Greenpower Motor Company Inc. (CVE : GPV) Q4 2020 earnings call dated July 20, 2020
Corporate Participants:
Michael Sieffert — Chief Financial Officer
Fraser Atkinson — Chief Executive Officer & Chairman
Brendan Riley — President & Director
Analysts:
Craig Irwin — ROTH Capital Partners — Analyst
Robert London — London Family Trust — Analyst
Bill Chapman — Private Investor — Analyst
Gary DiStefano — ThinkEquity — Analyst
Chris Bailey — MTW — Analyst
Steven Adas — Private Investor — Analyst
Presentation:
Operator
Good day, and welcome to GreenPower Motor Company’s Year-End Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Michael Sieffert, Chief Financial Officer. Please go ahead.
Michael Sieffert — Chief Financial Officer
Thank you. This is Michael Sieffert, the Chief Financial Officer of GreenPower Motor Company. I’d like to welcome everyone to our call to discuss GreenPower’s year-end and fourth quarter financial results. I’m here today with our Chief Executive Officer, Fraser Atkinson and our President, Brendan Riley.
During today’s call, we may make comments or statements about our future expectations, plans and prospects, which may constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent and annual results and MD&A filed on SEDAR.
In addition, these forward-looking statements relate to the date on which they are made. We anticipate that subsequent events and developments may cause the company’s views to change. GreenPower disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Also, during the course of today’s call, we will refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our MD&A filed on SEDAR, which is located on our website at www.greenpowerbus.com.
I will now pass the call over to Fraser Atkinson for opening remarks.
Fraser Atkinson — Chief Executive Officer & Chairman
Thank you, Michael. For the year ended March 31, 2020, GreenPower generated record revenue of $13.5 million compared to $6.1 million for the previous year, an increase of 122%. Gross profit for the year was 30% of revenue, which is the company’s target incorporating a blend of all of GreenPower’s products.
GreenPower enjoyed record deliveries of 68 vehicles for the year, including 62 EV Stars, four Synapse school buses and two EV350 40-foot low floor transit buses. These were across a wide range of sectors, including shuttle, micro-transit services, vanpooling schools and transit properties. In March of this year, GreenPower’s operations were temporarily curtailed in response to the COVID-19 pandemic and government’s stay in place orders. In response, management undertook a number of steps, both during and after the fiscal year ended March 31, 2020, to improve financial liquidity and manage the impact of these events.
Steps taken by management include or included the temporary reduction in salaries of certain employees, including a 30% salary reduction by myself, the temporary postponement of interest payments on convertible debentures held by insiders, the securing of funds and grants under programs offered in Canada and the US, including the SBA’s PPP program and managing the company’s supply chain, including securing critical parts and supplies in order to continue the manufacturing of electric vehicles. While the operational impact of the lockdown and measured reopening hindered our operations in a variety of ways, we have emerged in a strong position with great potential for growth ahead.
I will now pass the call over to Brendan Riley, the President, to discuss operational highlights.
Brendan Riley — President & Director
Good afternoon, and thank you, Fraser. It is really a distinct pleasure to be here speaking with you all today. As Fraser mentioned, the first half of the year has definitely been filled with both challenges and opportunities. One opportunity I’m tremendously excited about is our newest product to be released, that is the EV Star CC, which stands for cab and chassis. This is being built on our popular EV Star platform and shares about 98% of the components with the EV Star, but does not have a van body. It looks like a pickup truck without the bed and is really ideal for vehicle upfitters who want to have an OEM platform to build on.
Examples of these upfitted vehicles are a delivery truck, box truck, cargo transport trucks, garbage trucks, shuttle buses, high base school buses, RVs, ambulances, aerial bucket trucks and street sweepers, just to name a few. As you can imagine, a variety of those use cases are very timely in the current environment. And with the EV Star CC, it allows us to address this huge market with a product unlike anything that’s currently available from any competitive product manufacturer.
As the economy opened up in June, we were able to complete a sales trip across the Midwest. VP of Sales, Ryan Shetterly and myself went from the US Midwest all the way to Florida. We brought the EV Star and the EV Star CC with us to some of these vehicle upfitters, and even some fleets to let them see, touch and drive the EV Star CC and the EV Star themselves. We had amazing feedback, so standby for some amazing news we’re going to have as these deals develop.
As many publicly-traded companies in the space have reflected, the pace of EV adoption continues to accelerate substantially. Just last week, 15 states and the district of Columbia announced a joint MoU, memorandum of understanding, committing to work collaboratively to advance and accelerate the market for electric medium- and heavy-duty vehicles, including large pickup trucks, vans, delivery trucks, box trucks, school and transit buses, and even long-haul delivery trucks otherwise known as big rakes.
The goal is to ensure that a 100% of all the medium- and heavy-duty vehicles fail the zero emission by the year 2050 with an interim target of 30% zero-emission vehicle sales by 2030. This follows our strategy on focusing on markets that have mandates and money. Because of the compelling nature of our products and the excellent price point relative to our competition, we expect [Phonetic] to see national sales skyrocket as a result of these mandates. We have some other really exciting and interesting news about more potential for the EV Star; autonomous vehicle control and wireless charging. Right now, we have an EV Star that’s currently being modified for full autonomous use in transit operations by our partner Perrone Robotics. This vehicle will be delivered to the Jacksonville Transit Authority by this fall, and will be put into service shortly thereafter for full transit use. Also, GP is working with Momentum Dynamics to create a wirelessly-charged EV Star and then produce it on our full EV Star line. This will work with a whole family of EV Stars, and will allow these vehicles to charge simply by stopping over an in-ground charging pad. And the fast charging is now relatively inexpensive and has a potential to take away range anxiety from a lot of the operators using these vehicles.
Also with the completion of Altoona and Buy America compliance, we now have access to regular federal funding and NoLo grants to help our EV Star products get into the hands of transit properties from coast to coast. Our Altoona test score of 92.2 out of 100, which is the second highest score ever recorded for both internal combustion vehicles and EVs, is a tremendous testament to our product offering.
In addition, our unscheduled service maintenance used only 15 hours out of an allocation of 125 hours, about 12%, validating the ease of operation and the compelling nature of EVs as a product. Our EV Star is ideally positioned now. The transit properties are rethinking their large bus and scheduled fixed route service, leaning towards smaller vehicles and flexible micro-transit that takes care of the first and the last mile for the riding public.
I would like to invite all of you to visit our website to view some of recent testimonials in new segments where you can hear firsthand what our customers, such as San Diego Parking are saying about the EV Star product. Their comments highlight why I am so proud of what GreenPower team has accomplished and why we’re so excited about the future. I would like to thank you for your time today. I would like to pass the presentation over to Michael Sieffert to discuss the financial results.
Michael Sieffert — Chief Financial Officer
Thank you, Brendan. For the year ended March 31, 2020, GreenPower generated revenue of $13.5 million compared to $6.1 million for the previous year, an increase of 122%. Cost of revenues were $9.4 million, yielding a gross profit of $4.1 million or 30% of revenue. This revenue and gross profit was generated from the completion and delivery of a total of 68 buses, including 62 EV Stars, four Synapse school buses and two EV350s. Of this total, the company provided lease financing for 24 EV Stars, two at San Diego Airport Parking and 22 at Green Commuter.
At March 31, 2020, we had a cash and restricted cash balance of approximately $450,000, available funds on our line of credit of $1.7 million and working capital of approximately $740,000. We also completed several important financings during the year; the proceeds from which was invested in increased production across several product lines.
During the first quarter, we completed a private placement for gross proceeds of $4 million, which achieved the strategic goal of expanding our US investor base. In addition, during the fourth quarter, we secured an increase in the maximum available credit limit available on our operating line of credit to up to $8 million from $5 million previously, and this increase in the line of credit was achieved based on the corporate credit of GreenPower without additional external support.
Total inventory at the end of the quarter was $6.6 million, including $3.8 million in finished goods inventory and $2.8 million in work in progress. As well, we also achieved another objective and that was to secure research analyst coverage from two research analysts and [Phonetic] US investment banks during the year.
Cash costs for the fourth quarter were $1.7 million compared to $1.8 million in the third quarter and $1.5 million in the second quarter. The overall increase was primarily due to increases in salary expense, which in turn was driven by increases in the number of staff and higher selling and administrative costs and product development costs.
At this point, I’ll turn the call back to Fraser Atkinson.
Fraser Atkinson — Chief Executive Officer & Chairman
Thank you, Michael. These are very exciting times at GreenPower. We’ve seen a bright light shine on the clean transportation sector, especially with EV manufacturers trading on NASDAQ and for good reason. Our goal remains to not only build our operational presence but also awareness amongst the full universe of investors. It remains an absolute priority to uplist to the NASDAQ and we continue to make substantial progress in this regard.
I’ll now turn the call back to the operator to open up the question-and-answer period of our call.
Questions and Answers:
Operator
We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Craig Irwin with Roth Capital Partners.
Craig Irwin — ROTH Capital Partners — Analyst
Thanks. Good evening and thanks for taking my questions. So, Fraser, the first thing I wanted to ask is for the update on your HVIP vouchers that you currently have in hand, can you remind us how many units you have HVIP vouchers covering right now and what the timeline is that we can expect you to fulfill those orders or those vouchers, so that you don’t lose the eligible funding?
Fraser Atkinson — Chief Executive Officer & Chairman
Thank you Craig. And thanks for participating on our call. So at year-end, I believe the number was 71 approved voucher requests for just over $7 million in terms of voucher amounts. And since the year-end, we’ve used and being paid for 18. So, the delta being 53 that remains in terms of approved vouchers, that’s from the funding from the carried forward from 2019. And there’s been no indication that there would be any withdrawals. But those vouchers that remain are with — are pursuant to various custom orders that we certainly expect to be delivering later this year.
Craig Irwin — ROTH Capital Partners — Analyst
Thank you for that. So the second thing that I wanted to ask about is your gross profit. I know that the COVID environment has disrupted revenue for many, many companies out there. But I was really surprised to see such a very strong gross profit reported this quarter. Can you maybe clarify for us what’s in there? Is there any specific one-time item that might carry forward, or did this maybe pull forward profitability from future quarters?
Michael Sieffert — Chief Financial Officer
Hi Craig. This is Mike Sieffert, CFO. And to answer your question, I guess at a high level, the profit that was generated was from the sale of eight EV Stars and these EV Stars were previously on lease. And so, effectively, the original lease accounting was unwound and the sales were registered as straight sales of the vehicles. But I would say this didn’t bring forward revenue from a future period. And in terms of the profit margins, it was in line with our wider mix of vehicles and in line with these types of products.
Craig Irwin — ROTH Capital Partners — Analyst
Understood, understood. So, can you maybe talk a little bit about the sales pipeline for fiscal 2021 and fiscal 2022, excluding the CNC [Phonetic] model right now? So in your conventional shuttle bus and bus opportunity that you have been developing over the last several years, can you approximate the number of projects that you’re chasing the broader potential number of units that you look to bid on over the course of the next few quarters?
Fraser Atkinson — Chief Executive Officer & Chairman
Well, I’ll start off at a high level and then see if Brendan wants to add any additional detail. We don’t presently have a published pipeline or guidance that we’ve issued in part because emerging from COVID-19, we’ve pivoted to a number of sectors that have a higher sense of urgency and a greater opportunity, some of which Brendan referred to in his earlier remarks. And so, until we move forward and announce some of those deals, it’s still premature to refer to some of the specifics that your question relates to.
Craig Irwin — ROTH Capital Partners — Analyst
Okay. So then Brendan’s comments would be around the LoNo awards I think that you mentioned in your prepared remarks. Am I correct?
Fraser Atkinson — Chief Executive Officer & Chairman
That’s correct.
Craig Irwin — ROTH Capital Partners — Analyst
So, is it rational for an investor to expect there to be a few customers in there that look like they did get awards where you’re in sort of final competition or final negotiation to size the orders and delivery requirements? Is that a fair assessment of the probable current situation?
Fraser Atkinson — Chief Executive Officer & Chairman
Well, certainly since the Altoona report, we have — and since obtaining the final report, which was published in just April of this year with a score of 92.2 that Brendan was speaking to earlier, since then, we have had a campaign in the marketplace to get the market awareness up that our vehicle had now that we had the Altoona report in hand and a pass — not just a pass mark but a great mark, such that we’re available for all federal funding for any vehicle that’s used with public transportation that is accessing federal funding. So, not just the NoLo but all the different types of federal funding.
So in short, yes, we’ve been pursuing opportunity specific to that area and in a broader sense other areas. And as Brendan also alluded to, one of the areas that we’re focused on is micro-transit services, having deployed a number of tranches of vehicles in California where transit properties are looking at or have deployed our vehicle within their micro-transit services.
Craig Irwin — ROTH Capital Partners — Analyst
Understood. Thank you.
Brendan Riley — President & Director
And this…
Craig Irwin — ROTH Capital Partners — Analyst
Sorry, I interrupted.
Brendan Riley — President & Director
This is Brendan. Really quick Craig, I would say that I agree with your statement about the NoLo having some potential there, and I’m hoping we’ll be able to announce something very soon. But on top of that, our existing pipeline that we’ve been working on for years and developing for years, of course, we’ve got COVID here, which we think will affect, let’s say the timeliness of those deployments. We still have a fairly substantial pipeline that we are continuing to address and deliver into.
Craig Irwin — ROTH Capital Partners — Analyst
Okay. And then has the COVID pipeline — I mean the COVID impact on the broader environment started to fall a little bit where you’re able to now convert a little bit more easily than what’s been situational over the last six months. And are we starting to see business momentum come back a little bit? Or given the significant uncertainties out there, are transportation agencies and transportation service providers staying very conservative in this unusual environment?
Brendan Riley — President & Director
Again, this is Brendan speaking. Craig, the environment still is a little soft. People are a little apprehensive about the future. But we are seeing things lighten up like I mentioned in my report earlier, we were able to go across the country, which would not have been, let’s say in the months of April or May, maybe even part of June. But July, things opened up again and we were able to go and visit customers. They were able to see us and we are seeing an uptick in activity. So, even though it’s not back to normal, we’re seeing the softness soften.
Craig Irwin — ROTH Capital Partners — Analyst
That’s good. That’s good. I did want to ask about the cabin chassis product. My understanding of that market is the contracts tend to be much larger when they’re awarded. People don’t usually order single-digit numbers. They’re usually 10s or sometimes 100s of units. Can you maybe talk us through the different sales dynamic there, the sort of bid award cycle? What you need to do to properly prepare customers to make a commercial decision to buy your product? And do you expect material awards possibly to arrive before the end of this calendar year?
Fraser Atkinson — Chief Executive Officer & Chairman
So, I’ll answer the last question first. We expect the orders to start rolling in well before the end of this calendar year and really within the next few months, but that’s just our expectation. And the sales cycle is interesting. You’re now selling as an OEM to somebody that’s actually adding upfitting the vehicle, adding their components to the vehicle and then them selling it either retail to their customers or selling it through dealer network.
It does require a little bit more of an involved engineering effort; in that, often these vehicles do things like street sweepers, they’ve got components that get on at garbage trucks, big boxes, rams, hydraulics. So there is a little more upfront engineering work. But as you alluded to earlier, you don’t just sell one to 10 of these. It’s a sale of 10s, 100s and those sales theoretically could go add into an item for that product line.
So, we see it as a recurring business. We see it as a high-volume business. And also the touch points, once you’re done with your touch points on that product line, you basically just let the orders get fulfilled and shipped. Also, there’s very little end user training involved. You train the upfitter that’s doing the modifications once and that’s it. Then — you’re — then after that, you’re supplying vehicles, supporting the vehicles with after-service and parts, but it’s a much less labor-intensive type of sale.
So, the selling process is interesting but it’s similar. You just have to sell [Phonetic] a couple of people from each company to be an internal champion. They go with the product, verify that it’s the right fit for their application. Interestingly enough, the EV Star CC the way we’ve developed it, that vehicle has more capacity for carrying weight than any converted competitive products like you’d get from somebody who’s retrofitting a vehicle. So, it’s an interesting vehicle for people putting heavy bodies on that they’ve got a lot more weight to play with and provide for more compelling product for them. I know this is kind of in the weed, but it really is part of our rightsizing this vehicle’s capacity for customers’ application; something you can’t do by modifying an existing product.
Craig Irwin — ROTH Capital Partners — Analyst
Understood. Thank you for that. That makes sense that that’s important. So my last question before I hop back in the queue. I know the move to NASDAQ is a tremendous amount of work. And we need to acknowledge that the first fiscal quarter, the pages of the calendars have closed at this point, right? So instead of asking you for guidance, can I ask if the press releases of your sales and deliveries of vehicles in the first quarter match with the deliveries in the quarter, or were there potentially other deliveries that were not press released order, press releases that covered units that were delivered at other times?
Michael Sieffert — Chief Financial Officer
Hi Craig, this is Mike Sieffert. Yes, to answer your question, yes, the deliveries that took place in the first quarter, that was 18 vehicles delivered to Green Commuter. Those are the only sales that took place during the quarter.
Craig Irwin — ROTH Capital Partners — Analyst
Thank you very much. Excellent. Congrats on the progress. I’ll hop back in the queue.
Fraser Atkinson — Chief Executive Officer & Chairman
Thank you.
Operator
[Operator Instructions] Seeing no further questions, I’d like to hand the call back over to Fraser Atkinson. Oh, pardon me, we do have a question that came in. And our next question will come from Robert London with London Family Trust.
Robert London — London Family Trust — Analyst
Thank you. Brendan, this is for you. I was wondering if you could talk about capacity, capacity today and capacity where it could be at year-end. I’m trying to understand if you’ve got the orders, what can you fulfill.
Brendan Riley — President & Director
That’s a great question. So, right now we’ve got different capacities for different types of vehicles. So if you look at what our Buy America compliant vehicle capacity is, at present, we’re able to do like, just say, today, we’re able to do 10 Buy America compliant vehicles a month based on our existing staffing and with all of the — our facility the way it’s set up. We can easily just by staffing up that facility produce 30 Buy America-compliant EV Stars.
Now, GreenPower, we are more like an Apple than like a GM; in that, we’ve got multiple vendors throughout the world that can actually do contract manufacturing for us, that can do assembly for us, that can put together pieces part. So, if the orders, to answer your question specifically, if the orders do not require Buy America compliance, we can easily do 100 plus vehicles per month. But the Buy America compliant portion, our bottleneck would be our existing US manufacturing capabilities right now.
And again, that’s talking about EV Stars. The bigger heavier duty transit — love for transit vehicles and the school buses, those of course take a little bit longer to do and they’re much larger vehicles. We’d expect the run rate of those to be somewhere in the neighborhood of about 15 vehicles per month of any of those types of vehicles, the larger ones. So, the heavy-duty vehicles versus the EV Stars, there is a difference there. But again, Buy America-compliant vehicles, we’re doing 10 of those a month right now and we can do 30 a month just by staffing them.
Robert London — London Family Trust — Analyst
Great [Phonetic]. Thank you very much.
Operator
Our next question comes from Bill Chapman, a private investor.
Bill Chapman — Private Investor — Analyst
Good afternoon, everyone. This is Bill Chapman and I was curious, on the voucher program in California, with the state budgets being tight everywhere, can you project what the future looks like on these vouchers? Will they be dropped on the financial amount, the monetary amount, or whatever you comment on this, I’d appreciate?
Brendan Riley — President & Director
This is Brendan Riley. I’d like to have a first stab and then I’ll hand it over to Fraser. Right now, there are no vouchers available besides the ones that have been claimed in the state of California for the HVIP. We have about 50 of those left with our customers. Those are — they’re telling us — California Air Resources Board, the entity that actually gives out these vouchers, they’re telling us that by October they will have a new round of vouchers available for people to queue up for to claim.
As far as the 50 that we have, we do not see any risk for us right now in losing those, and we’re going to be delivering those 50 vehicles over the next, let’s say, six months. There’s also vouchers coming in New York City under the New York HVIP program and that amount is [Technical Issues] those are up to 90,000 each and they’ve got a certain amount — let me check my records here how much they’ve got, and they’ve got $17 million available for this particular program. Those haven’t been awarded yet but they will be very shortly. And then there’s other monies, of course in the forms of grants and other things, FDA, NoLo, bail, grants and other things. But as far as vouchers are concerned, those are the vouchers that I know of. And Fraser can add some to this.
Fraser Atkinson — Chief Executive Officer & Chairman
I think the important thing is that the HVIP voucher program has had a period of waiting lists and postponements in terms of the ability to submit for the voucher request. We’ve been fortunate to have a pretty steady stream of approved vouchers to work off in terms of deliveries. So as Brendan said, it’s — the program has communicated that this fall they’re going to open it up again. The funding is there in terms of the cap and trade program that generates the funding for not just the HVIP voucher program but all of CARB’s initiatives and California Climate Investments’ initiatives.
And so for us, it’s a matter of just ensuring that we’re ready every time the voucher program reopens. But in the meantime, we’ve also — while we talk a lot about money and mandates and the money being from various programs is that now that our EV Stars all tuned and tested, we’re able to access federal funding across the US from transit properties that are using federal funding in terms of acquiring buses, so that is new for us. And there are — on a regular basis, there’s new programs that are announced or launched in the marketplace.
And the last thing to mention somewhat related to the vouchers is our most recent delivery of two EV Stars to UCLA is that those vehicles were delivered without the utilization of any form of funding. So, there is no voucher funding, there is no government assistance. It was an outright purchase by UCLA to acquire those two EV Stars. So there — we’re finding that where there’s a mandate and where there’s a desire to electrify that organizations will find a way to acquire a vehicle without necessarily having to rely on these other types of programs.
Bill Chapman — Private Investor — Analyst
Okay guys, thank you very much.
Fraser Atkinson — Chief Executive Officer & Chairman
Thank you.
Operator
Our next question comes from Gary DiStefano with ThinkEquity.
Gary DiStefano — ThinkEquity — Analyst
Thanks for taking my question. So in the past, you’ve noted that your addressable markets are in both transit and delivery. Would you mind commenting on the current demand for delivery type vehicles if any, and the current state of that market? Thanks.
Fraser Atkinson — Chief Executive Officer & Chairman
Brendan, did you want to start off on that?
Brendan Riley — President & Director
Fraser, I’d let you take the first stab at this.
Fraser Atkinson — Chief Executive Officer & Chairman
Okay. So, in terms of logistics and delivery, we are seeing a huge sense of urgency, in that, both transportation company, last mile delivery, logistics are all seeing a significant growth in demand, in part because of the work-in-place and shelter-in-place protocols that have been followed across North America. And so as a result of that, we’re encountering opportunities that certainly weren’t there a year ago. As I mentioned earlier, we have not provided details or particulars of our pipeline, or guidance or forecast at this time. So, until we get announced orders around those areas, there really isn’t anything else to share other than the fact that the markets are very robust over the last three to six months.
Gary DiStefano — ThinkEquity — Analyst
Great. Thank you.
Operator
Our next question comes from Chris Bailey with MTW [Phonetic].
Chris Bailey — MTW — Analyst
Hi, good evening guys and congratulations on the great year. Thanks for taking my question. My question is regarding the listing on the NASDAQ. I know I think Fraser mentioned that it’s the utmost importance. But previously you did have a — I guess a target date, and for one reason or another, it didn’t happen. But are there any particular hurdles or stipulations that you can foresee? Maybe you might have a problem getting listed on the NASDAQ, and would you have like another target date in mind? Thank you.
Fraser Atkinson — Chief Executive Officer & Chairman
Well, thank you Chris. We do have — with the recent interest in the clean transportation, clean energy sector, certainly caused a lot of positive interest across the sector. This is also, I would call it, as we emerge from COVID to/post-COVID to some extent. I’d say post-COVID in terms of the back-to-business protocols that people are following. So, we’re in a much better position to move forward and our desire is to move forward as quickly as possible to take advantage of these other EV manufacturers that are trading on NASDAQ and trading with very strong multiples in terms of their projected revenues or even their current revenues.
And then lastly, in terms of the specific requirements, we do a refresh on what the requirements are, which include the number of prescribed shareholders that hold a Board lot, the shareholders’ equity or stockholders’ equity calculations, the minimum market capitalization of the company. And today, we’re in a lot better shape than we were earlier this year. So, we’re better positioned to move forward as quickly as possible. So, I know I haven’t given you a specific date. But at the end of the day, there are certainly factors outside of our control. But the objective of the team is to move as quickly as we can with the NASDAQ uplisting.
Chris Bailey — MTW — Analyst
Thanks.
Operator
Our next question will come from Steven Adas [Phonetic], a private investor.
Steven Adas — Private Investor — Analyst
Yes. Good afternoon gentlemen. Thank you for taking my call. My name is Steven [Indecipherable] shareholder. And I’m just wondering if you guys could touch on the impact of the lithium-ion battery prices, and whether you have a locked in price, or whether you’re seeing any benefits from lower battery prices? Thank you.
Brendan Riley — President & Director
Hi Steve, this is Brendan Riley. So, we typically don’t discuss what we’re paying for the cells. But what we’re seeing right now is you either get a lower price per, let’s say, kilowatt hour of your cells or you’re getting cells with higher energy density and power density. So, you do buy a certain number of cells and build up a certain number of vehicles. But we’re seeing either a energy density increase or a price decrease, however you want to look at it. Up [Phonetic] about 10% year-over-year has been the average I’ve seen in the chemistries that we’re using. Right now, we’re using iron phosphate for our vehicles and we are developing a nickel-cobalt-manganese chemistry battery pack currently also.
So the rule of thumb is 10% year-over-year, either energy density increase, power density increase or price reduction and you can look at them either way. They essentially come to the same thing. The nice thing about the energy density increase is that it lowers the vehicle weight for the amount of energy you have. So, you do pick up some efficiencies there. But we anticipate this price decrease to continue for the foreseeable future. We’ve not seen it subside at all. Some year there is a little more, some year there’s a little less. But the 10% year-over-year with the chemistry that we use seems to be the standard. That’s all that I have on that.
Steven Adas — Private Investor — Analyst
That’s excellent. Thank you.
Operator
And our next question will be a follow-up from Chris Bailey with MTW.
Chris Bailey — MTW — Analyst
Hi guys. Chris Bailey again. I was wondering if you could elaborate on, if you were at full capacity for production, what type of improvement could we possibly see on gross margin? Thank you.
Fraser Atkinson — Chief Executive Officer & Chairman
Well, our stated objective of 30% gross — sorry, this is Fraser Atkinson responding. And then Brendan can add anything else after my remarks. But our target is to have a 30% gross profit. And with an increase in production and scaling of production, that would often allow for a focus to reduce costs with those increased production.0 Our focus is around continuing to find the deals that generate that level of gross profit, which we’re quite happy and we believe will deliver a very profitable business model with the increased sales and increased sales revenue.
So, the plan over the next year or so isn’t to try and take costs out of the cost of goods sold with increased production, but to maintain the best quality we can on producing every single unit, as well as really a continued focus on our sales and marketing efforts. So perhaps a year, year and a half from now, we might start to look at the kind of exercise that you’re referring to. But at this stage, that’s not a priority in terms of what we’re focused on today. Brendan, did you want add anything?
Brendan Riley — President & Director
Fraser, you stated it perfectly. I have nothing to add. Thank you.
Operator
This concludes our question-and-answer session. And I would like to hand the call back over to Fraser Atkinson for any closing remarks.
Fraser Atkinson — Chief Executive Officer & Chairman
Well, thank you everyone for attending this call. And I would like to give a shout out to our entire team at GreenPower, as well as the support of our directors. We’ve had a number of challenging months as many businesses have. But as we have said on this call, we believe we’re well positioned and in a great position to grow our company through the summer and to the fall.
One thing I did want to add to is Brendan referenced money and mandates and likewise on the Q&A, we referred to the money side in terms of vouchers and government programs and so on. One thing we’re finding in the marketplace is that on the mandate side, three, four years ago would be unheard of other than a government body to implement or mandate a particular electrification requirement. What we found and especially coming out of COVID is that some of the thought leaders and CEOs of the large technology companies, transportation companies and logistics companies, they’re all not talking about electrification, they’re demanding that their team come up with a way to electrify their fleets, or the way they do their business that involves transportation.
So, we see the money and mandates as continually impacting the sales and marketing strategies for the industry, as well as our company. And we’re really excited about how so many companies outside of our space are embracing an electrification strategy. So with that, we conclude the earnings call. And thank you for everyone in terms of listening in and for your questions.
Operator
[Operator Closing Remarks]