Thank you for standing by. This is the conference Operator. Welcome to the Ballard Power Systems Q3, 2021 results conference call. As a reminder, all participants are in listen-only mode and the consent is being recorded. After the presentation, there will be an opportunity to ask questions. . I would now like to turn the conference over to Kate Charlton, Vice President, Investor. Mr. Donations, please go ahead.

Thank you, Operator, and good morning. Welcome to Ballard's Third Quarter 2021 Financial and Operating Results Conference Call. With us today, Randall MacEwen, Ballard CEO, Paul Dobson, Chief Financial Officer. We will be making forward-looking statements better based on management's current expectations, beliefs, and assumptions concerning future events. Actual results could be materially different. Please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. I'll now turn the call over to Randy.

Thanks, Kate. Welcome everyone to today's conference call. Given the growing number of research analysts covering the Company, will keep our prepared remarks relatively brief to leave sufficient time for questions. We joined today's call with an exciting industry backdrop, including COP-26, $9 billion of fresh commitments to hydrogen coming in the U.S. and a growing global recognition of the important role of hydrogen to achieve deep de - carbonization, including a hard to evade sectors such as heavy-duty mobility. We continue to have high conviction in our strategy and growth plan. Our business model has significant leverage and resiliency. As we deploy the same core competencies and fuel cell technology across multiple verticals. Bus, truck, rail, marine, off-road, and stationary power. And across I multiple regional markets, Europe, North America, and China. We're focused on large market segments where the value propositions for fuel-cells are strongest and the barriers to refueling infrastructure are lowest. We made solid progress across our business activities over the past quarter, including in customer programs and deliveries, in our technology and product development programs. in strengthening our operating platform in new customer acquisition in, in our partnership strategy. We also achieved a major corporate and industry milestone. In October, we announced at Ballard's PEM fuel cell technology and products have now powered fuel cell electric vehicles over 100 million kilometers around the globe. Let me repeat this again. Buses and trucks with Ballard technology have now accumulated over 100 cumulative kilometers of real on-road experience. This is a massive differentiator for us and puts us in a different league of demonstrated capabilities compared to any other Company that provides fuel cells for medium and heavy-duty mobility. Our proven in-service experience with a track record of safety, quality, availability, and performance continues to be a…

Thank you. We will now begin the question and answer session. In the interest of time, please limit yourself to one question and one follow-up. . We will pause for a moment as callers during the queue. First question is from Rob Brown from Lake Street Capital Markets. Please go ahead.

Good morning, Randy. Just wonder if you give some further color on the Marine Market in terms of the customer engagement or customers ramping up their efforts into this being driven yet by the IMO kind of discussions around carbon emissions, or where sort of -- where's Marine at in the customer engagement efforts.

Yeah. Rob, good morning and thanks for the question. The Marine Market is a market that I think we stepped back two years ago. I probably wouldn't have forecasted the high level of customer engagement we are seeing at this time. And part of it, you're right, is being driven by in some cases, targets and some cases, real mandates, depending on which jurisdiction you're in. So we do, of course, have the International Maritime Organization target to reduce emissions 50% by 2050. But we're also seeing a number of jurisdictions look at sensitive waterways where they're looking to protect those waterways and decarbonization is going to play out I think much faster there. We've also seen electrification incurring in Marine applications, both with battery and fuel cells. And we see particularly with Forsee Power an opportunity to package in integrated fuel-cell in battery opportunity there rather than the current diesel battery packages that are being contemplated for Marine. And now with Norled, we will be delivering our first modules to Norled for I believe the world's first fuel-cell ferry. We're pretty excited about this Norled is a major player in the Marine space for ferries and this is a critical project that we're investing a lot on. We launched FCwave product last September and already we're seeing a fairly significant order book and interest level developed for that product. And that interestingly, that product has application not just in the marine space, but the way its packaged and containerized, it has application for other verticals as well. So I think there's a lot to do to prove out the value proposition in Marine. But we're very bullish with the activity levels we've seen with key customers like Norled as well as some partners like ABB.

Okay, thinking, just following up on the European bus market, and that's the number of order activity, is that still being driven by the GI program or are you seeing orders starting to flow from cities and regions, sort of independent of that?

So we have seen a number of projects driven by adoption with Jive support. What I do think you're likely to see before the end of this year is the next announcement from Europe on support of fuel-cell buses. I think we need to be clear that the value proposition still does need some policy nudges. With the low-level of penetration that we have today, it's important for these jurisdictions to get some policy support to help with initial adoption. But I think the interesting thing is as we look at another 150 buses in Europe, and then behind that real scaling where you're starting to see sites where we will have quoting activity for 100 to 200 buses right now. So I do think as we move from tens and hundreds to thousands in Europe, in North America and as we've seen in China, cost will come down.

I think I'll turn over.

Thanks, Rob.

The next question is from Mark wells, from Cormark Securities. Please go ahead.

Hi, Randy. When you look at the sort of the pace of adoption in China and just the sort of the delays that we've seen there. Does that impact your development timeline like your product development timeline, I'm trying to get an idea of whether it gets to the point there's so much passage of time you actually skip a generation. Can you tell us how you adjust your development there in China.

Yeah. Good morning, Mark. Thanks for the question. And certainly, when we entered our collaboration with Weichai back in 2018 of the things that was really important to both Ballard and Weichai was to make sure we had the highest performing products at the right cost structure to have high market share over the long term. And we spent quite a bit of time at that point talking about the development of the right stocks and the right modules for the bus and commercial chuck market. And we laid out a plan, the $90 million Technology Solutions plan, to develop those products. So we've done, I think, a very good job collaboratively developing those products with a couple of a really interesting dynamics I would suggest over the last 18 months. One is that Weichai in a joint venture has been very effective at working to help localize components in the bill of materials for our fuel-cell modules in China. And so that has gone, I would suggest much faster than we expected. So I think that's a positive. And then as we look at the capabilities of the joint venture to take on more module design, Weichai is an expert at designing high-volume engines for the diesel market. You pair that up with Ballard's ability to design fuel-cell modules. So we're now having next-generation modules being developed at the Weichai-Ballard joint venture with less contribution from Ballard and more contribution at the JV level. So there are a number of Modules that are currently being developed by the JV, which I think are pretty exciting. And just to give you an example, we've recently deployed at the JV 1049 ton fuel-cell trucks to Ching Wong steel. And those are powered by a 160 kilowatt fuel-cell engines that have been developed by the JV for that application. So when I think about the program we have for the development of the fuel-cell stacks at Ballard and the use of those stacks in the joint venture, as well as the development of fuel-cell in Aegean's for the China market, I think we're doing a really good job with wage chide, understanding the market requirements, and then developing solutions for those market requirement. So I would say the development program is on pace. When you say skip a generation, I feel like we're pushing the boundaries every time that we're releasing our next-generation already.

Okay. And just as a follow-on, could you touched on power levels. Like some of those modules or that's pretty big power level on that. Whereas in Europe, you negotiate the partnerships you talked about most recently are more about hybrid type of arrangements. Should we be thinking of lower per vehicle power levels, say in Europe versus China is this sort of a bifurcation of the market? No, I don't think so. I think if you think about just coming back to the China market, our JV has also developed a 50 kilowatt module, so it's really very much trying to make sure you have right products for market segments, particularly in the commercial truck market, which is very segmented and of course, for the bus market as well. So do you think about the fuel-cell engine we're developing for Molly that's a 240 kilowatt fuel-cell engine for the commercial truck market in Europe.

Great, thanks. Thanks, Randy. Yeah. Thanks, Mac.

The next question is from Chris Shutler from B. Riley. Please go ahead.

Hey guys, thank you for taking my question here. I just wanted to touch on between some of the partnerships you've built out here between Marlin Linamar, Hexagon, Kwan China now foresee are any of those customers currently in the backlog and with some of the customers ramping up towards the end of 2022, early 2023 I'm curious. What's the timing when we start to see that flow into the backlog prior to the revenue ramp for some of them?

Chris, thanks very much for the question and I just want to clarify an important point, so we're talking about strategic partners that we're looking at module designed -- improving module design, including in some cases like Molly bringing some balance of plant component inside of our fuel-cell engine, and then others who are experts at integrating that fuel-cell engine into the powertrain and can offer complementary products so that we have a solution that is optimized for performance and costs. So the collaborations that we have those partnerships will actually help drive adoption by the customers that are vehicle OEMs. So I wouldn't characterize those companies you listed as customers Quantron would be a different example. There actually, a customer that will be buying fuel-cell modules directly from Ballard. But the Linamar etc.. The idea there is to collaborate on the different scope of work where we have strengths to improve our offering for vehicle OEMs. So and if you look at the order backlog today, we're seeing I think a pretty nice trend in terms of the pickup and order backlog for heavy-duty motive. And those are the segments that we're particularly focused on so we've had about a 30% increase in our order backlog, or 12-month order book, I should say, for heavy-duty motive throughout Q1 through Q3 of this year. And part of that is this emphasis by Ballard on simplifying the fuel-cell electric vehicle experience and some of the value that these partners will deliver. But most of these partnerships still have work to do in terms of co-development activities and I think you'll see the real leverage of that as we start looking at 2023.

Okay, got it. And then looking at kind of the China market where it's been a bit of a pause here for quite a while. Are you seeing the competitive atmosphere heat up with some local players come in or wherever things kind of stand from, a competition standpoint of people trying to catch up with the capabilities you are building with Weichai. I it sounds like there's continued progress on the tech side with Weichai, but curious, what -- how does the competitive landscape looks today?

Yeah. So Chris, I would say the competitive landscape became very intensive few years ago. I wouldn't characterize that as a recent phenomenon. So there's certainly lots of domestic players that are actively trying to find their way in the hydrogen fuel-cell market in China, trying to find their appropriate positioning in the value chain and ecosystem. And of course, our number of international players who like Ballard, see a large market whether it's going to be very scaled adoption. Let's not forget, we're talking about a target here of a million fuel-cell electric vehicles by 2030 and 2000 hydrogen refueling stations. So it will be the largest market for the adoption of fuel-cell trucks and buses in my opinion. So the competitive dynamics continue, I think the pause in the China market hasn't of course just impacted Weichai-Ballard. It has impacted all the players in that market with relatively slow deployment in 2021.

Thanks. I appreciate that.

Thanks, Chris.

The next question is from Michael Glen, from Raymond James. Please go ahead.

Randy, just on Mali, there has been some management changes take place within the organization, just wondering if you've had a chance to up to talk to the incoming CEO and also being any shift or thoughts on their direction with respect to hydrogen?

Yeah, you're right, Michael. Thanks for the question. And this has been known for some time so going back, in fact to around last Christmas, we knew there would be some change at Mali. So their leadership change I don't think it's going to translate into any reduction in interest in the fuel-cell opportunity with Ballard? My -- over the last year, what's happened, of course, is that the demand for hydrogen and the opportunity set for hydrogen has grown exponentially. And during that period, Molly has joined the Hydrogen Council and now has visibility at the Council level on the growing market opportunity set that they're seeing, not just for commercial vehicles, but in other markets as well. So I think we'll continue to have discussions with Molly, including with the CEO, and really make sure that there's alignment on the future investment cycle and timing and piece for adoption of fuel-cell electric trucks in the European market.

Okay. And then just following up on China, if we're looking at MEA volumes or MEA sales potentially into China. Any thoughts on timing for the next MEA order from the JP?

Yeah. No. Nothing we can share today with any conviction. It's still uncertain at this point, so I don't want to overstate where we are.

Okay. Thanks for taking the questions. Yeah. Thank you.

The next question is from Vivek Panjami from National Bank Financial. Just go ahead.

Hi. Thank you for taking my questions. Vivek on behalf of Just wanted to ask about the high-cap fund, what -- the investment in the hydrogen infrastructure. Could you talk about other opportunities that the team maybe considering in hydrogen infrastructure?

Yeah, Vivek, thanks for the question. So there are two or three new funds that have formed over the last 12 months. And those funds are typically designed to be hydrogen infrastructure funds, where they will support the adoption of hydrogen fuel cell and -- hydrogen projects, but including hydrogen fuel-cell project from mobility applications. And I think one of the real advantages of these funds is that they'll match up the supply, particularly of green hydrogen, although blue hydrogen is in the option as well, supply of green hydrogen with demand on the application side And be a finance year for those projects. So Ballard is actually -- we'll be investing in two of those funds. You mentioned high-cap as one of them that we've included in our subsequent event notes in our financial statements. There is a second fund that we're making an investment in as well. And the point of these investments for Ballard is really getting visibility on where these funds see opportunities to invest capital and potentially influencing opportunities by bringing projects to those funds for potential investment. So we think this is an important way for us to, again, match-up hydrogen supply with demand applications.

It's Paul here. So the other thing I think that these phones have really helpful for Ballard too is it gives us a seat at the table than into the deal flow of various opportunities. So we could look at potentially co-investing or if the fund is not going to take a pass on it, it might be something that Ballard is very interested in so staying current and in the deal flow across the whole ecosystem is a good objective for us to, as we look for different opportunities to deploy our catheter.

Sure. Thank you for that color, I'll leave it on their. Thanks

The next question is from Vesh Vaishnav from Coker Palmer. Please go ahead.

Hey, guys. Thank you for taking my questions. I guess maybe if we can set up expectations for the near term. How should we think about orders level near-term quality for 2022 versus this 20-25 million per quarter that we have been seeing so far?

Yes. Vesh, thanks for the question. And I think as we look at 2022, we see clearly the start of a growth ramp, a long-term growth ramp developing. So I'm very excited about the opportunity for 2022. One of the things we really like about our business model is the ability to leverage our core competencies in technology across multiple verticals and across multiple regions. And we see strength right now in Europe and North America, and we're see strength in most verticals moving forward as well. So I think that suggests a strong growth rate in 2022. I think the wildcard to add to that growth rate will be what happens in China in 2022.

Got it. And maybe we talked about inflation, how you had to do some air lifting and everything just because of supply chain disruptions. How do we think that progresses our subside as we move into 2022? And just on operating costs, how are you -- how should we think about as the revenues ramp, as the audit ramp?

So on the supply chain rating had a few remarks about it, but I would say that the team has done a pretty good job actually, and getting ahead of the issues with supplier. So some suppliers in various regions in APAC and others have had some disruptions, but we've been able to manage through them, build up some inventory, and have established really good relationships and finding alternatives. Where we've really seen the impact is in the delays in shipping and increasing freight costs as well, so for both Air-freight and with the sea-freight. So the costs are increasing, but even just the availability is pushing back the delivery times which can impact our deliveries as well. So that's where we're seeing it happening. We've also seen some impact earlier in the year on things like platinum prices and Iridium prices. Platinum is, has settled back down. Iridium is still high, but it's a relatively small percentage of the total, of the total bill. In terms of when the fragrant we see these challenges subsiding, it's probably going to be later in 2022 or possibly even beyond. I mean, this is a global issue, the supply chain, and the shipments, and the freight in particular. So we are exposed to that to some degree, but so far I think the team has done a pretty good job staying ahead of it and you're really not seeing a very material impact in our financial results from it.

All right, that's really helpful. Thank you for taking my questions.

Thanks Vesh.

The next question is from Jonathan Lamers from BMO Capital Markets. Please go ahead.

Good morning. Following the recent partnerships that have been established, is of the power train does Ballard remain interested in acquiring or establishing partnerships to gain access to the technology or simplify the fuel-cell adoption for the customers?

Jonathan, good morning and thanks for the question. So the way I would think about it is for a hydrogen fuel-cell electric powertrain, you need to have storage, need to have a fuel-cell engine, which is our core competency. You need to have power conditioning, typically a DC-DC converter. You'll need to have battery technology and then a thermal strategy and controls. And as we look at that power train integration also having integration capabilities and understanding of integration is important too. So as we look at partnerships and M&A opportunities, we're looking at each one of those boxes and identifying. partners for collaboration, partners for potential M&A that helps simplify the fuel-cell vehicle experience for customers. And I think part of the -- part of what we're seeing in the collaboration cycle is that there is high, high value. I think it's white space right now for optimization. So the ability to go to an OEM customer and say, here's a total solution that's optimized for performance for your duty cycle is very powerful.

Okay, thanks. And a follow-up question to that. For the Forsee Power partnership, what markets are Ballard and Foresee targeting first?

Yeah, the first market with Forsee Power will be bus, truck, and rail. And Foresee has a very strong position in the bus market. In fact, Ballard and Foresee share a number of same customers already that have been buying Ballard fuel cells and Foresee battery packs independently, separately, not optimized. So that's certainly the nearest term market opportunity and Foresee Power also has, I think a very strong position in the rail market. So they made an acquisition earlier this year of a Company that has competencies on battery packs for rail and have counted, Alstom as one of their key customers as well. So those 3 markets bus, truck, and rail, and particularly bus and rail, they have strong capabilities in today, I would characterize them as the market leader in bus and rail and very strong position in truck as well.

I pass the line thanks.

Thanks, Jonathan.

The next question is from Aaron McNeil from TD Securities. Please go ahead.

Hey, good morning. Thanks for taking my questions. Randy, you referenced it in the prepared remarks and some of the Q&A, but I'm hoping you can speak a bit more into the broader partnerships strategy specific to the truck market and maybe outside the Weichai JV in China. But I guess what I find interesting is that you've sort of itemized recent partnerships. The optimized different vehicle profile, the powertrains rather than by geography, which seems to be what you've done in the bus market. So I guess what I'm wondering, do you have an appetite to take on more partners or collaborators for do you think you've sort of hit all the main end markets that you want to pursue with the current partnerships. And do your existing partners have any sort of exclusivity on the types of end products that you're developing?

Great, thanks for the question, Aaron. And I think there's a couple of key points there. One is do we have an appetite for more partnerships? Clearly there's areas that we still think there's opportunity for a continued evolution in the power train design. And so the ability to understand the integration of all these components together into a power train solution for customers is something that we think is important. Particularly as customers -- you think about customers, for example, in the off-road market where they typically aren't doing their own integration. They relying on third-parties to help them with integration. So a number of customers that we see increasingly are asking Ballard for more support on powertrain integration. Maybe they're asking for DC-DC converter solution. Maybe they're asking for hydrogen storage solution and recommendations on battery packs, for example. And so it's really in response to a very clear signal by the OEMs, particularly as they start in early adoption, that they need help, including application engineering. So I do think there will be additional customers that we and partners, M&A opportunities that we'll be looking for to further strengthen these capabilities. Some of them will have regional capabilities. Some of them will have expertise, that is global in nature. So we'll have to watch for that as we look at different collaboration models and different value chain positioning.

Not sure if you had anything prepared, but can you give us an update on the 2024 target to reduce their costs by 70%?

Yes. So we have internally an objective this year for a very significant increase already in 2021, we will not just beat that, but beat its significantly in 2021. So we're ahead of plan on product cost reduction for our program installment in 2021. So that boards very well in total for the 70% cost reduction for 2024.

Great. I'll turn it over.

Great. Thank you.

The next question is from PJ Juvekar from Citi. Please go ahead.

Hi. Good morning, Randy. It's Eric Petri on for PJ. What do you need to see in China to increase visibility? Is that production cost compared to diesel? Or is it the cluster program or other incentives and just talk to about the recent spiking diesel and how that might shift the appetite towards fuel-cell engine adoption.

Yeah, Aaron, thanks for the question. I think the key there is really in the very near-term. It's actually the application of very complicated cluster region policies. And how do you ensure you are in the supply chain, or how do you have a channel strategy to penetrate those cluster regions so I think that's part of it. And more importantly and more broadly, as how do you have a national strategy in China to win in the long term with the right volume, the right cost structure, the right technology. So those are two things that were working on in parallel.

And any comment with the adoptions from higher diesel costs?

Yes, I would say not just the adoption, the higher diesel costs, but also what you're seeing, of course in China recently as power shutdowns and really a movement away from trying to import coal. And I believe there is very strong, very strong political and economic reasons why you'll see China become the leading adopter of green hydrogen over the long term. As they look to decrease their dependence on imported energy, I think this is going to play out very strongly and they have massive renewable resources and you're seeing now, I think there's an estimate of another 1.2 gigawatts of solar wind capacity that's been identified already recently. So if you look at a number of the companies that are talking about investments in blue and green hydrogen production. Like and Jing nagging and long G . There are a number of companies that are really focused on this opportunity to produce green hydrogen and on the refueling side, you've got Sinopec announcing a 1000 hydrogen refueling stations by 2025. So there are a number of players, including, I think 1/3 of state-owned enterprises now reported a plan to invest in the hydro and industry. So their number of players that are looking at the hydrogen supply side, which I think is a very valuable development in that market.

Helpful comment. And then as a follow-up, you talked about the excitement and development and adoption of Europe fuel-cell electric buses. And you also talked a little bit about the latest infrastructure bill and money set aside to replace fleets to 0 mission. In the U.S. I think currently less than 2% of the U.S. it's a full fleet is based on fuel-cell.

Yes, I think we're not just in the U.S. but globally, we are at the first second of a 24-hour day in terms of market adoption. So the $8 billion in the U.S. infrastructure bill is really around clean hydrogen hubs. And again here this is critically important where you're matching up the supply of low carbon hydrogen with demand and particularly including mobility applications. In addition to that, there's a billion dollars that have been allocated for R&D and demonstration commercialization for electrolyzer technologies to effective reduced the cost of electrolytic hydrogen to $2 per kilogram by 2026. And then on top of that, I think the next development out of Washington, are tax credits. And so that's currently in reconciliation right now with different bills evolving, but we do see likely an outcome here. We will have hydrogen production tax credits potentially as high as $3 per kilogram for the cleanest and greenest hydrogen. So we're very optimistic, moving forward, about the opportunity of -- for electrification. Fuel-cell electrification in the U.S. market, which is a fairly sharp contrast to where we were a year ago.

Thank you, Randy.

Thank you.

The next question is from Jeff Osborne from Cowen and Company. Please go ahead.

Good morning. I was wondering if we could touch on the warranty charges in the quarter as the release mentioned, what was that attributable to?

Hi Jeff. It's Paul here, so we did we did have slightly higher warranty, more TI costs as we continue to test our products and some of our newer products we saw in some of our tests that they were they were performing exactly as we had thought. So we thought it prudent to add a little bit to our warranty to ensure that our customers are covered. We're at -- the team is working on the issue and we're pretty confident they're already making great progress. Pretty confident they're going to

solve it. Also in the quarter though too, we had some other warranty provisions for older products which turned out that we didn't need and so when we net those together. I think it was around $400,000 or $500,000 in net charge in the quarter. So not hugely material, but we've always taken a very prudent and conservative approach to our warranty provisions. But we want to make sure as we developing these products and getting them to customers that we stand by them and customers will always be covered.

Got it, that's helpful. And then maybe Randy for you my follow-up is there's a lot of things that you can't control and there's things you can control. And I was just wondering what it would take for Ballard to start to think about giving guidance as it relates to things like capex and operating expenses. Just as you gear up in 2022 for this sort of hockey stick that you've been talking about for several years, commencing in 2023, should we think about the OpEx run rate being consistent with what we saw in Q3 or something more meaningfully higher.

Yeah, Jeff, thanks for the question. And I certainly think you're going to see a higher OpEx in 2022 and 2023 compared to 2021. We are making significant investment in the business, in people, in technology, in products, in our customer experience. We're building our capabilities here, including our corporate development office, and strategic management office. So there's a lot of activity going on at Ballard and particularly as we focus on these verticals, bus, truck, rail, marine, off-road stationery, etc., having the right expertise inside the Company that understands these verticals is critically important as well. And that comes with a cost structure associated with it. So we will be investing in the business. And I think your question is timely as well as we start moving towards Q4 and looking at 2022, we'll take your comments into consideration, Jeff, as well, and think about what type of guidance we can provide in 2022, whether it's a top line or as you identified, maybe some discrete operating expense lines.

Would be greatly appreciated. Thanks much.

Great. Thanks, Jeff.

Next question is from Pearce Hammond, from Piper Sandler. Please go ahead.

Yeah. Good morning and thank you for taking my questions. The first is on the backlog, I was just curious that the backlog included those 40 fuel-cell modules for the European market that your press released earlier this month.

It includes about a half.

Okay. And then just curious on the translation from some of the recent announcements you've made, which have been positive, and how quickly that kind of manifest itself into the backlog.

Yeah, most of the customer engagements and strategic partnership engagements take time. So we're -- typically when we're talking about developing solutions and getting them to market, that's typically can be an 18 months to 36 months cycle. In some cases, where we're talking about new customers, for example, like what we're seeing, likely deployments by them in late 2022. So I think it varies. But certainly what we're seeing is that the market interest in fuel-cell buses, fuel-cell trucks, rail and marine off-road and station all of these markets have shown real strength on customer engagement. And so I think what we should see is a trend in the right direction on the order book as we move into 2022.

Okay. Thank you, Randy. And then just a quick follow-up on the cost reduction question from earlier. Congrats on the reductions that you feel that this year. Just curious. I mean, what are the major kind of levers are drivers that led to those cost reductions this year?

It's really a combination of three different factors. One is really looking at the materials that we use. Qualifying new suppliers than new materials. New chemistries, etc., that could be in the MEA. So gas to Fusion layers, membranes, catalyst ionomers, materials for our bipolar plates as well. So that's number 1. And a lot of technology development has been done over the past 3 years to make that viable today. So that's a return on our investments. We've been making for some time to look at these new materials and qualify new suppliers. And actually work with suppliers in some cases, we've worked with suppliers who knew nothing about the specifications required for fuel-cell technology. And we walk them through 11, 12, 13 iterations of their product to get it where it needs to be. So that takes time of course. So that's the first, the second

Good point is, how do we look at processing and production? And we've invested quite a bit, particularly the MEA level on advanced manufacturing and have invested over $15 million in Vancouver on the advanced manufacturing, not just a six times capacity expansion, but looking all the process steps were literally from raw materials into finished goods out. Looking at the process steps, mapping those process steps, and looking at TOC times, looking at the tools and the equipment we use, introducing more robotics, more automation, reducing labor hours. And reducing TOC time. So a lot of work has gone into the advanced manufacturing side, particularly the EMEA level. We're now looking at

in 2022, in 2023, we'll be spending more time on the plates. And then the third part is really looking at volume and the opportunity for Global Customer global supply arrangements as we start to get larger commitments on the customer side and pairing that up with the demand for materials. So we see all three of those coming together. Most of the technology development work is very late-stage or finalized. And the advanced manufacturing for the 70% cost reduction is effectively been finalized earlier this year. And so we're -- we're very bullish on the opportunity to decrease our costs 70% by 2024.

Thank you Randy, for the very helpful answer.

Thank you.

The next question is from Craig Shere from Tuohy Brothers. Please go ahead.

Thanks for putting me in. Most of my questions have been asked, but what kind of -- want to get a bigger picture, There's been a lot of unexpected traction and train stationary power and Marine this year 12,18 months ago we want to have anticipated or baked into the long-term total addressable market. Could you get any sense or color around how you're now thinking about your mid-decade and end of decade opportunity set, given more verticals seemingly ticking in?

Craig, thanks for the question. It feels like you must have been in our boardroom yesterday as we were discussing this very topic, our TAM is growing, every month it seems, and these verticals -- if you go back to September of 2020 when we highlighted -- we had our Investor and Analyst Day, we highlighted a tale of a $130 billion by 2030 that is significantly under-estimating the total addressable market that we see today. And so we are in the process of updating that. Just given an illustrative example that included in the rail market, just the opportunity for commuter rail in Europe. So didn't include China, didn't include North America. And of course in North America, we're seeing a very significant opportunity for freight locomotives in rail as well. Similarly, we constrain that attempt to certain market segments and certain geographies in Marine and I could go on. It didn't include off road where we're seeing lots of traction right now as well. And of course, I didn't include stationary power, which is by itself a very large addressable market and certainly just backup power for Data Center on its own is a large addressable market. So I appreciate the question, and you're going to be patient with us. We'll continue to work through that and provide an update on the expected TAM and what the implications are for our cascade of revenue in our stocking of revenue out through 2030.

Do you think that we can have an update by the time we get some kind of guidance into '22?

Yeah, I think we will provide an update during the next call for sure.

Thank you.

Thank you.

The next question is from Alex Kania (ph) from Wolfe Research, please go ahead.

Thanks very much. I just was curious if you could talk a little bit more about the some of the stationary power potential that you've got I think particularly the HDF project. I'm just curious, if you see that as a one-off in terms of thinking about this Hydrogen green -- green hydrogen base-load power generation projects. Or do you see -- do want to see that workout first before you pursue similar types of opportunities or is there a lot that's potentially out there right now.

Yeah, Alex, thanks for the question. So a couple of points there is that we see the opportunity in certain stationary power markets, again to get leverage off, if not the same, some standardly the same products that we're offering in high power mobility applications. And certainly when we think about, for example, the Data Center Market opportunity, there we're seeing a lot of interest from the Data Center community in our 200 kilowatt fuel-cell engine that we've designed for the Marine Market so our FCwave product and its containerized or it's packaged approach. So we see a lot of leverage there. As you know, we're in the small hydrogen backup power business and that continues to it's still modest but growing. And we see pretty nice deployment happening in the Nordic countries at this time. But going to your point about green hydrogen, base load, I think where you see microgrid opportunities, where you have renewables that are required to supply primary power. And of course, renewables being intermittent hydrogen providers a wonderful energy storage factor and the ability then to use that stored hydrogen to redeploy it back as power when needed. So when the, when the renewables aren't, aren't blowing -- or the sun isn't shining or to use that hydrogen as high-value zero-emission fuel. And one area that we see this model very pronounced is in the mining sector, where mining communities, typically our remote, they have high power requirements at the mines. Many of them are looking at de - carbonization strategies, including on-site renewables and including a need to electrify these heavy trucks which cannot go battery.

Great, thanks. Pretty interesting.

Thank you.

Next question is from Greg (ph) from Weber Research. Please go ahead.

Hey, good morning, Randy and Paul. Thanks for squeezing me in. I was wondering if you could just refresh us on the timeline for profitability, the ramp, any notable milestones in China following some sort of policy clarification. Just to refresh us on our expectations there once we get over that hump.

Yes. So I think we haven't been providing guidance on when we would be looking at profitability, but certainly what we've been indicating for a number of years as Jeff Osborne alluded to a few minutes ago, is that we see this curve, growth of curve starting in 2023 and really moving through 2030. So I think it's a few years out from 2023 when we see that crossover because we continue to make significant investment in our business to make sure we have high market share in these large, attractive verticals for the long term. So I think 2023 you will start to see a very significant revenue ramp and you'll see that across the verticals and across the geographies with a lot of resilience in our business model.

Okay, great. Thank you. And then similar to the last question on stationary, stationary power, but with respect to Marine, just curious, like specifically, where are you seeing that interest in demand? Is that just for various and smaller chips and applications, are you starting to get interest from a larger Brown water barges or even some sort of Blue water, larger tonnage?

Yes. Good, good question. The Marine Market, like all of the markets are very segmented. So in the marine space where we expect to see early adoption between now and 2030 would be ferries, tug boats, work boats, pushboats, river boats. These are all the applications where if you look at the duty cycle for these marine vessels, they're prepared very nicely with what fuel-cell technology can offer. They also offer the ability to have either returned support or port deport refueling infrastructure. So I think that's very compelling on the fueling side. I think some of the larger Marine opportunities, for example, cruise ships and freight going ships. There's a much longer market to develop. These are all long lived assets. It takes time for these determined, even just to hit the 20-50 de - carbonization milestones in Maritime. We're one investment cycle away from technology disruption. So I think you'll see some of those applications start to see penetration in 2030 on-wards.

Thanks, Randy.

The next question is from Craig Irwin from ROTH Capital Partners. Please go ahead.

Hi. Good morning and thanks for taking my questions. So, Randy, I was pleasantly surprised to see the $1.5 million on the P&L from Synergy. Can you talk a little bit about the products that Synergy is taking? Have they exercised the option for the next-generation stack? And where do we stand with Synergy? They have come on and off over the last -- over the last couple of years. Turns up down, is this potentially a customer that can rebound nicely in '22

Craig, nice pick-up and thanks for the question. Yes, Synergy was a bit of a surprise for us. They effectively have run down their inventory, and we're looking for additional purchase of MEAS for the 9SSL stacks and so they are producing 9SSL stacks for some customers that already have 9SSL on their platforms. And so I wouldn't I don't think we will see Synergy is a high-volume long-term customer. I think many of the vehicle OEMs will be looking for the next-generation technology which is up the Weichai-Ballard joint venture. But Synergy also looking at designing other fuel cell stacks independently that could use Ballard EMEA. So we'll see that as a longer-term opportunity too.

Great. And then I was hoping for an update on the Audi-Volkswagen relationship. You have a long history of partnering together. You've done a lot of R&D work for them and they're always was an expectation of a commercial endpoint in there. Is that still a possibility? Or do you hold much hope for that at the moment? Or maybe is it something that should be revisited years from now?

Yes. We don't expect to see any small series production of Audi fuel-cell cars. So they had been developing the H Tron, which included the stack we've designed for them that a high power density stack for automotive applications. So I think Audi and VW very much focused on the battery segment at this time. And so I don't expect to see any developments there for the passenger car market with Audi in the near-term. And our current relationship with them in terms of the program we have is expected to complete around August of next year.

Okay. Thank you. And if I could squeeze just another quick one in backlog, total backlog has been burning off a little bit over the last couple of years with some very big bookings, a couple of years ago. We're looking at possible revenue inflection really taking shape over the next 12 months. How far ahead of that revenue inflection should we really see the bookings materialize? I know you talked to the customers for years before we see the bookings as analysts. But can you approximate for us, is this 2, 3 quarters ahead or should we have a different for some of these very large programs that you're targeting?

Yeah, great question, Craig. And if you look at the total order backlog and even you go back to Q1 of 2020 where the order backlog, total backlog was about a 108 million and today it's about $57 million and the -- I'm talking about for Technology Solutions, by the way, not the total order backlog. So it's gone from about a $170 at the start of 2020 to about a $109 in total at Q3, 2021, the big change there is a point out is the Technology Solutions has dropped off from about a 108 million to 57 million. That's really the execution against the Weichai technology -- Weichai Behler Technology Solutions program, and the execution against the Audi program. And really what we see going forward is the power products, heavy-duty motive being the driver of growth. And you think about all these markets we've talked about bus, truck, rail, and marine, where we've got bus OEMs in Europe, in North America, and in China with Ballard products already inside their platforms, with truck OEMs, starting to and the work we're doing on the truck market with Weichai in China and with Mali in Europe and for light-duty truck with Linamar or as well. And so that's a passenger van. And so when you look at a number of these programs, including rail and Marine, they will take a number of quarters, even years, before they start to see development in the order book. But again, I want to come back to this point. If I look at the order book for heavy-duty motive from Q1 to Q2 to Q. in 2021, it's up 30% since Q1. I want. And to me that's the real story is that we're seeing the market take up even with China being light. We're seeing the market take-up in Europe and the U.S. for heavy-duty motive, where we expect to see the lion's share of growth moving forward. So I think the question is, when we -- when will we see -- what's the linkage between when the order book starts to materialize and then subsequently revenue. I think it's a year is about right. And some of these cases, projects will take a year to execute against, as customers go through hydrogen refueling stations, as they go through getting the engines into their platforms and getting ready for deployment. So we've seen that historically in the bus market and I expect to see a similar thing occurring in the truck. A marine and rail market where you've got 12 potentially up to 18 months before projects go from order book to revenue.

Thank you very much for that. Congratulations on the progress.

Great. Thanks, Craig.

This concludes the question-and-answer session. I would like to turn the conference back over to Randall MacEwen, CEO for any closing remarks.

Great. Well, thank you all for joining us today. And Paul, Kate and I look forward to speaking with you in the New Year. When will discuss results for Q4 2021. Thanks again.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.