REE Automotive Ltd.

Good day and thank you for standing by. Welcome to the ReAutomotive Q2 2024 financial results. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Karen Shemesh, REIS Chief Marketing Officer. Please go ahead.

I remind you that today's call may include forward-looking statements. Any statement 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 those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control, such as the ongoing military conflict in Israel. Please refer to the company's Form 20F, filed on March 27, 2024, with the Securities Exchange Commission, which identifies the principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to publicly update any of these 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 financial results press release for a reconciliation of these non-GAAP measures to the most directly comparable gap measures. Listeners and those on our webcast are invited to follow along with our presentation today, which is available on the investor relations portion of our website. Today's call is hosted by Daniel Bar-El, Reece co-founder and CEO. We will be joined by Josh Steck, our chief operational officer, Tali Miller, our chief business officer, and Yaron Zaltzman, our Chief Financial Officer. I will now turn the call over to Daniel Burrell.

Good day, everyone, and thank you for joining us today. For those of you who have been following our story, and for those who recently joined, the past few months have been the most significant in REIT's history. We have achieved milestones that we pursued for years. Today, I can tell you that we have what we believe is by far the best product offering in our heavily underserved addressable market. I can also tell you that we have secured sufficient production capital and our funding position is strong. Thanks to our recently announced Strategic Supply Chain Management Agreement with Mothersong Group, we de-risked our ability to ramp up to mass production. We have already kicked off U.S. production with Roush as a U.S.-based contract manufacturer for our P7 product line. And we continue to see growing demand for our products, both from fleets and OEMs. The strategic agreement with Mothersan Group is transformational. It will allow us to grow faster while lowering production challenges that other EV companies often face as they ramp. With Mothersan driving manufacturing, customers and shareholders could be confident on this front. Today, we are joined by two great gentlemen from Mothersan, Mr. Rajesh Goel, President, Head, Special Projects, and Mr. Averol Kendall-Hawal, Head of Group Strategy and M&A, who will share more on the rationale behind Mothersan's decision to partner with REE. But before we jump to discuss these strong milestones in more detail, Let's first cover the second quarter of 2024 financials. Second quarter net loss narrowed by 57% quarter over quarter and by 59% year over year. Free cash flow burn continued to narrow with a 19% reduction quarter over quarter. Liquidity was $60.5 million comprised of cash, cash equivalents, and short-term investment inclusive of a $15 million credit facility. I believe that our strategic agreement with Mothersan will allow faster and more stable production scale-up and significant working capital benefits. Mothersan is a very strong global engineering and manufacturing company and one of the world's leading automotive suppliers. For Fiscal Year 2024, Mothersan achieved gross revenue of $17.2 billion and they operate 400 facilities across 44 countries with 190,000 employees. Mothersan has a strong lasting relationship with some of the leading automotive brands. Combining Mothersan's manufacturing expertise and supply chain might with Reeve's market-leading software-defined EV product, lineup promises to create a dominant new force in the electrified commercial vehicle market globally. allowing us to service customers at scale and address the significant order growth anticipated for our products. As part of the strategic agreement, Mothersan will manage sourcing and supply chain management of all production parts and support the assembly of the Re-Corner and the Re-P7 electric trucks. They will drive operational manufacturing improvements to Re's production line, which we believe would significantly improve unit costs. Faster revenue growth and improved unit costs are expected to accelerate the road to meaningful free cash flow generation. Demand-wise, we continue to see strong interest in our technology from potential customers, including OEMs. Let me repeat that last point. We are currently in discussions with three OEMs seeking to utilize RIS software-defined technology in their future product lines. offering the potential of meaningfully expanding our current offering from full vehicle or platforms to software licensing of our full X-by-wire technology, allowing OEMs to take our software to EVs in all classes and segments. Our order group continues to grow, reflecting strong demand even amidst broader challenges in the EV market. We remain committed to offering excellent products that provide improved operational efficiency and a low total cost of ownership. With the additional confidence customers gain from our collaboration with Mothersan, we anticipate strong order flow to continue. To put numbers on it, our order book is up 15% quarter over quarter as we continue to expand our dealer and service network to 78 locations across North America. We now have one of the largest service network of its kind in North America. On the demand front, it is important to know that the commercial vehicle fleet globally is not electrifying as quickly as fleet owners would like. The reason is simple. The available electrified vehicle options are simply not good enough. I think it's fair to say that major fleet owners today are desperate for a fit-to-purpose electric product that they can order at scale. At the risk of repeating myself, we believe that REE has the best-in-class technology-led product. Not only do we have the best product, but now, thanks to Mothersan, REE also has the manufacturing skill, experience, and expertise to scale production to meet the demand of large and global fleet owners. The annual market for medium-duty vehicles in the U.S. alone is 240,000 units, with more than double that in Europe and Asia. Currently, only a small part of that is electrified. And those units that do sell are essentially retrofitted ICE products. With the right product and production availability, the industry could easily be ordering tens of thousands of EV units per year in the U.S. alone. especially in class 3 to 5. With the right product, the required manufacturing backing, and the required service network, we are ready to meet the growing demand. As you may have seen, last week we announced a $45.35 million capital raise. As you know, we went public via a SPAC transaction, and at the time of the transaction, we underwent approximately $153 million in redemptions, causing us to commence our life as a public company with less cash than we expected. However, since that time, we continue to adopt, and today we feel that we are finally in a very, very strong cash position. We are proud that we have made it to the mass production point with the best in class, full FMVSS certified X-by-Y product that has been custom designed for the target customers. Thanks to the continued support of our patient long-term investors, this additional capital allows us to move forward confidently into the mass production phase from a financial standpoint. Mother-son contributed to the capital raise, as you have seen. fully aligning their interests with ours. With that, let me head it over to Josh to tell you more about our plan to meet the growing demand we see.

Thank you, Daniel. We believe that our supply chain management agreement with Mothersun is a game changer and bolsters our commitment to deliver our amazing Powered by Read technology reliably with quality and at scale to all our customers. It allows us to grow our production capacity responsibly with the demand while leveraging Mothersun's purchasing power, global footprint, and experience. This translates into a more efficient and stable production ramp alongside improvements to working capital. For those that are new to this story, Mothersun Group is a major supplier to the automotive industry with longstanding relationships with global OEMs. And I would like to hand it over to Averol for Mothersun to tell you more about them and then why in their eyes they did partner with us. Thanks, Josh.

We at Mothersun have been highly impressed by REE's path-breaking corner module-based architecture and the value proposition it represents for both truck makers as well as end users. Our goal is to support REE's growth and technological progress by expertly managing its supply chain and leveraging our top-tier engineering and manufacturing capabilities to drive commercialization and industrialization through a mutually beneficial commercial framework. Additionally, We aim to enhance RIS integration into the automotive ecosystem by providing exceptional customer support across the value chain. Our participation in the financing round further underscores our commitment to support this exciting technology. We believe this strategic partnership will contribute to Mothersome's diversification and strategy of increasing content for vehicles.

Over to you. Thank you, Avarol. We believe that we have the most compelling product on the market, well positioned to meet the growing consumer demands within the segment. Now with Mothersun's vast network of supply chain professionals, we can better support our customers through the start of production and ramp up phases as they build their electric commercial fleets. We know how important the ability to produce at scale and provide nationwide support are to our customers. Mothersun will be looking to drive efficiencies throughout the supply chain, especially in areas where they have production expertise. With this manufacturing backbone, we will be able to grow sustainably while maintaining our DNA as an innovative technology company. We are freeing up resources for future technological development and product enhancements while reducing production risks, becoming more efficient, and improving on unit economics. We kicked off U.S. production of our P7 lineup with Roush as our contract manufacturer for full vehicle assembly. Roush is a leading global product development supplier operating across more than 30 countries. We signed our agreement with Roush during the second quarter and have been preparing to start production over the past few months. This effort will be supported by a joint Mothersun and REIT team responsible for quality assurance, logistics, and testing. REIT will continue to manufacture our proprietary ReCORNER technology in our Coventry Integration Center. Now that we have secured the capital required for production, the execution of the strategic agreement with Mothersun, and the production cook-off at Roush, we are updating our production plan to start deliveries in 2025. In order to utilize our renewed capabilities while addressing the strong customer pull we see and to capitalize on the significant saving and efficiencies our collaboration with Mothersun is expected to enable. As a result of the very recent signing of our agreement with Mothersun, we expect it will take some time to develop a production plan which includes Mothersun's important input. Following the finalization of the revised production plan, we believe the revised production and revenue plan will benefit our ability to address larger fallen orders from fleets and OEMs, and coupled with the expected improved unit costs, will accelerate the road to meaningful free cash flow generation. With that, let me head over to Tali to tell you more about our business and product achievements. Tali.

Thank you, Josh. The demand and interest for race software-defined electric vehicles continues to grow. We see strong demand from both fleet and OEMs. Our order book increased by 15% quarter over quarter and is valued today at approximately $60 million. REIT authorized dealer network, one of North America's largest of pure commercial electric vehicles, continues to grow, now covering 78 sales and service points. This is a key strength for our fleet customers who seek nationwide service and support. We continue to receive strong positive customer feedback from our demo program as we continue to deliver more P7C demo trucks to our dealers across the US. The ReCORNER business line continues to show strong potential with two new OEMs joining our OEM program. We continue to see growing interest in our software-defined technology by traditional and new OEMs interested in adopting our ReCORNERS and thus gaining access to software-defined EV technology. We believe that although this is a long cycle business, it has the potential to bring our technology across vehicle categories and classes, making it the Intel inside for automotive. As Josh mentioned, we are updating our production plan and as such, we are working with our current and new customers to secure production slots for their deliveries. Naturally, our production slots are limited and we prioritize according to several factors, one of which is significant follow-on orders commitment. During the quarter, we delivered the first Powered by RE demo trucks to Penske and Newhall, amongst others, and have expanded our collaborations with upfitters, such as Wabash, who upfitted the Penske EV with a 16-foot Wabash DuraPlate body. These trucks received great feedback from potential customers, and Penske began offering Powered by RE electric vehicles for demos and orders across North America. In addition, U-Haul received the first P7S platform, completed it with a full body, and is now evaluating it as the first solution to support the electrification of its fleet. The feedback from U-Haul is very positive, and we believe that the P7S strip chassis is an excellent solution for a significant portion of the U-Haul fleet. The newly unveiled P7S, a software-defined electric truck, was designed in collaboration with the leading parcels delivery fleet. The P7S is designed to enable a fully flat platform with low stepping height, modular configuration, high payload, and revolutionary all-wheel steer, aligned for flexibility in dimensions and ultimate design freedom for fleet and bodybuilders to develop their own purpose-built electric vehicles such as step vans, box trucks, and vocational specific vehicles. On the autonomy front, We are very excited by the progress in our joint program with Airbus. Airbus has fitted Powered by RE with basic A350 airliner controls to demonstrate the first-ever autonomous drive on runways in France as part of the Airbus three-year OptiMate project. According to Airbus, they expect to see this technology tested in a full flight within one year on the Airbus A350 with more platforms to come. This project further improves the future of aviation, airport ground traffic management and safety, and RIS technology is in its core. As of July 2024, over 50,000 government and education entities were granted access to purchase RIS software-defined electric trucks through source well contract. Subsequent to the quarter end, we announced that its P7C will be available to government and education entities in all 50 states in the U.S. through a four-year contract awarded to National Auto Fleet Group. By source well, a government agency dedicated to streamlining the procurement process by fulfilling the bidding requirements on behalf of their members. As you can see, we've made strong progress on the demand side. We continue to see high interest from both fleets and OEMs for our very differentiated products as customers appreciate the value our technology brings to their needs. I believe the market has been waiting for electric trucks to be better, safer and more efficient than combustion engine trucks. The powered by re electric trucks are made to serve this exact need and customers recognize that. We are working with our fleet customers to secure production slots to ensure they have the best possible pathway to build meaningful electric fleets. I'm very encouraged by the level of interest our software-defined technology receives from leading auto manufacturers. With that, I would like to hand over to Yaron to talk about financials. Yaron.

Thank you, Tali. I'm very happy to share that we have secured the necessary funding to kick off U.S. production. This will allow us to start delivering vehicles to our customers in North America in year 2025 and to grow it to scale. I believe our collaboration with Mothersan will allow us to start reduce our production cost and to accelerate growth as we concentrate on our core, which is our technology and product offering. I'm very proud of our teams across the world for driving results while cutting costs. With that, let us dive into our second quarter financial. As David stated earlier, our working capital position is strong. We ended the quarter with $60.5 million in cash and short-term investments, inclusive of a $15 million credit facility. Our cash burn narrowed in the second quarter, as did our net loss. Free cash flow burn continued to decrease, with a 19% reduction quarter over quarter, and a 17% reduction year over year. Net loss narrowed as well to 10.8 million, a 50% decrease quarter over quarter, and 59% decrease year over year. Non-GAAP net loss in the second quarter decreased by 41% quarter over quarter to 12.4 million, a 43% decrease year over year. A reconciliation of gap to non-gap measurement has been provided in the financial statement tables, including in our earning press release. Last week, we completed a $45 million registered direct offering for the purchase of about 11 million ordinary shares or pre-funded warrants. M&G Investments, our long-term supportive shareholder, led the investment with a $20 million, and they now hold approximately 16% of re-share outstanding. Mother-son invested $15 million and now hold 11% on fully diluted basis. We believe our funding position is strong. and that with the recent financing run, we have the capital we need to kick off production without the need for further funding. We always said that we will kick off our production plan only when we know we are not taking any major financing risk. And now we are finally ready. There is a lot going on for us. We have our work cut out for us as we merge our operational activities with Mothersan, and we will be providing new guidance soon. Once we are deeper into the plan with Mothersan, we will be able to share the updated number, which we expect to include positive margin on our production and faster path to positive cash flow than previously announced. I will now turn the call back over to Daniel.

Thank you, Ron. As you can probably tell from the tone of this call, the recent announcement of REIT's strategic collaboration with Mothersan represents an absolutely transformational development. It's very big news for REIT's future prospects and our ability to realistically scale into what we know is a massive market opportunity where customers have limited alternative options. We have also strengthened our financial position with new capital from stable long-term investors, including Mothersan itself. In combination, this marks a major positive inflection point for the business. The combination of core competencies from Mri and Mothersan will significantly benefit our customers, be they fleet owners or OEMs. They've been in need of a mature and capable electrified product lineup that can be produced and serviced at scale. In fact, we've already started discussion with key customers to secure production slots, and we are currently updating our production plan. We will update you on this as things progress. Looking ahead, we anticipate three different ways that REIT technology will be sold. and integrated into the market, re-corners, the re-platform, and full vehicle such as the P7. We will work with Mothersan to build a reliable, stable, and long-term production plan across all three avenues. We will leverage Mothersan's production capabilities and expertise to lower our costs and improve our cash flows as we ramp production and delivery quantities. Before opening to Q&A, I should also mention that I'm encouraged by our recent capital raise, which secures our working capital needs to start U.S. production, and I'm grateful to Mothersan, to M&G Investment, and the rest of our other long-term investors for their continued support, trust, and patience. I also look forward to Mothersan's additional contribution to our board of directors. Lastly, As always, I would like to thank the entire team for their devotion and dedication as this very talented group of professionals are the true factor behind our success. I would also like to thank Avril and Rajesh from Mothersan for joining us on this call today. Operator, please open the line up for questions.

Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. This will take a few moments. Thank you. Once again, please press star one and one on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question. And the questions come from the line of Craig Irwin from Rose Capital Partners. Please ask your question.

Good morning and congratulations for the The strategic investment, it was big news and, you know, a big deal actually for the EV trucking industry considering, you know, the vote of confidence there from Motherson. So I wanted to ask if we could maybe talk a little bit about the Roush contract manufacturing agreement. You did mention in the release you kicked off U.S. production contracts. Does that mean that there are trucks that have started the build process or that you're preparing for the build process? Can you maybe frame out for us your interaction with Roush and how you would qualify the vehicles with them and then certify those for U.S. customer delivery and maybe the capacity or the number of vehicles a day that you would hope to get to over the next number of months?

Sure, Craig. Good morning. This is Daniel. Thank you for the question. Maybe, Josh, do you want to start?

Yeah, I can take that. Hi, Craig. How are you doing? I'm great. Okay. How are you? So, Roush, as we noted, we started working with him back way earlier in the year, and we kicked off the actual contract back in Q2, and we've been preparing for this moment with him for actually quite a while now, right? Now is the right time to bring it to fruition and announce it, but Basically, our collaboration with Roush is really centered around contract manufacturing for the full vehicle assembly of our Powered by RE vehicle. Roush will play a super critical role in helping us scale that production in North America and through joint operations with the RE team. So as we noted, Roush will build the vehicle for us. It's an exact copy of the vehicle that we've certified already. So keep in mind, as a contract manufacturer, they're building to our spec. So that's how the certification handles. They're really doing what we've already done. And as we noted earlier, We're going to start, we start production in Q4 and then we will deliver the first vehicles in 25. So right now we're in the preparatory phase to be able to start before the end of the year and then of course ramp up through next year.

Understood, understood. So my second question is about the cash burn, right? So you guys have done a fantastic job bringing expenses down. You know, I know some of the belt tightening there is sometimes a little bit painful, right? But you've got the company to a much leaner overall structure. You know, as we look at the progress to customers' deliveries in 25, is there much in the way of incremental expenses that might need to be added back? Or, you know, can this be part of the conversation you started in your prepared comments about getting profitability faster? with the Mothersen agreement and obviously manufacturing at Rausch?

Sure. I think this is a very good question. Yaron, why don't you?

Hi, good morning, Craig. Hi. So the cash burn was getting down and it's not going to go up. Actually, it's going to get more down in the following quarters. Because the R&D, as we always said, is more or less done. And R&D was the major expense in our cash burn. And the R&D now is going to go more down in the future. And of course, the SG&A should go slightly up because we need to increase our position in the U.S. But in total, there's not going to be increasing the cash burn.

Now, maybe I'll just add to that. Thanks, Yoram. I'll just add to that. There's a lot of expenses that we are re-evaluating now that we thought we would need to spend, but we might not necessarily need to due to the collaboration with both Madison and with Rausch as we move forward. This is why this collaboration with Madison and Rausch as a contract manufacturer is so transformational for us because not only that it gets us to scale, it helps us to significantly lower costs that we already thought we're going to be spending, but not necessarily will be spending in the future, hence the revised production plan. And I think this is what we believe will drive faster profitability and free cash flow as we move forward.

Excellent. My last question, I guess, it's probably interesting for both Wall Street and your customer base, right? So I've talked to a lot of customers that are enthusiastic to take delivery of units from REIT. And, you know, I was hoping you might be able to talk a little bit about how you select the customers that are likely to be front of the line for deliveries in 2025. You know, are there certain characteristics or potential longer term commitments that could be solidified Are these more marquee customers or customers that have made the right level of investment to allow adoption? You know, can you maybe flesh that out for us?

Of course. First of all, I tend to agree. We see a lot of demand and a growing demand for power by rear vehicles out there for multiple customers. And to your point, we have a very clear decision matrix, you know, upon which we prioritize orders. Amongst other indexes that we look at, you know, you can find order size, price, even the fleet electrification readiness, and of course, of course, the future potential. And we weigh them all together in order to score that in the end. And according to that score, we prioritize the production slot. I think maybe, Tali, can shed a little bit more light on customers actually visiting a few now in the U.S.

Yes, sure. Thank you. Good morning here. Yes, definitely. We see demand. We see growing demand. The way we prioritize is, first of all, we have, again, a lot of demand to allocate that now that we have a clear production plan for 2025. working with the fleet and working with the dealers that we have in place. And prioritization goes by size, potential, price, and also the fit to their needs.

Understood. Well, congratulations on the progress. I'll go ahead and hop back in the queue. It's great to see you guys strong out of the gates.

Thank you so much.

Thank you. We are now going to proceed with our next question. And the questions come from the line of Amit Dal from HC Wainwright. Please ask your question.

Thank you. Good morning, everyone. Congrats on all these important strategic milestones that you recently accomplished. You know, with respect to the three OEMs, Daniel, can you give a little bit more color on, you know, what kind of customers these potentially are? I know you mentioned Penske and U-Haul in the last earnings call. Are these the same customers? Are these different customers versus what you highlighted previously?

Yeah, thanks. And of course, good morning. So no, these are not the same customers. When we're talking about OEMs, remember, what we always said is that really It does not compete. So we have the ability to work with other OEMs such as us to allow them access to our software-defined technology, giving them by wire software-defined vehicles. And we see a lot of demand and growing demand from other leading car and automotive manufacturers interested in our technology. And when I say interested in our technology, for other OEMs, they're not interested in us building trucks for them, they are more than capable of building and certifying their own trust. They're more interested in the software. And why is it important? It's important because, one, we are the technology company. And second, it allows us to open up an opportunity for software licensing revenue, which is very, very significant in general and also for us. especially margin-wise and scale-wise. Why is that? It's because it opens up the opportunity for our software to be implemented in vehicles that are not necessarily only commercial and are not necessarily only in the current class 3 to 5. We're looking at lower and higher classes, both in the commercial and not commercial world. I think if you look at the market in general, most of the Car manufacturers and auto manufacturers out there have been talking about trying to get access to software-defined vehicles.

Understood. So my follow-up question on that is, these OEMs or other types of customers who are looking into your software, they don't have to buy the re-corners?

They can buy the re-corners and we'll be more than happy to supply them. And of course, leverage on Mothersan's production capabilities at scale, which is also just to make sure we understand is super important for those OEMs. But at the end of the day, production of mechanical parts can be done by several fronts. We believe that the best way to do it is for re- itself to concentrate on software. And together with Mothersan, we will be able to produce the re-corners as a full set with better scale, better economics, and better efficiencies. And then the OEMs will basically, the way we see it, put it on their own chassis, their own bodies, and be able to drive it. When we look at different vehicle classes, naturally there's going to be different requirements.

Okay, understood. Thank you for that. These, you know, the regulatory incentives that were in place or that you were expecting, are they still, you know, in play for customers who purchase the REE vehicles? Any changes on that front?

Could you please repeat the question? I couldn't hear you well, sorry.

So, you know, the regulatory incentives for purchasing these, you know, electric trucks, are those still in place? Any changes to that just to see if, you know, customers can still enjoy those incentives when they purchase these offerings?

Yeah, I mean, I think Tali can answer that, but before she does, I think I can say that we haven't seen a change in incentive. On the contrary, I think in the quarter we actually added – Another state that provides incentives. Tali, can you share some more on that?

Yes. Sure, sure. So on the incentive side, we don't see a major difference. There continues to be incentives on both state level and federal level. We're talking about U.S. now, specifically for Massachusetts. But of course, there are also other states and we see this definitely as interesting too.

Understood. Thank you. Just one last one for me. The 60 million in your order book, this is all for the full vehicles, right? These are not just orders for the corners, but these are orders for full vehicle delivery, right?

Yeah. So that's actually a very good question. So remember, we have three different product lines, full vehicles, chassis and corners. The $60 million, the approximate $60 million order book value is for full vehicles and chassis. Okay. Thank you.

I'll take more other questions offline. Thank you, guys. Appreciate it.

Thank you. Thank you.

Thank you. As a final reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, it's star one and one for any question. Thank you. We are now going to proceed with our next question. And the questions come from the line of Jeff Osborne from TD Cowan. Please ask a question.

Great, thank you. Daniel, just a couple quick questions on the, I wanted to understand the process flow. So obviously you'll be making the corners in Coventry. Will you be making chassis is there and then Roush is doing the full vehicles or will the skateboard actually be made by Roush as well and you're just making corners in Coventry? It's confusing as to what Roush is actually doing.

Yeah. Corners are in Coventry in the UK. All the rest is with Roush. But Josh, do you want to maybe dive a little bit deeper?

Yeah. Hi Jeff. How you doing? Good to hear again. Good to see you again. Yeah. So again, we're going to, Coventry is our, you know, again, like, like with, with all our, we want to keep our core IP to us. So again, we're going to manufacture the corner there, right? That we, that's ours. What we're going to do then is we locally source everything else, right? So again, the truck, the compelling vehicle is our design, everything is our IP. We will source that like our normal models. We're not going to invest in heavy equipment to make chassis. So we have current chassis manufacturers that will manufacture the chassis for us. Cabin parts will be made locally by local suppliers in the US. Again, we want to localize the supply chain. Again, mother-son will have a huge impact on that as well. And then Roush will do the final assembly for us. So again, that's That with us and mother-son together, we'll localize the supply chain. We'll bring down the costs. A lot of that has to do with logistics, of course, quality management, able to be with the suppliers, work hand in hand, and we'll bring the entire vehicle together at Roush. Then again, what's key is us with mother-son as well, we'll be at Roush. Roush is putting the vehicle together to our specifications. We then take the vehicle back over. We'll do the shakedown, quality qualification, and then handle the distribution within the U.S. Okay. And so...

Just to add on that, Jeff, I think it's important to mention that you're touching a very important point in my view, is that for a company like us to be able to manufacture in multiple locations around the world and manage that, you know, everything from supply chain to logistics is a big challenge. And I think this is one of the key strengths that we're now unable through this partnership with Mothersan. So maybe... To add a little bit more color about how do we see now, as a joint group, the global supply chain and logistics, maybe Rajesh or Aviral, you can share a little bit more on that.

Okay. Thanks, Daniel. Thank you for the question. As was mentioned during the announcement and by Daniel and Josh, the partnership is to bring in Mothersons global expertise, aid to help the supply chain management, which obviously includes sourcing and managing the entire supply chain. The value that it brings is because we do a lot of manufacturing of multiple components by ourselves globally, including harnesses, including mirrors, including plastic parts, including lighting, et cetera, et cetera. So the components that mother-son can contribute definitely comparatively helps the competitiveness of V. Second is because we have a fairly large sourcing organization, and with that expertise, we are able to source products a lot of the other components that we don't do by ourselves because we being module manufacturers on modules like the IP module or the buffer module, et cetera, our ability to source other components also is of a significantly high nature. And I think all of that in terms of, A, taking away that management bandwidth, granting that management bandwidth to be and taking away that from them and to bring efficiencies both in terms of cost and in terms of the process is I think what Mothersan will bring to this partnership.

Thank you. That's helpful. Two other quick questions. Josh, I think you mentioned that Roush was in production currently. I assume those are for demo units and you wouldn't have revenue attributed to those in Q1, but can you Just give us any type of comments as to when you expect to deliver vehicles for revenue. Would that be in Q2 or second half of next year?

Yeah, so like I said, we plan to start Q4. We didn't say it, so we've been preparing for production, right, obviously getting infrastructure and things together with them. Start before end of the year, and then we will start production next year. So as far as the production plan, again, As we've noted throughout this call, you know, we signed with mother-son, you know, just a little bit ago, and we're in the process of updating that production plan now. So, again, we expect to start in Q4. Delivery is in 25. And then, you know, following the finalization of the revised plan, we believe this revised production and revenue plan will benefit our ability to really address the larger fallen orders from fleets and OEMs. So we feel like this is a hugely beneficial thing, and we're going to work to optimize it to the best. But, yes, delivery is in 25 for sure.

Got it. And then can you share what the maximum capacity is of the Michigan facility from Roush if it were fully utilized hypothetically?

So the way we've done the production plan over the next couple of years is we can scale on a single plant up to 5,000 vehicles on two shifts. But again, we'll be putting that plan together for what 25, 26, 27, et cetera is with them over the next couple of weeks.

Got it. Last question. Do you think by the next call you could update us on what the production plan is, potential cost savings, and then what the new gross margin and EBITDA break-even levels are based on volume that you've shared in the past?

Yeah. Guys, we're working really, really hard to update the plan. And we are very, very excited by this plan. It will take us a little bit longer. Remember, we just started. We announced the partnership last week, literally, I think, a week from today. And it will take us, I think, a little bit longer, but the moment we have it, we'll update you, update our customers, of course, and everybody. As Tali said, we already started to work with our customers to secure their production slot for the new plan and build that new plan. And I believe it's going to be very beneficial for us.

Perfect. Thanks. That's all I had, Daniel.

Thank you.

Thank you. We have no further questions at this time. I will now hand back to Daniel Barrow for closing remarks.

Thank you. Thank you, operator. And thank you, everybody, for joining our call today and being part of this story. Thank you again for everybody at REIT for putting such hard and great work in this quarter and every day, making us who we are. Thank you all. Have a great day.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.