remain in active discussion regarding additional opportunities similar to that one, and we hope to be able to provide an update on this later this year. To conclude my opening remarks, I'd like to tie these various themes together and briefly revisit our remarks for last year as we summarize 2022 to take a high-level view of 2023. As we discussed in November, we have been disappointed with the pace of the inflection in our business and specifically the sluggish pace of electrification in the school bus market in the U.S. The combination of inflation, vehicle shortage, and reliance on subsidies make the timing of school bus opportunities unpredictable. This can be reflected in our orders for DC fast chargers in 2022, which declined in the back half of 2022 compared to the disciplined growth we had in the forefront of 2022. We do expect to see an improvement in 2023 EV bus sales, but both sales will likely still remain in the hundreds and thousands this year. One thing we are very proud of, however, is our market share. We estimate that more than 20% of electric school buses are connected to Nuvve hardware. We believe this validates our technology and is something that should not be taken lightly, and we are confident that we can grow our share even more. In the near medium term, the sale of our EV charging hardware will continue to be the bigger revenue generator for our business. As such, we are thrilled to have received the record order from LAUSD. With Q1 2023 nearly over, we can confidently say that we expect to report record orders this quarter and more than any quarter in 2022 and 2021. We further expect another strong quarter in Q2 as the EPA program awards come in, which should provide a good baseline for shipments through the balance of the year. Put simply, we expect to see a more material improvement in our hardware sales in 2023 as the tide begins to turn. At the same time, we discussed on the last call how it was important to pursue opportunities such as the one we have secured with Circle K. The ability to significantly expand our megawatts under management and provide grid services is, of course, the main game for Nuvve and where we provide two differentiated value to our customers. Hardware is just step one. Partnering with companies that are deploying the infrastructure themselves is accelerating the growth of our megawatts under management and, more importantly, the growth in our grid service revenue. Through commercial opportunities such as Circle K partnerships and other similar agreements we are pursuing, we believe there is a possible pathway to significant growth in megawatts under management in 2023 and for a solid improvement in grid services. I remain hesitant to guide on grid service revenue as it can be tough to predict, especially in these early days, but I wanted to be sure we express our optimism around making some real gains in 2023. And with that, I will now turn the call over to David to discuss our financial results.
David Robson, CFO
Thanks, Gregory. I will start with a recap of fourth quarter 2022 results. In the fourth quarter, we generated total revenues of $1.15 million compared to $1.25 million in the fourth quarter of 2021. Half of the decline is driven by lower grant revenues, falling more than 50% year-over-year and the balance of the decline is attributed to lower product and service revenues, which declined by 5%. Note that relative to the third quarter of 2022, sales more than doubled in the fourth quarter, and we have seen a continued revenue acceleration into Q1 of 2023. Margins on product and service revenues were 32.7% for the fourth quarter of 2022 compared to 3% for the fourth quarter of 2021. The strong improvement in margins on a year-over-year basis primarily reflects the decision in Q4 of 2021 to engage in the sale of DC chargers at a discount with a particular customer in return for the contractual rights for a larger share of future grid service revenues. In addition, margins also benefited this year from grid service revenues being a higher mix of total revenues in the fourth quarter of 2022 compared with the prior year quarter. Margins can be lumpy from quarter to quarter depending on mix. As a reminder, DC charger gross margins at standard pricing generally range from 20% to 25% while AC charger gross margins are approximately 50%, but in dollar terms, they are a smaller fraction of the revenue of a DC charger. Grid service revenue margins generally range between 30% to 40%. Operating costs, excluding the cost of sales, were $9.2 million for the fourth quarter of 2022 compared to $8.5 million in the fourth quarter of 2021. The increase was primarily attributed to increases in professional fees, rent, and legal expenses, partially offset by a decrease in compensation expenses, including a reduction in share-based compensation. As Gregory discussed previously, in the second half of 2022, we implemented steps to reduce costs in order to maximize operating efficiencies and liquidity. As such, cash operating expenses, excluding cost of sales, stock compensation, and depreciation and amortization were $7.7 million in the fourth quarter of 2022, declining from $7.8 million in the third quarter. We expect additional declines in efficiencies in future quarters with such expenses running at approximately $7 million or lower for the first quarter of 2023. Other income was $1 million in the fourth quarter of 2022 versus an expense of $1 million in the year-ago quarter. The $2 million increase in other income is primarily due to the change in the fair value of warrants issued to Stonepeak and evolve transition infrastructure related to the formation of Levo in 2021 and the change in the fair value of warrants issued to an accredited investor during the third quarter of 2022 associated with the securities purchase agreement. Net loss attributable to Nuvve common stockholders decreased in the fourth quarter of 2022 by $1.6 million to $7.9 million from a net loss of $9.5 million in the prior year. The decrease in net loss is primarily due to an increase in other income. Turning to our full year results. For the full year 2022, we generated total revenues of $5.4 million compared to $4.2 million in 2021, representing a 28% increase. Full year product and service revenues increased to $4.9 million from $2.9 million in the prior year, representing a 68% increase, while grant revenues declined to $0.5 million from $1.3 million, representing a 64% decrease. Margins on product and service revenues were 14.6% for the full year compared to 31.4% last year. The lower margins for the full year reflect lower margins realized in the first half of 2022 of 5% compared to 36% realized in the second half of 2022. We realized lower margins in the first half of 2022 because of a few strategic decisions we made early in the year to sell EV buses and discounted hardware as an avenue in exchange for future hardware and grid service revenue opportunities. Operating costs, excluding cost of sales, were $38.1 million for the full year 2022 compared to $29.4 million for the full year 2021. This increase was primarily attributable to higher public company fees, professional fees, and payroll and consulting costs. Other income was $12.4 million for the full year compared with $47.4 million of expense in the prior year, an increase of $57.9 million. The year-over-year increase in other income was primarily driven by the noncash financing costs associated with the formation of Levo of $46.8 million in 2021 plus noncash income associated with the change in the fair value of warrants issued in connection with the formation of Levo and noncash income associated with the change in the fair value of warrants issued in connection with the securities purchase agreement entered into during the third quarter of 2022. Net loss attributable to common stockholders for the full year improved by $47.9 million to $24.9 million compared with $72.8 million for the full year 2021. We had approximately $15.8 million in cash as of December 31, 2022, excluding $1.5 million in restricted cash. In the fourth quarter, we did not raise any capital. However, subsequent to the fourth quarter end, we disclosed in January that we had entered into an at-the-market or ATM offering agreement related to shares of our common stock. Given pressure on our stock price, we have used this facility sparingly in the first quarter of 2023. We also raised just under $500,000 in February through our registered direct offering. We believe our existing shelf registration, in addition to our ability to free up cash from working capital, along with our continued optimization of operating expenses will provide us with liquidity and flexibility as we scale megawatts under management and revenues into 2023. We are also excited to announce that we have recently agreed to monetize our investment in Switch, a leader in charging infrastructure operation and maintenance software that resulted in $1.3 million in new cash proceeds received in 2023. As a reminder, Switch has developed the only charging platform that is native to plug and charge and vehicle to everything. We have worked with Switch for years. And in June 2022, we entered into an agreement with them for energy management and technology integration in order to further advance and strengthen our technology and development of V2G. At the time, we made a $1 million investment in Switch. Recently, a financing event came about that allowed us to sell our stake for a 30% return while at the same time retaining important commercial and technology benefits of the partnership. The ability to put cash on our balance sheet in a nondilutive way and at a favorable return while still maintaining the various strategic benefits of this partnership, in our view, is an all-around win. Looking ahead, as we have seen year-to-date, our stock price remains very volatile and subject to a macro outlook that remains uncertain and subject to exogenous shocks. That being said, we remain focused on opportunities to raise capital and leverage the momentum in the underlying fundamentals of our business in the most efficient manner for our shareholders. Total cash decreased by $5.9 million during the fourth quarter, primarily attributed to cash operating losses of $7 million, offset by positive working capital. As we previously discussed, we expect to continue to generate positive working capital in future quarters, which will improve our cash burn in 2023 as we bring down our net investment in inventory and accounts receivable. Inventory decreased by $0.2 million to $11.6 million at the end of the fourth quarter from $11.8 million at the end of the third quarter of 2022. We expect inventory to decline in a more meaningful fashion as our anticipated charger shipments pick up in the beginning of the year, as alluded to by Gregory. Accounts payable increased to $2.4 million at the end of the fourth quarter compared to $1.7 million at the end of the third quarter. Now, turning to megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V1G and V2G chargers, which are primarily deployed in the electric school bus market in the U.S. and in light-duty fleet deployments in Europe in addition to stationary batteries. Currently, these chargers and batteries are located throughout the United States, Europe, and Japan. Megawatts under management increased by 7% over the third quarter, up 1.1% to 17.4 megawatts at the end of the fourth quarter 2022 from 16.3. For the full year, megawatts under management increased by 38%. Megawatts under management comprise 9.4 megawatts for stationary batteries and 8 megawatts from EV chargers. We expect our megawatts under management to increase nicely in the coming quarters driven by the Circle K opportunity, new school bus charging station deployments, and other commercial proposals we are working on in North America and Europe. This brings me to estimated future grid service revenues associated with our megawatts under management and megawatts to be deployed, which is based on a combination of contracted grid service revenues and merchant-exposed revenues. As Gregory mentioned, we expect our charger hardware orders in Q1 of 2023 to be the strongest compared to any historical quarter in 2022 and 2021. In addition to this growth, with our expanded megawatts under management reaching 17.4 megawatts at the end of 2022 and growing further in 2023, we are now at the early stages of reaping incremental benefits of recurring grid service revenues generated by our platform. In 2023, we expect grid service revenues to outpace our strong hardware revenue growth, therefore resulting in grid service revenues making up a larger share of total revenues compared to the prior year. Depending on the geographic regions of our deployments, our grid service revenue opportunities will vary. We are currently seeing grid service revenue opportunities for vehicle-to-grid services ranging between $85 per kilowatt year up to $300 per kilowatt year in strength in certain key markets we are focusing on. And with our planned expansion of V1G charging management services in Europe, we are seeing further grid service revenue opportunities. These revenues include a combination of contracted services and merchant exposed services, as I previously mentioned. Given the long-term nature of our customer deployments, these revenues are generally recurring for periods as long as 10 to 12 years. Now turning to backlog. At December 31, our hardware and services backlog was $4.1 million, nearly flat with Q3 of $4.2 million. We didn't realize growth in backlog in the fourth quarter as many of our customers were holding off on placing orders during the quarter in anticipation of placing orders in 2023 associated with EPA grant awards. To conclude, our outlook for 2023 is bullish. We already see this in our early 2023 results with Q1 2023 performance expected to be strong for charger sales and with grid service revenues expected to grow at an even faster pace, expanding our top line in both categories as well as expanding our gross margin dollars. In addition, we expect operating expenses, excluding cost of sales to decline in Q1 '23 compared to the fourth quarter of 2022. Finally, we expect to realize meaningful reductions in net working capital further improving our cash burn. As we look out past the first quarter, we will start to realize the revenues from EPA grants awarded last year and the benefits of new grid service revenues coming online, both through V1G services in Europe that we have already announced and expanded participation in V2G services in North America. Finally, we expect to grow our megawatts under management materially in 2023, which provides us the ability to earn valuable grid service revenues for Nuvve and our customers in the future. And with that, Gregory, I’ll turn it back to you to wrap up our prepared remarks.
Gregory Poilasne, CEO
Thanks, David. To conclude, we are in close collaboration with our school district customers with whom we have been awarded the EPA clean school bus program, and we look forward to accepting orders in the coming months and shipping them in the quarters ahead. We are happy to see momentum building now that we are a few months into 2023, both on the hardware side as evidenced by the LAUSD order, and on the grid service revenue side, as we seek out opportunities to layer our technology into existing infrastructure, such as through the Circle K partnership. These recently disclosed agreements, as well as our pipeline, point to an improvement in our business in 2023, compared to what was rather flat and disappointing in 2022. We, of course, remain optimistic about the medium and long-term growth prospects for our business as endorsed by the myriad of regulatory V2G tailwinds. We thank you for your participation, and we'd like to now turn the call back to the operator to begin our Q&A.
Operator, Operator
Our first question is from Eric Stine with Craig-Hallum.
Eric Stine, Analyst
So given the Circle K announcement, obviously, pretty exciting. Just curious, could you maybe talk about how you expect that to play out in terms of the rollout over 2023 and into 2024? And then you did mention that you've got similar opportunities out there. Any color you can provide on those would be helpful.
Gregory Poilasne, CEO
I believe the rollout will happen gradually. We have two types of resources: stationary storage and charging stations. Currently, the storage is concentrated in one area while the charging stations are spread across different regions. We will see more of this being implemented throughout the year, so it's important to manage the rollout process carefully. Additionally, we need to enhance our understanding because, for grid services, having a charging station alone isn't enough; it also requires a vehicle to provide those services. We are collecting high-level data to better understand how we can optimize these combinations. I anticipate some revenue starting in Q2, although it will be minimal, increasing in Q3, and likely reaching full scale, though not fully optimized, by the end of the year for the first 40 megawatts.
Eric Stine, Analyst
Got it. And then just on the additional opportunities?
Gregory Poilasne, CEO
Yes, I mean, obviously, we haven't disclosed those, but there is a large amount of fast chargers being deployed in Europe and in the U.S. And those are with freeway type of installations. You also have some other types of depots that may have less support for a full bidirectional application, but that might be a great application for unidirectional, so I would consider those two.
Eric Stine, Analyst
Okay. Got it. And then maybe as we think about megawatts under management, you obviously had the announcement related to stationary batteries in Japan. I'm just curious, could you talk about the stationary opportunity? I mean, I guess it's basically equal right now to the vehicle side in terms of megawatts under management. Now, how do you see that? If you look out three to five years, what does the mix look like in stationary? Does it remain a meaningful percentage of the mix?
Gregory Poilasne, CEO
I would say that vehicles will be a large proportion of the kilowatt hours being managed and the kilowatts we are providing to the grid. Definitely, vehicles will be a substantial part, but when you look at a site, you have a combination of local generation, like solar, local loads, local storage, and both unidirectional and bidirectional charging (V1G and V2G). You have a lot of flexibility in how you manage a site like that. We've always talked about both those powers representing a mix of local generation, local storage, local loads, and V1G and V2G. Our platform is not only great at managing EVs, but we're also really competent at managing stationary storage and optimizing the value we can extract from that combination. I think we're ahead of the curve in how we're positioning ourselves in that specific point.
Eric Stine, Analyst
Okay. So is it better to think about this in terms of each site having a mix of different types? There will be some stationary storage present, as opposed to opportunities that focus heavily on stationary storage specifically?
Gregory Poilasne, CEO
Yes. I mean our acquisition is always that our competitive edge is in the EV space. But EV combined with stationary storage is very valuable. And so the entry point is starting with transportation electrification. That's our position.
Eric Stine, Analyst
Okay. Got it. And maybe last one for me. Just curious, I guess, we're still kind of waiting on or in process in terms of the first tranche of EPA funding, but any indications about your involvement, how are things coming together as you kind of get prepared for that next stage of EPA funding?
Gregory Poilasne, CEO
Yes. I mean first, we are still working very closely with the school districts. It's a big step, right? There was a lot of money on the school bus side in this round, but a lot of school districts were surprised by the amount of money that we have to spend on the infrastructure piece, not just the charging stations, but potential grid upgrades. We expect the next round to be a lot more balanced and to have more project implementations that are more firm than what they were in the first round. This is what you would expect because now with the first round people have been thinking about. So we expect the next one to be something where people will have a clearer understanding of what they need to put in place.
Operator, Operator
The next question is from Brian Dobson with Chardan Capital Markets.
Brian Dobson, Analyst
So the Circle K partnership is very positive. I suppose, as you're thinking about Europe and growth there, can you speak a little bit to the environment and toward the business there and also the opportunity for potential subsidies coming from the European governments?
Gregory Poilasne, CEO
Yes, I think Europe is very interesting. The war in Ukraine has created a lot of volatility in the cost of energy, impacting electric energy costs. This volatility, in addition to more advanced markets such as CRN, CRD, FFR, brings many opportunities for us to provide those grid services with minimal impact to the end user. When you go through a fast charger, customers do not have to undergo lengthy wait times to save a bit of money. Just a short wait can make a significant difference in the cost of infrastructure and deployment.
Brian Dobson, Analyst
Yes, very good. And then also positive for next year that potential order from the Los Angeles Unified School District. As grants are paid out from the government, what kind of motivation do you think you'll see from other large school districts to enhance their EV bus orders?
Gregory Poilasne, CEO
I think that wave is happening right now, and it's not going backward. The biggest hurdle is really EV manufacturing, which is expected to result in hundreds, but not yet thousands of orders. The mindset has turned, and the school districts are ready to embrace it. They are still discovering what it takes to get there, but they are really embracing it. I think that the big school districts—some of the large fleet owners have clearly pointed that out. I think that tidal wave is moving, and it is exciting. We can expect hundreds this year and thousands next year.
Operator, Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Gregory Poilasne for any closing remarks.
Gregory Poilasne, CEO
Thank you everybody for joining us today. We are very excited about 2023 and we're looking forward to sharing more about the progress that we are making into rolling out our technology with partners such as Circle K and the further wins we are achieving in the school bus business. I look forward to sharing more with you at the end of the first quarter of 2023. Thank you.
Operator, Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.