Q4 2023 Ideal Power Inc Earnings Call
Participants
Jeff Christensen; IR; Darrow Associates, Inc.
Dan Brdar; President, CEO & Director; Ideal Power, Inc.
Tim Burns; CFO & Treasurer; Ideal Power, Inc.
David Williams; Analyst; The Benchmark Company, LLC
Donovan Schafer; Analyst; Northland Capital Markets
Brian Dobson; Analyst; Chardan Capital Markets, LLC
Jeff Grampp; Analyst; Alliance Global Partners
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the Ideal Power Fourth Quarter and Full Year 2023 Results Call. At this time, all participants are in a listen only mode at the end of management's remarks, there will be a question and answer session. Investors can submit their questions any time at the meeting webcast by typing them into the Q&A button on the left of your viewing screen analysts who publish research may ask questions on the phone lines for analysts to ask questions on the phone line, please press star one on your phone to enter the question queue at any time, and we'll open the floor for questions and comments after the presentation.
As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen.
Please go ahead.
Jeff Christensen
Thank you, Matt, and good morning, everyone. Thank you for joining Idaho Power's fourth quarter and full year 2023 conference call. With me on the call are Dan Brdar, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer, Ideal Power's fourth quarter and full year 2023 financial results press release is available on the Company's website at Idaho Power.com.
Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks, and we would also refer you to the Company's website for more supporting company information.
Now I'd like to turn the call over to Ideal Power's President and CEO, Dan Brdar.
Dan?
Dan Brdar
Thank you, Jeff.
Good morning, everyone, and welcome to our fourth quarter and full year 2023 financial results conference call. I'll first update you on our progress since the start of the fourth quarter and then review our priorities for 2024 to commercialize our Vitran's semiconductor technology.
We made great progress delivering against our Vitran commercial roadmap in 2023, and that progress has continued into 2024 as our customer engagements are expanding. But we're certainly excited about our progress and recent news. We're even more excited about how 2024 is shaping up for the Company. Since the start of the fourth quarter, we successfully completed several additional milestones had some very positive customer recognition that collectively confirms our continued progress on our BE trend commercialization roadmap. We're thrilled about our momentum, recent successes, customer feedback and recent enough announcement in these major areas.
First, we commenced SimCorp power module shipments to fulfill customer orders, simple power module targets, industrial markets, particularly the solid-state circuit breaker market and is expected to be the earliest source of our product revenue and sales ramp.
Second, we successfully completed Phase two of our development program with Stellantis, a top 10 global automaker, notably the name Stellantis was disclosed by the open hydropower for the first time in Q4 of 2023. Third, Stellantis recognized Ideal Power as a finalist in their 2023 Stellantis venture awards.
Fourth, we released demonstration videos and application notes related to our B trend and Simcoe products to assist the technical teams at our target customers to better understand our products in their use. These videos and application nodes have already produced new opportunities in our sales funnel that are producing a high number of views with our target technical audience, demonstrating a growing interest in awareness of our technology. Fifth, we are nearing completion of a qualification run with our second high-volume wafer fabrication partner. We'll take a deeper look at these activities but first, I want to take a step back and highlight what is driving the interest and the need for the technology we're bringing to market commercialization of our technology comes at a time when there are significant macro trends in the industrial, renewable energy, energy storage and hybrid and electric vehicle markets that will act as drivers of our revenue growth for many years. It's not only the long-term growth of solar energy, energy storage and the adoption of hybrid and electric vehicles. These growing markets are part of the broader global electrification of society that that is occurring. Current electric utility system was designed decades ago and will require enormous investment to accommodate the fundamental changes. Electrification requires our utility transmission and distribution system was not designed to accommodate large amounts of distributed solar power for homes and businesses, the build-out of a nationwide electric vehicle charging infrastructure and the broad use of localized energy storage by businesses for backup power and electricity cost control. At the core of all these applications, renewable energy, energy storage, hybrid and electric vehicles, EV charging and utility grid modernization is the need for improved power semiconductors as they are essential to reducing the cost and improving the efficiency across all applications at our power semiconductors mean more useful energy for solar energy storage installation, longer range and faster charging for electric vehicle and lower cost and more efficient use of electricity and why we're so excited about the timing of our commercialization and what brief Vitran brings to the market. Our technology has the potential to improve how will the performance and cost of a wide variety of applications that are part of this fundamental change and how we make distribute and use electricity looking at the size of the opportunity. This creates based on the recent study by mode or intelligence in their global power electronics market report to be trends, serviceable addressable market for SAM is predicted to more than double over the next five years with a projected 16% compound annual growth rate. The total SAM for Vitran is forecasted to grow from $3.6 billion in 2023 to $7.6 billion in 2028, driven by these macro trends.
Looking forward, we'll continue to execute on our Vitran commercialization roadmap. Our priorities for 2024 are to convert large OEMs in our Test & Evaluation Program to design wins and our custom development agreements sell simple power modules to additional target industrial customers and distributors for simple products. Continued strong execution on our development program with Stellantis began third party automotive qualification testing, complete the qualification of a second high-volume production fab and capture initial sales of our simple IQ intelligent power module.
And I'll discuss the highlights of some of these priorities along with other opportunities in development.
There's a growing list of customers working with our team in each of our key target markets. And I'm pleased and excited about our progress and the feedback we're receiving from our growing customer engagement. We expect the industrial markets and in particular, the solid-state circuit breaker market, certify our simple power module to be the earliest source of our product revenue and drive our initial sales ramp. The interest in our simple product is driven by the need for better circuit protection within the utility distribution system. Industrial facilities need to be able to quickly isolate solar farms and energy storage facilities and even circuit protection within hybrid and electric vehicles. Later this year, we're expecting initial sales of our Simcoe IQ intelligent power module. Simcoe IQ takes our Simcor power module and adds an intelligent intelligent driver to allow localized control and operation. The same core IQ product applies to the renewables market, particularly renewables, coupled with energy storage, stand-alone storage and microgrids, EV charging and other industrial markets like the solid-state circuit breaker market. These applications have a shorter design cycle compared to the automotive industry targeting the Industrial Power and Renewables markets first gives us the ability to ramp up our supply chain and revenue. So we are ready to serve the high volume we expect to be driven on auto manufacturers for their hybrid electric vehicle platform. With the visibility of our technology and products growing, we're now receiving numerous inbound inquiries from companies and companies in our early target markets.
Looking to learn more about our products to better serve these customers and provide the ability to purchase products in smaller volumes. We're adding distributors for customers wanting parts for evaluation, some of which will later turn into volume supply agreements with us, we're finalizing our first agreement with the distributor for our products. We've also selected a second distributor with particular strength in Asia and have begun crafting an agreement with them as well. Our current focus is engaging distributors with strong technical sales teams, expertise in securing sales for new technologies and global reach will add more sales reps and distributors over time have comprehensive channel coverage. As we said previously, given the evaluation and OEM product design cycles of most industrial companies, volume and revenue will be modest in 2024. We expect to see the start of a ramp up in sales in the second half of 2024 as customers work to release products that incorporate Vitran.
Turning to Stellantis, we're thrilled with our progress in a program to use the train in their future EV drivetrain due to the strong performance of our team and our technology. We're continuing to earn our place in the program and recently announced that we successfully completed Phase two of the program several months ahead of schedule. Phase two deliverables included a multi-wafer run delivery of tested the trend devices and drivers to both the programs, packaging company and the organization, building the initial drivetrain inverter and delivery of a comprehensive test plan for auto qualifications that was subsequently approved explained this, we collaborated closely with Stellantis and the program partners to supply different devices for integration into the custom power module and inverter designs from the device testing results by the Stellantis program team validated the expected efficiency improvements anticipated from the use of the trend in the drivetrain as part of Phase two. Stellantis also conducted a data-driven comprehensive assessment of the technology readiness for implementation into their electric vehicle platform. And we're pleased to say the outcome of the assessment was very positive, successful completion of Phase two was also customer validation of Vitran and its potential impact on improving EV range and costs. Additional validation was provided by Stellantis in December when they named us a finalist in the 2023 Stellantis venture awards. Our selection was based on our successful collaboration and performance in the program and potential impact on customer experience, novelty of the technology and this potential scale within Stellantis. We're leveraging our success with Stellantis to attract and engage additional companies interested in our technology for their applications, including other industrial and automotive OEMs and Tier one automotive suppliers. We're currently finalizing the scope of work for Phase three of the program was delayed this, which now includes the production side of their team. This phase is expected to include the extensive testing of the CustomVue tram module to meet automotive certification standards, enabling the trend to be the core of the powertrain inverter for the automakers next-generation EV platform, their stated goal for the program is to have a custom module production ready by 2025. Stellantis is funding the program. We had modest revenue from them in 2023 and expect modest revenue from Stellantis again in 2024 due to its compelling advantages. The trend is also being evaluated for Stellantis as vehicle power management, circuit protection and EV charging ecosystem. As a reminder, this program represents our second engagement with the world's leading automotive manufacturers as another top 10 global automaker is already in our Test & Evaluation Program, substantial progress continues with our test and evaluation program participants, particularly for solid-state circuit breaker and hybrid and electric vehicle applications. This year, we expect to convert large OEMs in our test and evaluation program into design wins and or additional customer development agreements. Our test and evaluation program includes several large global companies that present multiple opportunities for IVL power taken as a whole they address all of our target markets while initially interested in a specific application. These program participants have, in many cases, expanded their interest for several applications in their product portfolios that could take advantage of the benefits of Vitran customer shipments to the test and evaluation program. Participants included multiple package be trend devices, the device driver, a power test board housed in a safety enclosure to facilitate and accelerate the evaluation process. To date, the transshipments test evaluation program participants include a top 10 global automaker, a global Tier one automotive supplier, a leading provider in the solar industry, two, Forbes Global 500 power management companies, global provider of backup power and energy management solutions and several others with additional kits to follow for new participants. While these large companies move slowly. Several of these customers have advanced beyond the evaluation stage and are requesting multiyear product volume quotes or custom product development proposals and in many cases are providing us with specific feedback for our long-term product planning roadmap to closely align with their requirements, the conversion of a single opportunity to potentially significantly impact that victory of our pending revenue ramp. As you know, our Test & Evaluation Program will remain an embedded process in our sales and marketing effort and a source of input to our next generation of products will continue to add additional potential customers to the program for those customers that represent an opportunity for us to collaborate with a market leader for a specific market segment. Program allows us to get a good handle on customers' technology evaluation processes, their product design cycles and the commercial plans beyond the high-profile companies in our Test & Evaluation Program, we're already seeing customers, particularly in the circuit breakers and circuit protection markets ready to be served by our distributors as we bring them on board.
Let's turn to the supply chain that ensures we'll be prepared to support our sales and production ramp. Our second high-volume wafer fabrication partner is nearing completion of a qualification run. This wafer fab in Europe will support future revenue growth and add boost sourcing for wafer fabrication. We're very pleased with its progress with no major issues to date and look forward to receiving the wafers from this slot and assessing their performance for the completed wafers and resolving the trend die. We expect to complete the qualification of this fab as early as the second quarter of 2024 last year, we qualified an Asian wafer fabrication supplier with high volume capability with these two wafer foundry partners on board, we have dual sourcing for wafer fabrication in different parts of the world with no exposure to China. Our dual sourcing strategy will allow us to proactively secure not only the necessary production capacity, but also the ability to source components and services from partners in disparate geographies as part of our strategy to mitigate supply chain risks. This dual sourcing will provide us with sufficient supply capacity for the large customers. We're engaging for confident each of these wafer fabs has ample capacity to meet our expected demand for at least the next two to three years. Automotive qualification testing will begin later this year. Being automotive qualified helps us across the board in both automotive and industrial applications. It says a lot about the robustness of your design and its ability to handle extremes of the environment for shock, vibration and power cycling. It helps industrial customers get a comfort level for the readiness of a new technology with our certification test plant now approved as part of Phase two certification testing firm we intend to use has been selected. And once Phase three with the Lantis is underway, we'll begin the wafer runs that we plan to use for auto certification while it may change at some point in the future, one advantage we have for the foreseeable future is that for any application like hybrid electric vehicles or solid-state circuit breakers for solar and energy storage wafers and resulting dies for all exactly the same. We can ramp up production robustly because we don't have to forecast wafer demand and the die design mix based on the application.
Another advantage to our approach is our ability to leverage the huge investment that's already been made in silicon wafer fabrication and packaging for power devices. Our asset-light business model gives us the ability to continue focusing on technology improvements, being able to quickly incorporate customer feedback for our product roadmap. Although the interest in bidirectional power semiconductors continues to grow. We're not aware of any competing inherently bidirectional technologies.
Looking at our expanded Vitran's patent estate, we currently have 82 issued Vitran's patents for 36 of those issued outside of the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India and Europe, with pending coverage in Taiwan are representing our high priority hasn't covered geographies. As part of our product development and introductions, we're expanding our patent efforts and what we believe to be high-value patents on our driver design and controls and packaging designs both are unique to the bidirectional nature of our technology. As a result of our continued innovation, our list of pending Vitran patents is now at 39. In addition, we treat our double-sided wafer fabrication process as a trade secret. So even studying our patents, somebody wouldn't have the know-how to be able to fabricate the device. There's an enormous amount of learning that's gone into the fabrication process flow to make high quality, high-performing double-sided devices for commercial sale.
In summary, we're off to a great start already this year, and we're on track to achieve our 2024 milestones. We look forward to several announcements in the coming months as we complete the key objectives we plan to accomplish for the year when we look out over the next 12 months, we're confident we can continue to drive considerable commercial progress in our target markets. We'll maintain our relentless focus to commercialize our technology and facilitate its adoption in our target markets. We expect the trend to displace conventional power semiconductor solutions in many applications with the solid-state circuit breaker, renewable energy, energy storage, hybrid and electric vehicle and other industrial markets.
Now I'd like to hand the call over to our Chief Financial Officer, Tim Burns, to review our fourth quarter financial results.
Tim Burns
Thank you, Dan. I will review the fourth quarter and the full year 2023 financial results. We recorded $61,000 in commercial revenue for the fourth quarter and $161,000. For the full year, our grant revenue was $37,000 for the full year 2023. Looking to 2024, we expect commercial revenue from both product sales and development agreements. Although we are continuing to pursue government funding opportunities, we do not have any such programs at this time.
Operating expenses were $2.5 million in the fourth quarter of 2023 compared to $2 million in the fourth quarter of 2022, driven primarily by higher research and development expenses. We completed several wafer runs with our qualified high volume production foundry. We also are in the midst of a qualification one with a second high-volume production. Foundry operating expenses reflected higher stock-based compensation expense and performance stock units and new hire grants. We continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs product development other research and development activities and hiring, we expect to keep general and administrative expenses relatively flat in the first quarter of 2024. Excluding the impact of stock-based compensation, sales and marketing spending is expected to continue to increase modestly in the coming quarters due to hiring and costs associated with our commercialization efforts.
Net loss in the fourth quarter of 2023 was $2.4 million compared to $1.9 million in the fourth quarter of 2022. Full year 2023 net loss was $10 million compared to $7.2 million in full year 2022. Fourth quarter 2023 cash burn was $2.3 million at the midpoint of our guidance of $2.2 million to $2.4 million as we continue to manage expenses prudently and aggressively cash burn in the full year 2023 was $7.9 million at the midpoint of our guidance of $7.8 million and compared to $6.8 million in the full year 2022. We expect first quarter 2020 for cash burn of approximately $2.3 million $2.4 million and full year 2024 cash burn of [$8 million] to $8.5 million, net of an expected $1 million benefit from proceeds from expiring heavily in the money warrants.
Cash and cash equivalents totaled $8.5 million at December 31, 2023. We have no debt and a clean capital structure. Given our planned cash burn, which remains modest, we have ample liquidity on our balance sheet to fund operations through 2024 or potentially see several potential sources of funds, including product sales, development agreements, other commercial agreements with upfront payments and government funded programs where we see opportunities to collaborate with some of our partners. We are also exploring potential strategic relationships with our well-capitalized partners. For example, Stellantis has a venture fund, and we were named the finalist in the 2023 Stellantis venture awards. You don't know if there's a potential opportunity for us was to analyst venture funds. That is something we could choose to explore if we are convinced it wouldn't adversely impact other EV customer opportunities as a public company. We also have access to the capital markets if necessary. At December 31st, we had 5,996,697 shares outstanding, up slightly from the end of September and 1,040,248 warrants outstanding, unchanged from the end of September 444,180 of the warrants outstanding are heavily in the money and set to expire in November 2024, if not exercised before and included [811,478] stock options, restricted stock units and performance stock units outstanding. We had 7,848,423 diluted shares outstanding at December 31.
At this time, I'd like to open up the call for questions.
Operator?
Question and Answer Session
Operator
Thank you.
And at this time, we're conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button. On the left side of your viewing screen analysts who published research may ask questions on the phone line for analysts to ask questions on the phone line, please press star one on your phone. Your first question is coming from David Williams from Benchmark. Your line is live.
David Williams
Hey, good morning, gentlemen, and thanks for taking my questions for David.
Yes, so congrats on all the progress. You're clearly making a lot of headway here, and I've always been impressed with your go-to-market strategy is how quickly that's developed. I guess in that vein, can you talk a little bit about the shipments you had this quarter and maybe just any color around that, maybe who that was or but their retainer, what the feedback has been since they've received those things?
Tim Burns
Yes. So there obviously some core product sales. So their initial shipments of that product. That product is targeting the solid-state circuit breaker market. We have a couple companies in our Test & Evaluation Program that were Forbes Global 500 power management leaders.
There's also, I would say a couple of more that are similar in size to those companies that we're interacting with on a regular basis. So we're not going to name the specific companies, but there are some very large well-known names in the space.
David Williams
Okay, great.
And you talked about having the capacity capacity in place for the next several years. I guess what is the opportunity for maybe revenue to inflect a little more quickly than you anticipate if you started receiving orders or design wins for production later this year, how quickly could you ramp and do you feel that you have opportunity if you needed more capacity that you could you could maybe augment what you have currently with the other opportunities?
Dan Brdar
Yes, as far as our ability to produce product that the wafer fabs and the packaging firms, we can rent them relatively quickly, even from a material standpoint, the wafers that we use are not special. We've I mean, they're out there available in the silicon commodity wafer market. And there's plenty of capacity to actually just do more runs than we have been doing with them. So that ability as quickly as pretty quick. And so it's really a function of how quickly do we see the customer adoption of technology adoption with customers up, especially the big customers that we're working with always seems to take longer than anybody would like. But if they decide they want to start doing something meaningful, we could respond literally within the quarter.
I might wrap it up additional products.
David Williams
Great. And maybe just one last one here, but maybe if you could talk a little bit about the ASP. or even the bill material potential on the solid-state circuit breakers, what does that look like? And maybe even on a per unit basis, but what kind of revenue could we expect as that begins to ramp if you think about volumes?
Tim Burns
Yes.
So for the simple, it's a multi-die module.
If you look at the IGBT module market out there, those modules typically range anywhere from, let's say, $100 to $300.
We're going to be make sure we're price competitive in that market.
Dan Brdar
One of the things that we've done in the design of the SimCorp power module is for we think about high power circuit breakers for industrial utility applications. They have a huge range in size. They could go from a couple of KV. up to thousands of KV. and the product is designed.
So you can parallel as many units as you want to get to whatever rating you want.
So we don't have to make any special modules depending on the size of the broker. And that's one of the themes. The things we're getting for feedback is on the customers that are focusing on circuit breaker applications, really like the fact that it gives them unlimited flexibility and how they size the broker.
David Williams
Thanks so much for the time, gentlemen, appreciate it. And I'll jump back in the queue.
Dan Brdar
Thanks, David.
Tim Burns
Thank you.
Operator
Your next question is coming from Donovan Schafer from Northland Capital Markets. Your line is live.
Donovan Schafer
Hey, good morning, guys. Thanks for taking the questions. So the first one that I want to ask about is on following covering the clean energy kind of like utility-scale solar space, there's there's an acute pain that and that project developers are feeling right now and it's flowing through and impacting a lot of the utility scale equipment providers that I had that I cover. And, you know, it's one of them is high voltage circuit breakers. And I know this stuff can be pretty a lot of nuance, pretty technical like there may be differences. For instance, the Vitran may not be applicable for like a high voltage type grid grid type application or where you know, or that could be a long validation process where you need a utility or sign off and say, yes, we're going to allow such and such a piece of equipment to connect into our our wires or protect our system and so forth. But so you know, the pain point right now is kind of more high-voltage, but you go through the whole spectrum or the whole gamut from going down to the panel level and building up to where you tie into the grid. So I'm curious if you're seeing any incremental interest or have folks taking a greater interest in this kind of approach if it is portable or transferable for those applications. And if with current kind of problems the industry is having there, if that's something you'd be able to benefit from or if it takes too long. And so maybe not necessarily this cycle by the next time a bottleneck like this emerges in this space. You could you could execute on a just curious any color around that.
Dan Brdar
Yes, I mean the nice thing about the way we have done SimCorp is you can literally do something that is it of [1,200] volts or you can do some things at 12,000 volts. And that's a big part of why these Forbes Global 500 companies are really interested in understanding our technology because they'll figure out what's the right size, whether it's really high voltage or whether it's going to be something that is a much more localized level at the panel level and figure out what's the right solution there and our technology gives them the ability to have the same semiconductor in this huge range. So they can craft the solutions that give them really a unique offering compared to the rest of the marketplace. So we expect to participate in both ends of that spectrum.
Donovan Schafer
Okay. So there's not some something where say a certain number of Vitrea and dies would need to be effective in like series or in parallel? Or because I know there's this modularity to it where you can kind of mix and match and hit whatever specifications you need from a voltage and current standpoint, but you could get like an incremental amount of losses or something. Because I note, of course, that's one of the benefits as you have fewer losses versus other slightly in our other circuit breaker types of years --
Tim Burns
By dividends or does it get prohibitive at any point.
Dan Brdar
Now and see what actually happens is you parallel losses losses, but now
(multiple speakers) actually be really impactful as you get to bigger and bigger breakers where you just get to a level of losses that if you're doing IGBTs, you can't even begin to touch it.
Donovan Schafer
Okay. Okay.
Okay.
Let's go on and then with the I was kind of on a similar in a similar vein talking about EV.s on Phase two with the process of Stellantis. And I know I think in the release you said and in the prepared remarks, one of the objectives was to for the customer to validate you have potential improvements for range and cost in the EV. And I know that's kind of interchangeable because as you improve the range you can you can then reduce the batteries required. And so that lowers the cost and you can kind of pick and choose between the two. But is there anything you know, I guess first did were they successful in that part of things where they are able to kind of come up with their numbers, some kind of quantification? And then is that something you can share? And if not, can you just maybe give more of a rough materiality or if if that's an attribute that would move the needle for them?
Dan Brdar
Yes. On the large automobile companies have just incredibly sophisticated modeling capability to assess the impact of a whole variety of things on the performance of the vehicle.
I'm just on your one comment. We have we haven't had any discussions with any automaker where they're talking about reducing the size of the batteries on what they're looking for solutions that help them lower cost and extend range at the same time because they're there. I think most of those issues, so take batteries out there, it doesn't give them again and range of with improved semiconductors so far is just kind of a nonstarter for them.
They want they want something that tackles both those issues that will be generally does help because we're working under a nondisclosure agreement with them.
They won't let us say what the model improvement was from using Vitran. But what we do know is we're really happy that it met their expectations. We did some work ourselves leveraging some analysis that Toyota did looking at improvement of power semiconductors. And our conclusion back then was our technology would improve the range of electric vehicle by 7% to 10% by using Vitran instead of IGBTs. So I think the answer they got must have been somewhere in that neighborhood, but I doubt they would let us disclose it.
Donovan Schafer
Wow. Okay. That's quite impressive. And then for what we're talking about developing, you know, a module or a customer module for these types of applications on the I know the needs can vary. I think quite widely. So it's a simple module. You've got four dot four Vitran ties in there when it comes to doing, let's focus specifically and just as kind of a point of reference for the Stellantis, the idea of making a more and it doesn't need to be signed as I mean, I guess you could talk about a just for this particular application and to have a module where it's the power module that is in the drive train application for tying to the inverter, how many guys would be involved in something like that I mean this includes four. Is this something where you're talking tens or hundreds or are really more like [$0.04], same order kind of a magnitude of SimCorp?
Dan Brdar
It will be bigger than simple. It depends a lot on the car, the size, the size of motive, it's in there, the electric motors they want to drive, but it will it could be from maybe as low as eight to 10 to maybe 20. Now it also depends on how many modules they want to use to get redundancy for the modules themselves. So they may break it up into a couple of groups just from a reliability standpoint.
Operator
Thank you.
Your next question is coming from Brian Dobson from Chardan Capital Markets. Your line is live Kay.
Brian Dobson
Good morning.
So you gave some great cover from Stellantis and you mentioned also conversations with leading global company. Steve, do you believe that the growing network has contributed to starting those conversations? And have you noticed that that relationship has opened up new opportunities for it?
Tim Burns
So yes, I think both initially with the Navy program for solid-state circuit breakers and then was so intense, particularly after we were able to name them when we were named, we were named a finalist in the still latest venture awards. Both really resulted in a significant increase in our sales funnel, significant inbound inquiries, particularly around the solid-state circuit breaker application in the hybrid and electric vehicles application as well. So that's something that we think will just expand our opportunities, including companies that aren't necessarily in our Test & Evaluation Program.
They're now looking to purchase SIM pools rather than in a test and evaluation program to obtain the customer kits that have individually packaged Vitran die.
So we think that will drive it.
It will be very modest, but it will drive revenue early on is companies are actually looking to buy several tens of devices for their evaluation that we haven't even discussed as part of the test and evaluation program.
Dan Brdar
Having that we saw was as soon as we announced the Lantheus, the other I've talked to an automaker that's already in our Test & Evaluation Program, a clearly reacted to that in terms of the level of activity, engagement and things that they're looking to do with us. So I think they all realize they've got to figure out what is their EV platform going forward? How are they going to tackle the range and cost issues and how are they going to do something that is innovative. It doesn't look like you're just copying what somebody else has already done.
Brian Dobson
Yes, very good.
Thanks.
Very much.
Operator
thank you.
Your next question is coming from Jeff Grampp from Alliance Global Partners. Your line is live one.
Jeff Grampp
I guess I'm curious with that with respect to the and the Stellantis process, is there a way to kind of compare contrast the difficulty or risk profile, if you will, between the various phases? In other words, just trying to assess as an outsider, is it is it harder and more challenging to pass through a given phase? Or is it just different and maybe a little bit apples and oranges to really characterize and situate.
Dan Brdar
And I don't think they're substantially different from one phase to the next.
They have different different levels of focus, but they make their criteria pretty clear upfront in each phase what we've got to do, there's a common view of what the deliverables are, what the criteria are. For example, just this the technology readiness assessment that they went through they share with us.
Here's all the data we're going to need for you guys to meet the criteria that we need for production. So there isn't really good to work with and her team is really, really sharp technically. I mean, we've been really impressed by the caliber of their in-house team that's working on electric vehicles.
So it's a it's one of the things where the focus a little different in each phase, but no surprises. And just you got to do the work and produce the data and do the testing and satisfy their requirements to put something into production.
Jeff Grampp
Okay, great.
Understood. And then for my follow-up, I'm curious on the distribution front, you mentioned being pretty close, I think with at least one distributor. Can you just talk high level how important you guys view that sales channel as far as the overall opportunity set for you guys? If we kind of I guess, exclude the Stellantis as of the world, which sound like those can be kind of game changers. But with respect to us and cool and some of these other commercial development talent, how important of a sales channel is that for you guys?
Dan Brdar
It's actually very important because we're a small team on and for a new technology, you spend is almost as much time working with a small customer as you do a big one, especially early on in that process. So having a distributor that can serve the smaller customers, those that are not likely to go into a strategic supply agreement actually is a great way for us to start getting revenue into the pipeline without having to build a huge front end of the team to be out there just chasing just individual sales.
Jeff Grampp
Okay.
That makes a lot of sense. Thank you for the time, guys.
Dan Brdar
Thank you, Jeff.
Operator
Thank you.
Your next question is coming from David Williams from Benchmark. Your line is live, you might say.
David Williams
So let me ask a follow up. I wouldn't ask you kind of following up on Jeff's question there about the distribution. You've talked in the past about one of the biggest hurdles is educating your customers or potential customers. How big of a hurdle do you think that is that something that you can do with the distributors and some even use them for demand creation as well as logistics and order fulfillment. But are there any challenges you see in terms of educating that effort into Salesforce?
Dan Brdar
Not so much challenges.
What's happened as we have worked with customers like Stellantis and some of the other big companies that are in our Test & Evaluation Program. It's forced us to put together material that actually helps the technical audience come up to speed. So we're not having to do it from start every time. So we're getting a lot of reuse out of both the data, the presentation material and the discussion material that we've put together for other customers. So we've already taken the first distributor through that on because they are because their technical sales team, they got it.
They understood it right away.
So what we've told them is, look, if you get stuck at any point in time. We've got field application engineering here.
You can pull in if the questions get beyond your level, but they came up the learning curve pretty quickly,
Tim Burns
And we actually issued some videos and application notes here just recently for the technical audience.
And we'll continue to expand the amount of information we have on website to support, for instance, sales through distribution.
David Williams
Okay.
And one just last one, if I may. On the test evaluation program, is there a way to think about the magnitude of customers that are coming to you outside of that T&E program and just kind of trying to get a sense of and what that interest is outside of that cap opportunity audience?
Tim Burns
And so I would say the interest outside of programs probably probably roughly equivalent to the interest in the program. So there's various reasons why someone might not want to sign a test evaluation agreement or prefer to receive some cool power modules rather than arbitrary and test kit, right? Particularly because they're looking at solid-state circuit breaker applications as they give an example. So we haven't specified, you know who those customers are even providing necessarily kind of similar detail that we do with the test and evaluation program. But that's just our approach. If we don't have a signed agreement, we've generally tried to avoid talking about those opportunities, if any, FORMER specifics.
David Williams
Fantastic.
Well, keep up the good work gentlemen, and look forward to the continued success.
Dan Brdar
Thanks, David.
Operator
Thank you.
I will now turn this call back to Jeff Christensen to read questions submitted through the webcast.
Thank you.
Jeff Christensen
Thank you, Matt. And gentlemen. Our first question is, can you please explain how Vitran fits into applications? Is it different for each application? And how do you think about that for production of Vitran?
Dan Brdar
Actually for us, it's what are the advantages of our technology and that it's the same night regardless of the application, whether it's packaged a little bit differently. And what we're actually going to make in the wafer fab is the same, whether it's going into an electric vehicle, a circuit breaker or energy storage or solar installation. As I mentioned in my prepared remarks, that might change over time, we'll see as we continue to make improvements in the Vitran technology. But for now, it gives us a lot simpler approach to ramping production because we don't have to be too focused on is the the wafers being made going to go to electric vehicle application or solid-state circuit breaker, and they're all the same for us.
Jeff Christensen
Thank you.
And as the operator mentioned, you can click, you can click on the ask-a-question button and submit your questions and please submit each of your questions as you think of them in that Ask-a-Question button rather than all your questions at one time we have several questions in here.
Next question, gentleman is considering the vast interest in silicon carbide and GaN. How does the trend performance compare with these materials? And do you see Vitran topology being applied to these materials in the future?
Dan Brdar
Yes, they're never each really targeting different things on GaN really started where you need a very, very fast switching SOWs and things like radiofrequency, it's been moving into power applications. Do you think about your your computers, your laptop chargers, those are probably GaN based devices. They've been trying to get to higher higher voltage or there are a there are some limitations in terms of what you can do with and on that come from the nature of the material and the technology and so both GaN and silicon carbide are expensive and we are actually have the ability to take our technology to silicon carbide, for example. But we haven't really been too focused on that yet simply because of the fact that silicon carbide needs to come down significantly and cost, it needs to improve and quality on. And it's not it's not trivial home for example, if I go buy a silicon wafer, it cost me $60. If I go buy silicon carbide wafer is $800. And that's part of what's driving some of the things you've seen like Tesla announcing, they want to reduce the amount of silicon carbide by 75%. It's all about how do you get the cost down, but still improved performance, and that's what really creates the opportunity for Vitran.
Now as silicon carbide materials, a wide bandgap materials improve, you'll see us make a silicon carbide device in Vitran, but we think that's still a few years away just because there's such a big gap in terms of what is what silicon carbide a wide bandgap materials bring for the performance level so it's there's a lot of excitement around that, but it really needs to be used in places where you need the ability to go to much faster switching speeds or much higher temperature or much higher voltages than what you can do with a silicon device like yes, like the trend.
Jeff Christensen
Thank you.
Another question regarding silicon carbide is for the future EVs. That will utilize silicon carbide platforms. Are the enhancements to range would be trends similar to in the silicon carbide platform versus non-silicon?
Dan Brdar
Yes, it's a very similar kind of improvement because it's really the nature of the architecture itself. What are the things that can be done that on we see an opportunity. If you look, for example, what Tesla is doing rather than going to all silicon carbide phosphates, are there going to a hybrid module that includes silicon IGBT, low-voltage silicon carbide prospects to handle the switching? You can do the same thing with Vitran, you can make a silicon Vitran with low-voltage silicon carbide offsets to give you the really fast switching. So there's a lot of steps along the way that I think you're going to see on terms of how new semiconductor devices get adopted, while everybody is working on bringing down the cost of silicon carbide and improving its quality.
Jeff Christensen
Thank you.
Our next question submitted into that Ask-a-Question button is can you talk about the interest level or make additional comments about the interest level among Tier one auto suppliers?
Dan Brdar
Yes, we actually did it with literally one of the world's largest auto suppliers. And we started with a discussion about the TAM for the Drivetrain, but they're one of the companies that I was referring to that have come back and said, there's a whole bunch of other products that we make that could use Vitran. So it's become a much broader discussion and what we're finding is the Tier one suppliers are now starting to engage with us because they're trying to figure out with the automobile makers having built these EV teams in house, they want to be part of that and they want to be embedded into these designs and they have a lot of ability to innovate themselves. So Vitran gives them the ability to innovate designs for circuit protection for quick disconnects on the batteries for the Drivetrain itself that they actually want to come up with so they can propose them to the automakers and give them a differentiated solution.
Jeff Christensen
Thank you.
And we still have the questions and please submit them and we look forward to answering your questions. You can submit them into that Ask-a-Question button.
Our next question is, can you talk about other companies developing this Beach, this bidirectional power switch and who are your competitors?
Dan Brdar
Yes.
We really don't see anybody else that's developing an inherently bidirectional device, all the bidirectional switches that we see people putting together our combination of conventional technologies, they're putting IGBTs back-to-back, which doubles the losses that are they're putting must buy must must have had back-to-back and we keep a pretty close eye on what's going on both in the technical literature of things that happen in the patent office. And, for example, our team is at the Applied power electronics conference this week. Now whether specifically going to be looking at what's going on with others and bidirectional switching, we really are competing against the IGBT makers of the world. So it is the Infineon's, the on semis, the foodies, the advantage with us really is as we ramp up in volume and as we have customers like the automakers who are going to want a second source of supply, we actually would license our technology to them so they can leverage their own investment in their fabrication facilities.
Their sales and support organizations.
So while they are competitors, we think at some point in time, there's going to be a couple of them that are actually really interesting collaborating with us.
In fact, we had one of them reached out to us here just last week wanted to explore collaboration.
So we know we're definitely on the radar screen and we're trying to make sure that we're creating a pathway for partnerships rather than just pure competition.
Jeff Christensen
Thank you.
It looks like there are no other questions at this time. Dan, do you have any closing remarks.
Dan Brdar
I just want to thank everybody for joining our call. We made great progress here on our path to commercialize our technology, and our talented team is on track for a very successful 2024. So we look forward to commercial announcements in advance of our next call and thank you, everybody, for joining us.
Operator
Thank you.
This concludes today's conference. All parties may disconnect and have a great day.
