REE Automotive Ltd.

Good day and thank you for standing by. Welcome to the re-automotive first quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you'll need to press star 1 1 on your telephone and you will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Kamal Hamid, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and thank you all for joining our first quarter 2023 conference call. We hope that you have seen our press release and shareholder letter issued earlier this morning at investors.ree.auto. Today, our co-founder and CEO, Daniel Burrell, will be sharing highlights from the shareholder letter before opening up the call to Q&A where he will be joined by our Chief Financial Officer, Jeroen Zaltzman, our Chief Business Officer, Tally Miller, and Josh Peck, our Chief Operating Officer. 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 refer to the company's form 20F filed on March 28, 2023 with the Securities and Exchange Commission, which identifies principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to publicly update any forward-looking statements except as required by law. In addition, we will be discussing or providing certain non-GAAP financial measures today, including non-GAAP net loss and non-GAAP operating expenses. Please see our shareholder letter for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. At this point, I will turn the call over to Daniel. Thanks, Kamal.

Hello, everybody, and thank you for joining us today. I hope that you have seen our press release and shareholder letter issued earlier this morning at investors.ree.auto. If you haven't yet, I encourage you to review it, as it has additional information on the topic that we will discuss on this call today. I'm pleased to share that 2023 has gotten off to a great start for reautomotives. Our first quarter afforded us several exciting opportunities at events like World Truck Week and ACT Expo, where we were able to interact with influential fleets and dealers, understand their key challenges and showcase unique value proposition. Our team was also able to achieve important milestones like the completion of our winter testing in Sweden, another considerable step on our journey to getting RE vehicles on the road. Our focus remains on our path to certification by the second half of 2023, with initial pilot vehicle delivery by the end of 2023. And we continue to make great progress here. We are working on a two-phase production plan that will allow us to achieve sustainable growth Phase one, which is expected to run through 2024, anticipates the pilot production and assembly of vehicles in the low hundreds, targeting break-even gross margin on the unit level by the end of 2024. Phase two targets production in the low to mid thousands of vehicles with break-even EBITDA by the end of year 2025. More details on our two-phase production plan can be found in our shareholder letter. As you may have seen, we recently announced the introduction of the P7C chassis cap, which complements our existing product lineup and further emphasizes our near-term focus on zero-emission class 3 to 5 vehicles. The P7C targets the fast-growing and highly incentivized Class IV EV market, and joins our P7B, the box truck, and P7S, the street chassis, in the P7 program. We expect significant demand for zero-emission Class III to V vehicles to be driven by the recently adopted California Advanced Clean Fleet Regulations, the ACF, which sets ambitious targets for commercial fleets to pursue zero-emission trucks. The 2020 MOU signed by 15 states and the District of Columbia is expected to expand the benefits and reach of the ACF throughout the U.S., further driving the commercial EV market. Interest in the P7 program increased, as proven by the growth of our dealer network in the U.S., which now includes eight dealers and three fleet customers. Together, these dealers have already placed initial orders of approximately 100 vehicles, which are included in our current order book. From a financial perspective, we ended the quarter with liquidity of $126 million, comprised of cash, cash equivalents, and short-term investment, and no debt. We expect to end the year with $65 million of liquidity, including financing the initial 25 vehicles for internal testing and pilot deliveries for selected customers. We expect to generate sufficient orders to ramp up series production based on our growing dealer network and fleet customers. We understand that this ramp-up to the low to mid-thousands of vehicles produced will require additional funding before we reach break-even EBITDA, mainly due to the working capital requirements. We estimate that this ramp-up will require $80 to $100 million, and we will explore options of raising debt or equity in the right form, all in line with the progress of our business cycle and needs. We will provide more color on our model later this year with the progress of our plan. Before we open it up for questions, I want to first of all remind you to take a look at the shareholder letter which we shared this morning, which talks to all of these highlights in more detail. You can access it on our investor website at investors.ree.org. I would also like to take this opportunity and thank the REIT team across the globe for their continued hard work and dedication, particularly for the milestone they have already achieved this year. I look forward to sharing more of the great work we have accomplished together in future updates. Operator, please open up the call for questions.