REE Automotive Ltd.

Greetings and welcome to the ReAutomotive 4th Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the opening remarks. To ask a question during the session, you will need to press star 1 on your telephone. As a reminder, this conference is being recorded. I would now like to turn the call over to Leema Gruber, Vice President of Investor Relations. Thank you. You may begin. Thank you.

And thank you all for joining our fourth quarter 2021 conference call. We hope that you have seen our press release and investor deck issued earlier this morning at investors.we.oto. I would like to remind you that today's call may include forward-looking statements. Any statements describing our beliefs, goals, plans, strategies, expectations, projections, forecasts, and assumptions are forward-looking statements. Please note that the company's actual results may be different from other anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filing with the SEC, which identify the principal risks and uncertainties that could affect our business prospects and future results. We assume no obligation to update publicly any forward-looking statements except as required by law. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, non-GAAP net loss, and non-GAAP EPS. Please see our release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures. Joining me today is our co-founder and CEO, Daniel Borrell, who will provide an overview of our business and given operations update, as well as our CFO, David Goldberg, who will continue with a discussion on our financial results and outlook. At this point, I will turn the call over to Daniel. Daniel, please.

Thank you, Limor. Good morning and welcome to our fourth quarter 2021 earning call. I will begin the call with an update on the company's progress on our many strategic initiatives and discuss milestones achieved in the last few months. Then, Our new CFO, David Goldberg, will follow with a recap on the financials of the fourth quarter and our outlook. Finally, before we open the call for your questions, I'll provide a brief overview of our technology and vision for the future for listeners who may not be as familiar with RE. The last several years have been busy and exciting for RE as we accelerate our path to production in 2023. In 2019 and 2020, before REIT was a public company, we were focused on validating our technology and setting up our supply chain. These were, of course, critical as we couldn't engage major global counterparties without the technology and capabilities to deliver on our promise. Moreover, the measure we have taken in the past couple of years to build and enhance our supply chain and vendors network positioned us well to mitigate the global supply chain issues though I believe that tight market conditions will moderate by the time restart commercial production. This past year was transformational for the company. We entered into strategic collaborations to develop designs and prototypes to support various applications and build the right ecosystem. Together with our strategic partners, that enables us to start accepting orders by the end of 2022, and produce in 2023. As a horizontally integrated business, RE is agnostic to vehicle size, shape, power source, and driving mode. Our products are designed to be operated on either battery or fuel cells and in any drive mode, both human-driven and autonomous, while affording complete design freedom to our customers. Through our collaboration with leading partners, we are well positioned on the demand side to deliver full vehicle to customers while remaining focused on our core business of corners and platforms. Agreements with OEMs and body manufacturers allows us to tap into existing customer base and these automotive leaders. For example, through our strategic collaboration with EAVX, the EV focused business unit of JB Poindexter and Company, will target the fast-growing U.S. walk-in van market via a joint sales team. J.P. Poindexter is the leading producer of walk-in van bodies in North America, with more than 50% market share. We have also partnered with American Axle Manufacturing, a leading global automotive supplier of drivetrain technologies, to supply a compact, high-performance, 3-in-1 electric drive unit, an EDU. which we have developed together during the past three years. REE plans to leverage American Axle's system integration capabilities and focus on noise, vibration, and harnesses reduction to incorporate American Axle's lightweight and efficient next-generation electric drive unit into the REE corners. The REE corner and the REE board are designed to be manufactured using a novel manufacturing model. The components will be manufactured by our partners and suppliers via multiple production lines around the world, feeding a global network of integration centers owned and operated by REE. REE's CapEx Light manufacturing approach and integration centers enable us to remain a comparatively asset-light enterprise. This means not only faster time to market, but also secured supply chain capacity and quality control. Our partnership and collaboration not only allows us to go to market quickly with full vehicles, they will also position us to develop a comprehensive ecosystem of enabling capabilities and services such as vehicle financing, charging infrastructure, after sales and service, and data as a service for a full turnkey solution that will enable and expedite a smooth and scalable transition for our customers from ICE to EV fleets. As an example, in December, we announced a strategic partnership with Hitachi America, a subsidiary of Hitachi LTD, to co-create a highly scalable data-as-a-service and analytics-as-a-service platform, which is expected to provide operational efficiencies to our customers through intelligence and analytics across the lifecycle of a vehicle. It could also provide REE with an opportunity for subscription-based revenue. We are working on other collaborations that support our go-to-market plan and aftermarket service. These relate to financing and EV charging infrastructure, and we look forward to sharing more information in the future. I cannot overstate the importance of REE's ecosystem as it is fundamental to our business. These are all critically important steps as we are not just buying components or implementing third-party technology. We are jointly developing key capabilities together with our partners. Importantly, in doing so, we believe we have created a path to dramatically streamline the transition to electrification of the automotive industry. A great example for this would be a strategic development agreement we signed in mid-2021 with a leading global commercial OEM to jointly develop Class 4 commercial EVs and jointly take them to the market in the U.S. With our supply chain and partners ecosystem foundation, we continue to aggressively execute on the timeline previously provided. We are targeting completion of prototype validation by our customers on non- public roads and obtaining firm orders towards the end of the year. Following that, we expect to validate advanced prototypes on public roads and obtain purchase orders. During 2021, we made a significant progress toward commercialization and production capabilities in anticipation of prototype trials and ultimately production. We established and staffed RIS Engineering Center of Excellence in the UK to accelerate engineering design, validation, verification, and testing, as well as homologation in the state-of-the-art facility. RIS focused on building its highly automated launch factory and first integration center in Coventry, the UK, in 2022, and plans to open its first asset-light integration center in Texas which is expected to be operational in 2023. We anticipate initial capacity to produce 10,000 vehicle sets by the end of 2022, ramping up to 20,000 vehicle sets by the end of 2023. All these things set the stage for the activities we are undertaking this year to tie to our anticipated timeline for commercial production in 2023. Regarding our existing programs, we are focused on commercial vehicle segments of the market, including light commercial vehicles, delivery vans and trucks, and mid-duty commercial vehicles. We're focused on this segment because of the rapid electrification of commercial fleets and the differentiation of our modular approach, which ultimately leads to lower total cost of ownership for our customers. a compelling value proposition to any skilled commercial enterprise. As I mentioned earlier, our platform is indifferent to vehicle size, shape, power source, and level of autonomy, so the potential application is broad and future-proof and can be deployed across fleets of varying vehicle classes. P7 program. Most recently, we started trials of our new P7 modular platform, designed for commercial delivery vehicles and walk-in vans. The P7 enables unmatched efficiencies for fleets, offering a low, fully flat chassis for vehicles in classes 3 to 5, and approximately 35% more cargo space for a given footprint. All with optimized total cost of ownership. Reel corners can be integrated into full vehicles or chassis and our approach can meet electrification needs across customers. Electric and autonomous vehicles built on top of Reel's P7 platforms are designed to achieve driving ranges up to 370 miles with max speed of 80 mph and supporting payload of 8,800 pounds. For fleet owners needing full vehicle solutions, REE can deliver future-proof mission-specific design with a network of global automotive partners. Upfitters and other manufacturers looking for full design freedom can also take REE's strip chassis or chassis cabs for maximum dimensional flexibility for speciality equipment. We have a number of ongoing P7 programs with several counterparties. One is based on a functional and operational specification of a major global logistic company, including their product validation and durability cycle. We expect this customer to test a full vehicle prototype on private roads in the US in mid-2022. The other two programs, which I mentioned earlier, are our strategic collaboration with EAVX, to which we started to send prototypes for upfitting advanced top hats for private road validation in mid-2022. The other is our joint development agreement with a major commercial vehicle OEM, with which we developed a Class 4 electrified platform for commercial trucks, school buses, walk-in vans, and recreational vehicles. During the joint development phase, REE and the Global Commercial Vehicle OEM expect to enter into a supply agreement for REE to supply its REE corners for a dedicated new EV chassis. We expect to start providing full vehicle prototypes to our pipeline customers in the US and the UK for private road validation in mid-2022, with first orders expected towards the end of the year. The platformer program. Our collaboration with Hino Motors, a global leader in heavy and medium-duty trucks, is progressing as well. Together with Hino, we jointly exhibited our concept modular EV platform, the Flatformer, at the Consumer Electronics Show in Las Vegas this past January. The Flatformer leverages innovative re-corner technology, which allows the entire drive components to reside within the wheel housing, between the wheel and the chassis. thus creating a fully flat chassis. The platformer is capable of carrying a customized mobility service model that can carry passengers, goods, and delivery services. The mobility service module can be easily detached from the EV platform and, once detached, can serve as an independent, stand-alone unit, leaving the platform to be operated separately and continue on its next mission. Rui and Hino anticipate that platformer prototype will be produced in 2022. The Leopard program. Finally, in November, we unveiled an autonomous concept vehicle based on our modular EV platform design, based on interest from potential customers for such a vehicle of this nature. The full-scale concept is geared for customers including delivery fleet operators, e-retailers, and technology companies seeking to build fully autonomous solutions according to their exact specifications and with unmatched interior space for transporting passengers and cargo. Since Leopard we initially presented, the company has received significant interest and intends to produce a proof of concept vehicle for the customers by the end of 2022. Before I hand him the call, please allow me to properly introduce our new CFO, David Goldberg, and welcome him to the REIT team. As you may have seen, David recently joined us from Magna International, where he most recently served as Senior Vice President of Corporate Development. We're counting on David to lead all aspects of REIT's financial functions, strategic industry partnerships, and investors' relations. I'm highly confident that David will have a tremendous impact on the company as we execute this critical path of our business plan.