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spk06: Good afternoon. I'm Mark Frohnmaier, CEO and founder of Arcimoto. And I'd like to welcome you all to Arcimoto's Q2 2021 stakeholder webinar. Arcimoto is an Oregon C Corp founded in 2007 with the mission to build products that catalyze the shift to a sustainable transportation system. These quarterly webinars held in tandem with our filings with the SEC are intended to give our stakeholders a clear and current picture of the company's progress as seen by Arcimoto's leadership. I'm going to run through a presentation starting with our latest company video, discuss the context, the quarter, recent updates and goal progress, as well as a bit of the road ahead, after which I'll be joined by members of the executive team to take stakeholder and analyst questions from SEI. You can find supplementary information, including our earnings press release, financial filings, presentation materials, transcript, and a replay of this webinar that will be posted later on our investor relations page at arcimoto.com slash IR. You can also sign up for investor updates at that link. Before we begin, I want to call your attention to our safe harbor disclaimer regarding forward-looking statements. This note identifies risk factors that may cause our actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our Form 10-Q and other SEC filings. That said, let's dive in.
spk05: At Arcimoto, we build light, electric, ultra-efficient rides that are outrageously fun to drive for a reason.
spk06: Our vision is a city that doesn't suck anymore. Today's city is dominated by the car. We pave over nearly half our urban land for these giant, multi-ton extractive machines that we mostly drive alone or with just one other person and leave parked rusting for 95% of their life.
spk05: That's nuts. We believe that by right-sizing, electrifying, and better utilizing our rides, we can reclaim our space, clean our air, and make our cities much more livable for everyone.
spk06: We've built a new human-scale vehicle platform, Nestle. A family of products dialed for a wide range of everyday trips. The Fun Utility Vehicle for daily driving, rentals and rideshare. The Deliverator for last mile delivery of essential food and goods. The Rapid Responder for emergency services and security. The Flatbed for general fleet utility. And the Roadster, a fun machine that drives like nothing else on the road. Every Arcimoto is pure electric with range for everyday driving, have Rockstar parking as a standard feature, and accelerate from zero to fun instantly. Our experience model is rental first with operations open in multiple destination markets and more on the way to give potential adopters a taste of the ride.
spk04: I've been driving it everywhere. I'm just like a 16 year old. I don't even care where I go or why I go there. I go out and I get in and I just drive around.
spk00: That's an awesome, awesome machine right there. It's quiet, it's got plenty of power, all the power you need, and it's just comfortable.
spk02: Everybody wants it when they see it, and they haven't even driven it yet. The real joy is when you get to drive it, and then you just get the feeling of what it's all about.
spk04: I'd also like to give a big shout out to the Arcimoto team. Your workmanship and design is awesome.
spk06: The full future Arcimoto vision adds driverless technology to make shared rides much more convenient. Imagine a city where your personal transportation is available at the touch of a button on your phone.
spk05: Enjoy the experience of driving again. And when you reach your destination, you just hop out and the Arcimoto is available for its next driver. We're in production now. Every Arcimoto is built here in the amp where we transform raw material through cutting, forming, welding, machining, and final assembly all under one roof. To take the venture to scale, we purchased a new, much larger facility and teamed with Sandy Monroe and Associates with the goal of kicking off mass production late next year.
spk06: Finally, we acquired Tilting Motorworks, developers of the Trio accessory that can turn two-wheeled motorcycles into amazing tilting three-wheelers. Together, we're building a new ultra-light micro-mobility solution for the rapidly growing global electric bike and scooter marketplace.
spk05: With our overarching focus on scale, this year we plan to demonstrate the full breadth of Arcimoto's solutions for sustainable mobility and expand our market presence as we prepare for the next decade of the venture's growth. Arcimoto is a public company. We've been powered since our inception by a community of stakeholders with whom we share a mission to catalyze sustainable transportation. I hope you'll join us.
spk06: To set the frame, the IPCC just issued a code red for humanity, and we're in the middle of a global pandemic. More infectious and harmful variants of COVID-19 are circling the globe. Every organization we interact with, all the people, are under significant stress as the fragility of the global supply chain has been laid bare, and as our patterns of behavior are showing an ever more clear perilous toll on our home. At the end of the day, sustainability is a social networking exercise. The right-sizing of our relationship with our planet is going to take all of us working together to accomplish. We are heartened that leaders around the globe are advancing targets for carbon reduction, including the Biden administration, our Oregon congressional delegation, and state and local leaders around the country. More specifically, much of what I'm going to talk about today in the context of Archimoto's rapidly accelerating pace of innovation towards its mission is reflective of a shared commitment to maintain a livable planet.
spk07: But first, the numbers.
spk06: The second quarter wasn't all roses. As I have cautioned in several prior updates, and as anyone who is following the automotive industry already knows, we're subject to a topsy-turvy supply chain in an emerging field. Two prominent examples. During Q2, one of our critical supplied components had both production and transportation setbacks that would have resulted in an extended production shutdown starting mid-August on our earlier planned path. And another key components update exhibited a software error that prompted a delivery pause for several weeks as a multi-organization Tiger team dissected root cause and solutions. Consequently, we adjusted our build rate and have revised our planned mainline target of production output to 425 FEV platform vehicles in 2021. In the context of our planned marketing efforts, I'll discuss shortly, this will impact total planned customer deliveries in 2021 as well. That said, by the financial metrics that we see as most important to the achievement of Arcimoto's mission, Q2 was far and away the company's best quarter to date. Our balance sheet is the strongest in the company's 14-year history. We continue to maintain a disciplined approach to resource expenditure, and we've made substantial forward progress on critical fronts for the company's growth. In Q2, we submitted a first draft of and are presently refining our application to the Department of Energy. or a loan to fund the substantial portion of our planned expenditures for next stage production. And further, the ATM facility we put in place this year in partnership with Canaccord Genuity allows us to continue to fortify our position at current market prices and times we believe are in the best interest of our stakeholders. Contemporaneously, as our balance sheet has strengthened, we have noticed a meaningful rise in the number of market bets against the company. You can refer back to our last two webinars if you want more color on some of the knock-on ecosystem effects of such activities. But to provide some perspective on relative size, at the time of the last NASDAQ report, short sellers of our stock collectively had short positions that totaled almost double the amount of funding the company is presently contemplating requesting in its next ATVM loan application revision. Moving on. We have three broad top level goals for 2021. The first we laid out one year ago during 2020 Q2 report to get to mass production in a new facility starting by the end of next year with a targeted capacity once at full output of 50,000 vehicles per year that provides further a pattern for yet higher scale replication. Second, continue to build the market for Arcimoto's products to support that level of production and ultimately way beyond. And finally, showcase the full presently contemplated range of Arcimoto's solutions for sustainable mobility. I'll go into the progress to date on all three fronts. The push to volume production is our most important overarching objective, bar none. We believe achieving scale will allow us to reduce vehicle costs to the point where the Arcimoto is affordable to almost everyone while providing the positive cash flows necessary to sustain the business long-term. And I'm pleased to report that in the second quarter through present, we've made significant headway towards this primary goal. We closed on the purchase of a new facility, more than 200,000 square feet under roof on 10 acres of land. We landed our new plastic thermoforming cell in a new facility and are aiming to have it operational before the end of this year. We've completed the first phase of construction planning, and that build-in will commence when the prior owner completes move-out, targeted at the end of this month. With our partners at Monroe & Associates, we have completed architectural down selection of all major vehicle subsystems, essentially the materials and manufacturing method choice for the parts of the vehicle for volume. And engineering and assembly planning are now moving ahead full steam. And as I mentioned earlier, in Q2, we submitted our first draft to the U.S. Department of Energy for a vehicle manufacturing loan and are now in regular conversation with their team, expecting to submit a refined draft imminently that takes into account their feedback and requirements, as well as our ongoing engineering refinement efforts. In summary on goal one, significant progress, a mountain of work ahead. On the marketing front, one thing is clear. The more people get a chance to drive an Arcimoto vehicle and experience their one-of-a-kind electric performance, the more our market grows. In addition to test drive and media events across the West Coast, we've also held large-scale test drive event at the Portland International Raceway in July. and continue to receive positive product reviews from top tier EV press, including a review on Forbes.com last week which stated, the FUV made more people smile than any other vehicle I've ever reviewed. We've also grown our rental operations in key markets, opening our first two company owned stores in Eugene and San Diego. We'll also be delivering additional rental vehicles to go car tours in both San Francisco and San Diego. We continue customer deliveries in Oregon, Washington, Florida, and our home state of Oregon, and are preparing to open sales and rental in Hawaii, Arizona, and Nevada, where we expect to begin taking reservations from our pre-order customers in the coming months. We have recently relaunched the FUV configurator tool on our website in order to further streamline the ordering process, the first of several major planned upgrades to the initial user experience for prospective customers. We are actively working with both city and state officials with the goal to electrify government fleets. The city of Encinitas in California is testing Arcimoto vehicles for use by Encinitas lifeguards and infrastructure and sustainability departments. Continuing Mayor Catherine Blakespeare's efforts to reduce carbon pollution and advance sustainable transportation in Encinitas. This week, we will begin our statewide pilot program in the state of Tennessee, introducing Archimodos in Memphis, Knoxville, Chattanooga, and Nashville with test drive events this month. In addition to retail sales and rentals, we believe a key path for Arcimoto vehicles is in shared mobility and have engaged with multiple potential partners to begin rolling out vehicle share programs. As the population in cities continues to grow and as vehicle ownership in urban areas declines, the need for right-sized, shared, sustainable fleets becomes ever greater, and our vehicles offer clear environmental efficiency and economic advantages over current car share options. We continue to work with state governments across the country to improve access to Arcimoto vehicles. Most recently, successfully advocating the removal of special motorcycle endorsement requirements in Florida, Hawaii, and Louisiana so that customers there can operate an Arcimoto with a standard driver's license, thereby modernizing legacy three-wheeled legislation with a common sense solution. And as we look globally, we've begun developing a measured strategy to enter the world market, starting with countries that fully accept the United States federal vehicle motor vehicle safety standards.
spk07: In summary on goal two, significant progress and a mountain of work ahead.
spk06: Finally, Arcimoto has continued to rapidly accelerate its pace of innovation in order to demonstrate the full range of our solutions for sustainable mobility. At our summer event just a few weeks ago, we launched our first production roadster, showed the long-awaited half-door accessories, and showcased with partners some of the truly exciting technologies now in development. Torque vectoring to dramatically improve low-speed steering as well as vehicle handling, driverless capability by remote control, heated storage deliverator for meals, and battery recycling in line with our long-standing goal to create true cradle-to-cradle products. By the way, it's not lost on us that the top three best-selling cars in the US last year were pickup trucks. Might explain all the excitement around Cybertruck, Rivian, Ford's Lightning F-150, and others. Well, now Arcimoto has a pickup truck. We showed the first prototypes of the Arcimoto flatbed, and it's awesome. Same base scalable Arcimoto platform, incredible configurability and volumetric carrying capacity in a small footprint. We aim to begin piloting the flatbed later this year. I want to emphasize again the importance of partnership and collaboration. Monroe & Associates, Stoffel Systems, Shurt Tech, Redivivus, Bib Technologies, and so many others have pitched in their brilliant minds and hard work towards our shared purpose. On that note of partnership, just shy of a year ago, I reached out to Bob Mile, founder of Tilting Motorworks, about an idea for a new micromobility product line that would leverage their expertise in tilting trikes with Arcimoto's electric vehicle capabilities. And I'm incredibly excited to report that the first prototype from that collaboration is now on the road. We're not ready to show the product yet, but I will tell you, I got to ride it for the first time on Thursday. And on that first ride, I leaned it way farther than I've ever leaned a bicycle. It's easy, smooth, and stable, and I can't wait to show it to you in product form. This Mean Lean machine is chock full of new electric vehicle technology. We are actually reinventing the wheel this time, and it's targeted squarely at the rapidly growing e-bike and e-scooter marketplace. We believe it will perfectly complement our go-to-market strategy of rentals and ride share, and we'll set a new bar for efficiency, utility, and affordability for a wide range of transportation tasks. We acquired Tilting Motorworks at the beginning of this year to accelerate development of that program. But I want to take a moment to talk about what else we got in the deal. An existing product line for motorcycle riders who don't want to fall over anymore. Our trio accessory transforms a motorcycle into an amazing three-wheeled tilting machine. And we see giant market potential for this product. In the U.S. alone, there are more than 12 million motorcycles in use, and the trio is already adapted to the leading big bikes, Harleys, of which 180,000 were sold last year worldwide, Indians, Gold Wings, and most recently, the Lightning Electric Superbike, with which we intend to compete for a land speed tilting three-wheel record at Bonneville next year. In summary, Arcimoto is shipping and continuing to further develop kick-ass, ultra-efficient three-wheelers alongside a world-class team with whom we share a mission to right-size mobility as we grow our market presence in preparation for volume production. We must continue to improve the experience for the Archonauts, our early customers and riders, their vehicles, the first time user experience, and sales, service, and communication processes. This means listening closely to feedback we receive from customers and pilot partners to improve our offerings for scale. We must continue to cultivate our leadership skills as our team and demands expand. Arcimoto is more than 200 people right now, about double where we were one year ago. And this means continued emphasis on process, culture, and our core values of continuous improvement, environmental efficiency, and fun. We must maintain our focus on the health and safety of our team during an ongoing pandemic, encouraging good life choices, and bolstering our resilience for the road ahead. The plan is not waiting around. The IPCC's Code Red is our call to action. We must continue to step up our production pace amidst the churn in order to make the contribution for which we are called. And with that, let's bring on the rest of the C team, except Terry, who is on his way back to Eugene, and dive into Q&A. I just want to give a little bit of background here. This is our quarterly stakeholder webinar. We do quarterly webinars in tandem with our filings with the SEC. This is sort of the modern day replacement for the conference call, dial in an operator and stuff like that. We're aiming to modernize that approach in order to give our stakeholders a clearer picture of the company. So we're still continuing to experiment with the format. And of course, if stakeholders and analysts have any feedback on the format, feel free to send it in to the company and we will adjust accordingly.
spk07: And with that, let's take our first question from Say. All right.
spk08: In regards to the ATVM loan, what time frame does Arcimoto believe they might get access to funding? Also, what percent of the Arcimoto project do you believe will be covered by the ATVM loan?
spk06: So very good question. We are anticipating submitting our next draft revision of that application imminently within the next week or two. And we anticipate that it would likely be somewhere in the vicinity of a four to 10 month process from there should the department decide that Arcimoto is worthy of that loan. in terms of what percentage of the project it would cover. As I mentioned earlier, we are in the best balance sheet position we've ever been in. We have plenty of cash on hand to move forward. Ultimately, I think we'll end up asking for the ATVM to cover something like 80% or a little bit less of the overall total project cost for scale production, which is what we're now calling 1.x.
spk03: Great.
spk08: Once Arcimoto's second facility goes into production, will the current AMP facility be converted into a production line for Platform 2 vehicles?
spk06: Uh, we know on our current plan, uh, we have the, our current facility will still be doing production targeted at platform one. So, um, it's, it is, we're, we're going to be playing a little bit of musical chairs as we move forward over the next, uh, 18 months, uh, or so, which I guess less than that next, you know, well, yeah. next year and change, is that we're going to be moving certain components that are presently in the AMP into the RAMP, and that will make space for some new development programs that are going to come online to support the scale production version in the AMP.
spk07: We've not yet selected a facility for the manufacture of our Platform 2 products.
spk08: when does Arcimoto believe it will be able to implement factions, remote controlled systems into a type of shared vehicle network and related question from chat from Ed Hurtley. I'm curious if that technology will be available as an upgrade for existing vehicles to allow existing owners to use a ride share service, or will it be limited to company owned vehicles?
spk06: So the, and is that, Is the question really around shared use? Something we've talked about for a long time is the potential for Arcimoto customers to share out their vehicles to others, basically set rental rates and let their neighbors go get groceries with their Arcimoto's. That is still certainly in the long-term plan. And in terms of really more the driverless component technology that Faction demonstrated using the Arcimoto platform, in terms of when that is going to be meaningfully deployed, even in sort of like on-road pilot form, that has yet to be... uh determined and certainly yet to be announced so stay tuned on that front um we are very hard i mean this is the faction was able to take uh a an arkamoto provisioned with our intermediary uh torque vectoring and driverless layer and get those vehicles up and running uh inside of about four weeks So those guys are moving fast and certainly very motivated as we are to get rideshare working in an actual useful way out in the world that leverages that tech. And what that really does that we think will make it more convenient for vehicle sharing customers to get vehicles, having a vehicle sort of delivered to you without paying for somebody to actually drive you once you're in it. And we think that that is a very compelling future model for vehicle sharing that we are pursuing aggressively.
spk07: I see a follow-up question from Ed regarding the phone app and when we can expect to see that come online.
spk06: It is in development. We have mapped out the initial stages of the phase one requirements. It's in development now, and it will be ready when we release it. So we don't have a fixed timeline that we have announced yet.
spk07: But it's a critical piece of the puzzle, so something that we are definitely pushing on.
spk08: When will the FAUV get over-the-air updates, and how much do you anticipate this will end up saving Arcimoto in service costs?
spk06: It will save us. I have not run the numbers on what it's going to save us, but it's just such an obvious win. In terms of when that's going to happen, we're balancing that with a number of different priorities. And so, again, we have not announced a timeline on that as one of our top level goals, but it's something we're pushing forward on.
spk07: When will owners get a personalized Arcimoto portal account to track service and referrals, and will it show data like battery health and mileage?
spk06: My goal is that the – so we've talked about this a little bit in terms of the Fub.life portal that's both an owner portal for – getting more details on vehicles, tracking service updates. It's one of the critical pieces of customer communication that we want to bring online. My goal is to have the first incarnation of that online this fall at some point. This is going to be a pretty rudimentary first step into both the owner portal as well as some of the, I would call it, virality pieces of the puzzle. So as any owner of an FUV knows, you are constantly bombarded with questions about the vehicle whenever you park. And, you know, it just draws a ton of attention and a ton of questions. And what we really want to enable on that side is to have our owners as ambassadors, you know, be able to point someone to a vehicle a QR code on the side of the vehicle that sort of tracks them on a high scoreboard and lets us all participate in the sharing of the Arcimoto product family idea.
spk07: How has your partnership with Monroe & Associates had an effect on the FUV product and your ability to quickly scale mass production?
spk06: Well, it's been a substantial impact. Having the Monroe team really jump in with both feet to help push the Arcimoto to scale has been a huge shot in the arm for Arcimoto. They bring a whole different lens of expertise focused on mass production technology. of large automobiles and the technologies and materials and capacities for pulling that off uh in a expedited reason manner uh and so we are working with them hand in hand uh week in week out to push this project forward uh we're still targeting having the uh the ramp open and shipping vehicles at the end of next year. It will be obviously a continued ramp up in terms of vehicle output at that point to achieve maximum capacity. We're planning multiple systems that will come online and programs that will come online over the next years in order to continue to drive down costs and ultimately provide a foundation for true global scale.
spk07: Yeah, they've been pivotal help to the company. What is the status on the doors and their effect on the ATVM loan application and approval process?
spk06: So some astute folks out there have noticed that the ATVM requires what they call a fully enclosed compartment vehicle. And so the vehicle that we are applying for funding and the factory that we are applying for funding for is to deliver squarely on that requirement. In terms of the half doors that we demonstrated the production version of just a few weeks ago and plan to ship to first customers this quarter, it's a piece of the puzzle in terms of understanding closures, but the full-scale version, and this is a product that we haven't actually shown yet. If you recall from our last earnings call, We sort of ballparked about 75% completion in terms of showcasing new products on the Arcimoto platform family. This is one of them. There's another one that we also have not yet shown. And we're aiming to at least display where we're going by the end of this year.
spk07: Does Arcimoto have plans to export or build a plant in Europe?
spk08: That would seem like an excellent market. And then kind of perpendicularly related from Jeffrey Campbell in chat, can you point out a country or two that would meet the requirement to be receptive to U.S. standards?
spk06: Sure thing. And actually, hey, we've got Dilip Sundaram on the line, our chief international business officer. And Dilip, would you like to give a little bit of color onto that question?
spk01: Yeah, absolutely. Thanks, Mark. So, yeah, thank you for that question. As mentioned earlier, I think Mark had mentioned earlier, we are developing a very cogent and a comprehensive strategy to enter global markets. Our first priority, of course, will be to focus on countries that fully accept the U.S. federal motor vehicle safety standards and to answer the second part of the question is basically it is countries like Mexico, Belize, Barbados, Bahamas, Honduras, Guatemala, and there's a host of others. Now, This FMVSS market itself represents a huge market. Now, this will be followed with the homologation of our products to meet EU standards, and that'll make it possible either to export, which is definitely, again, Europe is a large market, so which would be quite likely export. Otherwise, it is quite likely also that we might find a partner to manufacture in Europe.
spk06: And to add a little bit on that, we also see Europe and actually the entire global market as being very ripe for our Platform 2 efforts. So again, Platform 2 is aiming at something, yet again, an order of magnitude more efficient and less expensive than the Platform 1 product family.
spk07: And so we see true global applicability for that product as well. Tesla is opening up the supercharger network to other EVs.
spk08: How and when will the FUV be able to take advantage of this? What are you doing right now to make the platform long trip capable?
spk06: Great questions. We have not talked in specific detail about product features of what's coming off of the 1.X development effort. But what I would really like to see is just that customers get the choice of what charge port they want and can have options for things like higher capacity charging. I mean, that's sort of a no-brainer. And it is certainly on the roadmap. But to me, it would just make... We've got a bunch of customers who are also Tesla drivers. And so having the same charge port, the same capabilities to us just makes a lot of sense. Tesla has done an absolutely fantastic job building out a global charging network for electric vehicles. And we're Super thrilled that they are now looking to open that network to makers of other vehicles.
spk08: Have there been any discussions with large food retail chain operators about the deliverator and possibility of a fleet acquisition?
spk06: We have discussion. Yes, is the short answer to that question. No details that I'm willing to talk about now other than we did have a pilot at a franchise here in Eugene and just got phenomenal feedback from that operation for the Deliverator as a food delivery vehicle. If you look at what Bib Technologies has done with the platform, they have taken what we're calling Project Hotbox. They have built a deliverator that serves up piping hot food. We are definitely looking in the early pilot phase at getting as much feedback from prospective customers to really fine-tune those offerings for customers.
spk07: for the mass production versions of the vehicle platforms. Production is slow.
spk08: Can we focus on production and getting vehicles in customers' driveways? When will we see at least 100 a week being produced and delivered? And then there's several kind of related questions in chat just related to the earnings results. Maybe you can provide a little color on revenue projections versus actual. I know you mentioned some of the struggles in the presentation earlier. but perhaps a little bit more on plans for deliver, revenue projections, and the amount of inventory on our balance sheet.
spk06: Sure. So as we, again, and I did touch on this at some length at the beginning of the presentation, we are definitely still within the COVID-19 pandemic that is still having substantial effects on our supply chain. And that does impact production. We think we have got clarity for the end of this year in terms of our planned production output of 425 vehicles. A portion of those will go to customers. where we see, particularly in the stage that we're at right now, we think it is very important to get as many sort of demonstration and rental vehicles into the market as well. We have had in Eugene here, just our local rental shop of Arcimoto's, we've had fully subscribed vehicles on many days, about a quarter of the days that we've had the Eugene rental shop open, we've had all of our rental vehicles fully subscribed and utilized. And that's, you know, what we're really going to end up having to balance is delivery to early customers versus building, seeding the marketplace for scale using rideshare pilots and rentals. I'm expecting a substantial increase in output in 2022 beyond what we are building in 2021. And we're still fine tuning those numbers. So I would expect that on our next quarterly stakeholder update that we'll have more guidance about what 2022 looks like. But this is still, again, and this is in advance of our push to mass production, which is where we would start to see numbers like 100 vehicles a day.
spk08: What are some of the current biggest risks that would delay starter production of the new facility, and how is the Arcimoto team taking steps to ensure the schedule stays on track?
spk06: So the biggest risks that I see are unnecessary couplings between vehicle systems and cost reduction efforts. And so we've taken great pains over the last couple of months to really identify, and this is what the 1.x program is all about, is identifying what the long lag items are and making sure that we decouple those from the scale improvement and cost reduction programs that we can execute sooner. And there are any number of potential risks, whether you're talking about construction slowdowns to compliance testing that can always take longer than you think. Now, I think the advantage that Arcimoto has is that We have already gone through that with our first platform vehicle. We're very familiar with that terrain. And so I think that is a risk reducer for us.
spk07: But as of now, we are still targeting end of next year for first vehicles emerging from the ramp. We talked about HVM earlier, but I'm not sure this question was addressed.
spk08: What exact stage is the loan in?
spk06: So we are pushing towards the substantially complete application phase. That's what we're aiming this next piece to accomplish. And then there are, of course, multiple gates beyond that in terms of conditional commitment and then ultimately funding of the loan.
spk08: A delivery vehicle needs to operate in all weather conditions. Are there plans to fully enclose the deliverator and make it viable for four season use? And a related question in chat is wondering about the full doors and what the timeline might be on that.
spk06: Totally. Well, I mean, the assumption that I guess a question, the basic assumption, since there are plenty of deliveries being done on bicycles and motorcycles and so on. But to the point for a for a full all world, all season vehicle. Yeah, you need you need full enclosure. And so same thing with the sort of the answer a little bit back on. uh the atvm loan regarding closed compartment that's part of that program and those doors that will apply to uh the fund utility vehicle will also work on the deliverator we've designed them to work for both can production and profit be increased by eliminating the options to the customer when ordering and build the same design over and over uh In theory, there are multiple ways that profit could be increased, but actually options are where we see a real opportunity for higher profit margins. And ultimately, we see the fund utility vehicle as having that optionality is a big part of the selling features of it, particularly when we actually have our full accessory family launched. And as we've looked out at other vehicles, I mean, I think It's hard to find, except perhaps like the Model T, a product family where optionality was issued and not a part of the profit story. I do think that one of the things that we are really focused on is streamlining that process of option selection just to make it easier to get through that whole piece of the puzzle.
spk08: What opportunities do you see in last mile transportation, specifically with e-scooters and e-bikes, that FEV's Platform 2 will be uniquely enabled to address?
spk06: We'll talk more about it when we actually show the product.
spk07: All right.
spk08: Is there anything specific that you hope to learn in the upcoming Tennessee pilots that might be different than pilots in Florida and California? Or are you looking for patterns of repetition in all three efforts?
spk06: I think probably a little bit of both. We expect that there's largely people who get in the FEV and Arcimoto platform vehicles. There's a lot of the same feedback, particularly regarding the enjoyment of the ride and that A unique FUV experience. But every pilot that we've done has provided specific enhancement requests related to how they use vehicles. And I would expect that the fine folks that we talk to in Tennessee will have lots of good ideas about how we can make Arcimoto's better for them.
spk08: Are CAFE credits being used in future cost calculations as a credit when estimating reduction of retail price? Is this a large portion of the tactic to reduce consumer prices?
spk06: No. So in terms of like carb credits, there is now discussion about bringing motorcycles into that regime. But that's going to take some time and we have not modeled it as part of our sort of profitability story. We do see a nearer term opportunity in terms of end user tax credits at the federal level. We think that the substantial pronouncements that the Biden administration has made, as well as congressional leaders, supports a much higher tax credit for Arcimoto type vehicles. We think there is a very strong argument that affordable Vehicles that are super, super efficient and don't take up a lot of space should benefit from the same tax credits that much larger, much more expensive full-size cars get. So that's an area of advocacy that we are continuing to push on with partners and with others in the field. And if you think about it, I mean, that could have a truly dramatic impact, particularly in the near term, on the affordability of Arcimoto's products for the wide market.
spk07: Any plans to change battery chemistry or format since a lot has changed since the first FUV introduction?
spk08: What order would you rank your battery priorities? Reduce weight, reduce costs, or increase range?
spk06: Well, I should say that we have some very interesting battery developments in the works, something we will be talking about on future earnings calls and stakeholder webinars. you know, versus, uh, you know, priority for me at this point would be, uh, reduction of costs and improvement of range. Um, the, the battery's actually in a really good spot in the vehicle. Uh, we, uh, and, and we will likely see as, as energy density continues to incrementally improve, uh, we will see, uh, batteries that are essentially the same weight that go farther, have higher, uh, volumetric energy density. Um, and we're also seeing, uh, continued push down the cost curve of battery cells. So we got a lot of good stuff coming on that front. I would say from the customer perspective, it really is about just incremental changes over time for the foreseeable future.
spk07: Has Arcimoto been testing with any other company's software for autonomous vehicle arrival? None that we've talked about publicly yet. All right. Going, shifting over to chat.
spk08: Kind of touched on this already. Can you comment on why retail sales were only 30 units last quarter? You know, the number of consumer events, plenty of people drove Archimedes this quarter. Weather's perfect in springtime. Why didn't you sell more?
spk06: Again, we are now in a position where we are constrained on the production of Arcimoto vehicles. And as we looked at our options and what we need to do to execute the growth of our market plan, We allocated a significant number of our vehicles to things like our opened rental stores in Eugene and San Diego. I also mentioned that there was a delivery pause for several weeks due to a software glitch. That did impact those sales numbers as well because we actually count the sale when we deliver the vehicle. And again, I think what we're going to see in terms of end user sales is that Arcimoto has to balance the growth of our market growth plan with the sales to existing pre-order customers and new customers who want our vehicles.
spk08: As a stakeholder is critical to understanding greater details, issues related to the supply chain. Can we hear how precisely ArcMoto plans to jump production in Q3 from 75 units to 150 units?
spk06: So, well, it is looking like we are in good shape today for quarter three and quarter four in terms of hitting that target of 425 vehicles produced this year. There are some challenges that Arcimoto has that are unavoidable in the supply chain at our scale. We have parts that are single supplier sourced. We are producing at a low enough volume that in a lot of cases, we have only a single supplier who supplies a particular component for the vehicle. As we look to higher scale, obviously those are elements that we are going to address and make much more robust. But and again, this is caution that I put out, I believe, over at least the last couple of quarterly stakeholder webinars is that we expect a relatively flat growth curve quarter over quarter with the potential for lots of choppiness due to the supply chain. I mean, just as one example, we had a. what was a i mean not quite a port shutdown uh that uh one of our suppliers uses like an eight week delay we have we've had multi-week delays at the uh at the port down in los angeles and then uh suppliers uh as well as us face always the questions around uh the movement of the pandemic and now more and more uh related to uh extreme weather events and things like you know, things you wouldn't even normally expect, like the Texas freeze that shut down petrochemical plants in Texas actually had an impact on our gearbox and the seals that we use. So it's We are going to continue to use absolutely best efforts to make sure that interruptions are as least problematic as possible while executing our market growth plan, continuing to deliver vehicles to customers, opening up rental locations. But we are still amidst choppy seas in a global pandemic. One more thing, actually, Fritz, on that topic. Just as a way to look at this, particularly given that Arcimoto is... We are one of... a dozen nascent EV companies here in the US that are bringing clean transportation solutions to the world. One of the real advantages that Arcimoto has in building towards that mission is that we are already in market. We are in market today. We have vehicles out for demonstration. The constraints that we have on production at very low volume certainly have an effect on near-term measures of the company's progress. But our really next stage goals are to step up to much higher production volume and to do so in a time window when we've got a lot more clarity on things like the global chip shortage, battery supply chain constraints, and all the rest. I think that really positions Arcimoto well, certainly versus others who are attempting to launch scale production of vehicle programs towards the end of this year. So we've already got vehicles on the road. We're definitely doing our absolute best to deal with the supply challenges in the near term. But again, our overarching focus right now is the push to scale, the planning for scale, building resilient supplier relationships for the scale production version of the product family.
spk07: And so everything that we are doing in the near term really needs to be balanced through that lens. When will Hawaii get a rental facility and which island in Hawaii?
spk06: Which island singular? I think there are multiple islands in Hawaii that certainly that Arcimoto team members have volunteered to go spearhead. In terms of timing, we are waiting on the acceptance of our vehicle manufacturing license for Hawaii so that Arcimoto's can be easily registered on the road there. But we see tourist season, sort of the winter tourist season as being a good time. to get first rentals going in Hawaii. And so we're, you know, that's, we, I'm not, I don't have a fixed timeline for you today, but we're pushing hard. I would like to have at least one of those facilities opened up right around the end of the year, the beginning of next. And in terms of what islands, you know, we see opportunity on, you know, in Honolulu, on Maui. Really, I think the Arcimoto platform vehicles are just going to be phenomenal vehicles for that marketplace, both for people who live there and for people who are visiting.
spk07: Arcimoto expressed support for Black Lives Matter last year.
spk08: What has been done to increase African-American employment at the company? The national average is approximately 15%.
spk06: So what we've done, put in place at the board level is a real push for getting diversity programs in place. I would like to report that we've made more progress on this front than we have. But it is still certainly a key piece in terms of, you know, Arcimoto at its root is all about transportation, you know, clean transportation and ultimately transportation equity. And so making sure that we as an organization take that seriously in terms of our own composition is really important.
spk07: Can you comment on the status of customer pre-orders?
spk06: Is the backlog growing, holding, or declining? We actually saw a meaningful rise in terms of indications of interest in quarter two. And I'd refer you back to our 10Q if you want to look at that exact breakdown of numbers. Doug, do you have that right in front of you?
spk07: It was approximately 700 pre-order increase.
spk06: Yeah. And again, just a note about pre-orders. We look at pre-orders as strong indications of interest in the product. They are either refundable, nominal deposits, or they are things like letters of intent from commercial customers and so on. But we definitely do see them as a meaningful indicator of future market traction for our products. So Uh, seeing a big, uh, uh, substantial step up is, is not a bad thing.
spk08: And then what looks to be the last question in chat here, uh, any, any, uh, opportunity for alternate controls of the vehicle?
spk07: Um,
spk06: Well, and is there any indication there about what?
spk08: There seems to be some trepidation towards the handlebar controls specifically. But I would say that there has been several questions about alter-abled folks and other opportunities for an alternate control system.
spk06: One of the things we've heard from ultra-abled folks is actually that the handlebars are a real advantage there. For folks who have limited lower body mobility, that would require certain special hardware to be added, for example, for the hydraulic brakes to be able to move them to the handlebars. One thing that was really cool that we saw at the summer showcase was the work that Stoffel Systems has been doing on torque vectoring. The implication of that for the FUV is it's just a much smoother experience on the handlebars, particularly at low speed. For anyone who's trepidatious about driving the Arcimoto, it takes a very short time to get the hang of it. If you've ever ridden a bicycle, it's a piece of cake. What you end up ultimately feeling is like the vehicle becomes an extension of your will to move. We are going to continue to refine that user experience, particularly through the software controls work that we were doing with Stoffel. But we have no present plans to change to something like a steering wheel. In fact, it was the switch from a steering wheel that really unlocked the the true um the true win of the arcimoto platform in terms of uh being able to carry an awful lot on a small footprint vehicle um and and the the move to handlebars was actually a big piece of that all right a couple more rolled in how are we doing on time i think we got time for one more and then i'll uh i'll wrap it up
spk07: have you considered making an electric all train vehicle similar to the Tesla cyber quad? How about that one to end it off?
spk06: Uh, Short answer on that one is yes. We have considered making a number of different types of vehicles. For the moment, we are very focused on bringing our current product offerings to scale and focusing heavily on the daily driving problem as well as vehicles that sort of fit in that same go-to-market approach. So one of the things I really like about Platform 2, again, is that it We think those vehicles are going to do very well in our rental shops. We think they're going to do very well in terms of the rideshare conversations that we're having. And so where you get that overlap of business model, it becomes easier to move multiple products through it. When I look at off-road, I think the platform has real opportunity there. particularly at least constituent elements of that platform. But it has a whole different go-to-market approach and a lot of additional engineering work to make it happen. So we want to keep Arcimoto as focused as possible, particularly right now in getting our existing product lines refined, getting our new factory up and running, and really pushing to scale to deliver on the mission.
spk07: All right, one more since we've got a question couched in a compliment.
spk08: Arcimoto is the second largest pure EV maker in production in the U.S. behind Tesla with extremely low cash burn compared to other EV makers. Can you explain how you've managed this success?
spk06: Wow, that is a – thank you for the question. I do think that one of the things we pride ourselves on is, you know, focus on a meaningful solution that is simple, lightweight, ultra, ultra efficient, and we just abhor waste. And I think that has kept us, you know, we, Arcimoto was, for our first seven years, I was the first funder. I put in the first couple million. And I sort of treated every additional investor dollar going in as though it were my own in terms of really trying to get the most bang for the buck. I mean, that meant that we basically got into production with, I think, a total spend over our first 12 years of about $42 million. So zero napkin sketch to first production vehicle on $42 $42 million for a next generation EV company is fairly unprecedented. So I also, you know, we have an Oregon ethos of building startup companies into more mature companies. And that has also been, you know, the Oregon has a, it's very collaborative, but also used to be, you know, very capital efficient. Just one example, you think about building out marketing and sales. We've really focused, particularly in the early years and up to production launch, on the vehicle, on getting the product really dialed, on getting something that we think is going to sell itself once we can really get it to scale into the right price.
spk07: That's another element of it, I think, is just focus. Shall we wrap it up? We're a little bit over time. I want to thank you guys all for attending.
spk06: This officially concludes our 2021 Quarter 2 Arcimoto Stakeholder Webinar. I would add that I got a little something special for you. If you all could have been there at our summer showcase, you would have seen some truly impressive things. Torque vector driverless vehicles, tilting joy rides, and a community of peers rowing together towards a brighter future. you also might have caught uncle john and the from here band serenading the crowd with another fine tune now john couldn't make it back down for the call today but in honor of him sandy and all the fine companions who joined us on our quest Emily Jensen, founder and CEO of Thinking Tree, yours truly, and Rich Lamas, the best stand-up guy I only just met, played again the song we penned for the showcase. Of course, for anyone of the opinion that Good Fun Tunes have no place in a stakeholder webinar, now is your cue to hit the log out button.
spk05: I had a warm summer showcase in a little town called Portland. Met hippies and some techies to build the world a ride. Across the parking lot I saw him, a grizzled auto veteran. So I walked right up and asked him, Sandy, can you give me some advice? He said, son, I made my life out of tearing down the big cars, knowing where the flaws were by the way they joined their parts. So if you don't mind my saying, I think we can really help you. We'll lean design the moto and get you guys to scale. You gotta know when to hold them, know when to hold them, know when to walk to work. Knowing too far, you never count your attendees when you're sitting at the keyboard. There'll be time enough for counting when the factory's done. Now every builder knows That the secret to designin' Is keepin' all things simple Great suppliers by your side Cause every fastener can be trouble Funky oak for Bob's assemblin' Short the shadow of design cost And we'll build the best of rides You gotta know when to hold em' Know when to hold em' Know when to walk to work Knowing too far, you never count your attendees. When you're sitting at the keyboard, there'll be time enough for counting when the factory's done. And when he finished talking, he turned back toward the lot scene. Winked at those hippie chicks and got into his plan. And somewhere in the darkness, we see that big ramp coming. And in this awesome team, we've got the aces that we need. You gotta know when to hold them. Know when to hold them. Know when to walk to work. Know when to fuck. You never count your attendees. When you're sitting at the keyboard, there'll be time enough for counting. When the factory's done, you've got to know when to hold them. Know when to hold them. Know when to walk to work. Know when to fuck. You never count your attendees. When you're sitting at the keyboard, there'll be time enough for counting.
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