Welcome to the Gogoro Inc. 2023 Q1 Earnings Call. This session will be recorded. I’d like to introduce Bruce Aitken, CFO of Gogoro who will kick us off.

Thanks, operator, and thanks to everyone for taking the time to join us today. I’m Bruce Aitken, CFO of Gogoro, and I’m pleased to welcome you to our first quarter 2023 earnings call. Hopefully, by now you’ve seen our earnings release. If you haven’t, it is available on the Investor Relations tab of our website, investor.gogoro.com. We will also be displaying the materials on the webcast screen as we go. We’re looking forward to sharing our Q1 results, as well as providing guidance on what we’re seeing as the outlook for 2023. But before our CEO, Horace Luke shares, I’d like to introduce Michael Bowen of ICR who will share the process for today’s call and provide some important disclosures. Michael?

Thanks, Bruce. I’m sure you’re all looking forward to hearing from Horace and Bruce on behalf of Gogoro. But before that, allow me to remind you of a few things. You are all currently on mute. If you have a specific question, please use the chat function in the system to submit the questions and we’ll answer as many as time allows. After Horace has given a brief overview of Gogoro and some of the business highlights from Q1, Bruce will go a bit deeper into the Q1 financial results. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our first quarter 2023 results. Management’s expectations for our future financial and operational performance, the capabilities of our technology, projections of market opportunity and market share, our potential growth, statements relating to the expected impact of the COVID-19 pandemic, supply chain issues, and other headwinds facing the company; the company’s business plans including its expansion plans; the company’s expectations relating to its growth in overseas market; statements related to the potential of our strategic collaborations, partnerships and joint ventures; statements regarding regulatory developments and our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed prior to the market open today and in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law. Further, during the course of today’s call, we will refer to certain adjusted financial measures. These non-IFRS financial measures should be considered in addition to, not as a substitute for or in isolation from IFRS measures. Additional information about these non-IFRS measures, including reconciliation of non-IFRS to comparable IFRS is included in our press release and investor presentation provided today. Now, over to Horace.

Thanks, Bruce, and Michael. Thanks for joining our call today. We’re pleased to have this opportunity to meet with you and provide an update on the first quarter 2023 results and guidance for the rest of 2023. 2022 was a transformational year for Gogoro as we migrated from being a private company to a public company. We have now been a public company for just a little bit over a year and 2023 is already shaping up to be a year of both immense opportunities but also some challenges. The macro operating environment is certainly more challenging than the past few years, but we believe our solutions for clean and sustainable urban mobility will enable Gogoro to continue to be successful. Our battery swapping platform, partner ecosystem, and energy’s grid integration combined with our people and culture provide unique advantages that will allow us to successfully grow in Taiwan and internationally. In Taiwan, 2023 is expected to be the first year since 2020, not substantially impacted by COVID in one way or another. Various restrictions have been lifted during Q1, but comparisons between 2023 and 2022 will be difficult to make given the COVID impact during 2022 and preceding years. We have projected the Taiwan market to be roughly flat in 2023 both from the standpoint of total ICE vehicles sold as well as electric vehicles sold. Our Q1 financial results were as anticipated with a little volume downside. While the overall two-wheeler market grew in Taiwan unit sales of Gogoro and partner branded vehicles were down slightly. The total number of registered scooter was 177,000, up 9.8% from 161,000 in Q1 of 2022. As mentioned, any comparison to 2022 or earlier years is difficult as there were a variety of COVID lockdowns throughout the year, which makes either year-on-year…

Thanks, Horace. We’ve made good progress and launched three pilots since we last reported earnings. Before I give market specifics, let me go into a bit of detail regarding expanding via B2B as a starting point in international markets. And specifically, why we believe B2B is a great starting point for India. The adoption of electric two-wheel vehicles is gaining popularity as a sustainable solution for urban transportation, particularly in congested cities and particularly among B2B riders. The sheer distances driven daily by B2B riders makes the focus on converting them to clean solutions and imperative. And many city governments are making steps towards banning the use of ICE vehicles in B2B services. Electric vehicles have lower greenhouse gas emissions and reduced noise pollution within a city. The challenge that B2B riders have always experienced with electric vehicles is the amount of time that charging takes and the range anxiety given the amount of time and space required for charging electric vehicle. When Gogoro’s battery swapping solutions are deployed, this charging location and time issue as well as range anxiety concerns are effectively addressed as battery swaps occur in a matter of seconds. Simultaneously, concerns about battery volatility under charge are addressed via our ability to charge batteries in our GoStations at the optimal time and temperature to maximize for safety. Provided we launched these services at roughly price parody to gas on a per kilometer basis. The feedback we received from B2B riders, delivery platforms and demand aggregators is overwhelmingly positive. In Taiwan, B2B delivery riders are using Gogoro powered vehicles for their daily deliveries. Given the distances they ride daily and the constant power they need, B2B riders are the best customers for pilot programs and early adoption of Gogoro technology in new markets. These pilots give us…

Great, thank you, Michael. I think this is important before I go into the specific markets in the question in Southeast Asia and also in India. It is important to really kind of understand our expansion process. I’ve always had a three step process in our global expansion. The first step, as you probably have witnessed in our most recent announcement, for example, we have announced three pilots just in Q1 and pilots before that last year. It is a three-step process in which it starts with a pilot, where we understand and get data from and user feedback from the market locally, so we understand how to adjust our technology, adjust our product, adjust our offering, and how to actually communicate our value proposition to the customer. And the second step in the process is to expand out, and grow out the network via B2B business model, where a lot of these B2B riders are very much based on huff and spoke rider – riding patterns, where then we can reliably and with a very, very predictable income build out the network. And only upon a successful build out of a B2B network do we actually grow and expand into a B2C opportunity in those markets. A great example of that is actually in Korea, a market that maybe we don’t talk about very much. Today, after a very successful pilot year, year and a half back, we have actually come exited out of our second phase of our pilot. And now there’s over 70 stations in Korea, in cities – across eight cities, in cities like Seoul, Sejong, and Jeju. Those cities are very heavily densely populated. Today, we have about 1,000 vehicles in Korea doing B2B delivery, including powering the local DHL fleet with our battery swapping.…

Okay, great. Thanks so much for that Horace. So the second question, we will go to is more on the financial side. Can you help reconcile the downtrend in EV unit sales with a bit of growth in the ICE market in Taiwan? Do you see this trend continuing in the latter part of 2023? Sounds like from the call that the downside was expected and cyclical in nature, but then do you foresee second quarter and the rest of the year playing out relative to Q1 and how that might impact your full year guidance of $400 million to $450 million? So if you can help us understand your comfort with that guidance, I’d appreciate it. Thanks.

Thanks, Michael. Q1 revenue was basically, as we expected, Q1 is traditionally our smallest by volume seasonal quarter, both from a revenue standpoint as well as from a unit sales standpoint, typically, contributing about 18% to 20% of full year revenue. So we’re on track from that standpoint. Consumer sentiment in the first quarter due to all of the pressures in the macroeconomic environment, inflation and so on, also compounded by geopolitical pressure. We think that’s what’s slowed purchases just a little bit and in those challenging economic times, people tend to make conservative predictable choices in terms of how they spend their money. We do hope to see more people converting to electric in the second half – in the second quarter and the second half of the year going forward. We do expect from the second half to gain growth from international vehicle sales as we – as Horace said begin to see market shift from that first stage of pilot into a more B2B deployment model. And so we’re comfortable with where we sit right now from our guidance of $400 to $450 million. And we do expect things to continue to play out as anticipated in the back half of the year as well.

All right. Thanks, Bruce. With that, operator, could you please open up the line for the Q&A session?

Thank you. Thank you. Our first question comes from Alice Chan with UBS. Your line is open. Ali, your line is open. You may be muted.

Hi. Hi, can you hear me?

We can hear you now, Ali.

Hello. Okay. Thank you for taking my question, and thank you for sharing the progress of our alliances in each country. So I have a question for India. You just share about the alliance with Zip. So how about the other alliances? Can we have an update on the progress? Thank you.

Thank you, Ali. This is Horace. So, yes, as I said, as I mentioned, the first step is really to have a pilot that allow us to take lesson learned from these riders, learning how they use it, the low condition, the weather condition, the environmental issues such as dust, water, flood, et cetera, et cetera, will really educate us and our partners on what is needed to build a great product. The first – second phase for us is really to launch a B2B program. Now, our partners, most of our partners that we’re working with today are very B2C focus. And with that said, we’re going to go with a B2B first, where we can actually build a predictable network, a robust network with healthy riders on it, and with healthy number of batteries, and then open it up in the future for B2C. So, long story short is that they’re – our partners are still developing their vehicles. There are many partners there and talk with us about using our technology to actually develop their vehicle as well. But we’re going to stay focused on B2B because it’s very – India is a large place, 2,600 kilometer wide, and 1,900 kilometer deep. And so we’re going to actually go focus on major cities where we have a large demand from aggregators like Zip and also for –from businesses who are focused on delivery such as Zomato, Flipkart, et cetera, to really help us build up the network first, and then we’ll pivot to B2C like we did with – like we were doing with Korea today.

Well, thank you, Horace. My second question is regarding the Taiwan market like you just mentioned the competition has become fiercer and with ICEs becoming more aggressive in pricing, and also there are launch in entry level products. So how would you plan to regain market share in Taiwan market? I heard you that there will be a new product in second half. Wondering if there is any other plans to regain the market share in Taiwan and also when we launched the new products at entry level, will that have any impact on our margin? Thank you.

Great. I’ll take the first step, and maybe Bruce can take a second step if I didn’t answer all of it. At Gogoro, we are very much focused on user experience. To us it is not necessarily a price driven decision for the customer. Usually what it is, it’s a great better user experience, a healthier user experience for the customer. And so, with that said, what we are doing in the second half is we’re broadening our portfolio with a number of different partnerships as well as different products that we’re doing as well as making the with products that are – they’re better fit with the different market segment. Now, with Q1’s results, I think there was a as Bruce said, it is conservative time. There is a lot of noise about everything from bank failure to geopolitical tension that made the consumer make decision maybe a little bit more reserved. But however, as we look at Taiwan, the moratorium for gas vehicle purchase is imminent. It will come and there’s a very, very clear target with the government that has put out to the public about how many percent they want to convert. And with that, they will put the right policies, the right incentives in place to push the customers toward making the right decision. So I think it’s a – its both the headwind of the moratorium as well as tailwind that we’re putting in with better products and better innovation and better user experience that hopefully will today like as Bruce said, we have a very healthy market share in electric little more than 80% when we look at the 125cc, 100cc class vehicle. We believe that will continue because our innovation is clearly in that space. So we’re very, very optimistic as to what Taiwan is today. However, for the year, we still want to be a little bit more conservative as when it comes to our projection because you don’t know what will happen. But we’re very much focused on going and stabilizing Taiwan market share as well as diversifying our revenue internationally. It is very critical for us to diversify into the international market with the proven technology that we got. Lighting up these cities is actually quite quick. If you think about, what we are, we are literally a distributed power plant that goes all around the city with stations that have energy storage within it that can distribute. When you think about power plant, it takes 10, 15 years to deploy to build one. We have been able to successfully launch these pilots very, very quickly in Q1. And I think we’ll only see that power grids accelerate throughout the year.

I’ll just add a couple of comments about margin, Ali. In the first quarter, as you saw, margins down just a little bit, largely driven by low volumes in our manufacturing facilities, as well as some ASP pressure as we intentionally look to broaden our offerings in the mainstream kind of market segments. In terms of going forward, there’s a multiple – there’s a number of different ways we’re working to ensure that margins stay relatively flat. We’re increasing the use of consistent components across our entire vehicle lineup and that helps us to be more flexible in our manufacturing. We are increasing the operating efficiency on our Gogoro Network as we become more experienced at running that network and experience efficiency there. And then thirdly, we’re just really cost conscious at the moment. We’re engaged in belt tightening. We’re engaged in tight control of marketing dollars to ensure that they’re used effectively. We’re looking at all kinds of different spending at the macro level. And then maybe the last thing, we’re doing also is really diversifying our supply chain. As we localize manufacturing in different countries, we can use some of those lower cost products and bring them back to Taiwan for lower overall product costs. And we’re finding benefits in places like India and in other countries from doing that. So we’ll keep margins flat is the goal for the year.

Okay. Thank you, Horace, and Bruce. That’s my questions. Thank you.

Thanks, Ali.

Thank you. I’m not showing any further questions at this time. I’d like to turn the call back over to Michael.

Okay. Thanks, operator. This concludes our question-and-answer session, but I’d like to turn the call back over to Horace for any closing remarks. Horace?

Great. Thanks, Michael. Our thesis of the company has always been an electric transition will occur, that it will occur fastest on two wheelers, and that battery swapping is a solution that best meet the needs of urban customers whether B2B or B2C. That piece is not only intact, it is now becoming widely held among OEMs, governments, and customers. I continue to be proud of and inspired by the work all – of all the Gogoro team members and partners are putting together in every day to contribute to a cleaner world. Additionally, my thanks to all of our loyal Gogoro Network customers for placing a trust in us and our solution. We’re working tirelessly to ensure that you have a great customer experience. With the market shifting toward electric, the sentiment of two-wheel electric vehicles is expected to experience rapid growth in the coming years. This transition is a critical – is a crucial move toward sustainable urban transportation. We’ll continue to execute in Taiwan and international markets, along with our partners and lead the transition to renewable clean mobility in urbanic cities. Thank you, everyone for attending today’s webcast.

The conference is now concluded. Thank you for attending today’s call. You may now disconnect.