Electrameccanica Vehicles Corp. Ltd.

Greetings, and welcome to the Electromechanica Vehicles Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially and from those described in the call. Please refer to the company's regulatory filings for a list of associated risks. I would also refer you to the company's website, www.electromechanica.com, for more supporting industry information. I would now like to hand the call over to Mr. Kevin Pavlov, Chief Executive Officer of Electromechanica. Kevin, the floor is yours.

Thank you, Operator, and good afternoon, everyone. I'm pleased to welcome you to today's corporate update conference call, the first in our company's history. Today, I'm joined by Electromechanica's CFO, Val Buehler. For those of you joining us for the first time or who I've not had the opportunity to meet, I'd like to take a moment to first introduce myself. In September of this year, I was privileged to join the team as CEO during what I believe to be the biggest moment in our company's history, first deliveries of commercial solo EVs. By way of background, I bring automotive experience that has covered large global corporations, private board experience, government affairs, mergers and acquisitions, and relevant experience with startup companies over the course of my career. Most recently, I served as COO and Director of Karma Automotive, where I worked to achieve significant cost reductions and avoidances through process improvements. Additionally, I've had the pleasure to serve in various senior management roles within the industry, most notably at Fortune 500 company Magna International, where I was at different points in time, the COO of its e-car joint venture, global president and general manager of Magna Electronics, and executive vice president of Magna Services Ventures and Innovation Group. Additionally, I was also the CEO and board director for EcoFueling and was an executive consultant at Ricardo Inc. PLC. My direct experience working within the automotive companies at all stages of development will prove to be a critical resource as we accelerate our commercial production and deliveries. Now, given we are at a key inflection point in the company's evolution, it's worth taking a moment to discuss where we started. We reformed in 2015, and by 2017, we acquired Intermeccanica, a globally respected automotive manufacturer with over 62 years of experience in manufacturing and delivering high-end custom sports cars for select clientele. Leveraging this experience, we set out to design innovative electric vehicles, the goal of which was to revolutionize commuting, delivery, fleets, and shared mobility. During this time, we hand-built 64 prototype vehicles out of our Vancouver facility refining and improving our design. Early adopters tested the prototypes in day-to-day use, and I'm proud to say that some of these vehicles are still in circulation today. With the design finalized, we produced 60 pre-production solos manufactured by our strategic partner, Dongshan Industrial Group, in China. Again, we deployed through the U.S., Canada, and China for final on-road validation testing. The vehicles took the form of what is now our flagship vehicle, the innovative, purpose-built, single-seat electric vehicle called the Solo. This three-wheeled vehicle, engineered for a single person, offers a unique driving experience and is fully highway capable, benefiting from the HOV lane access. The Solo has features front and rear crumple zone, side impact protection, roll bar, torque limiting control, as well as power steering, power breaks air conditioning and a bluetooth entertainment system with other comforts it blends a modern look with advanced safety features it has an accessible price point of eighteen thousand five hundred dollars most recently in october 2021 we commenced commercial deliveries for early reservation holders and fleet operators making a transformational milestone not only for electromechanica but for the future of the electric vehicle industry as we know it. For the month of October, we delivered a total of 21 vehicles to our customers and fleet operators. By reaching this milestone, we've built out sales, logistics, and service networks to support all near-term delivery targets as we ramp production and sales. As we discuss the ramp in production, I think it's important to take a moment to highlight the $228 million on our balance sheet as of the end of the third quarter. This strong cash position sets the stage for growth as we focus towards production ramp and the build-out of our U.S. base of operations in Mesa, Arizona. Our sales program is grounded by direct-to-customer with retail centers spanning five U.S. states and ten metropolitan areas. We are also showcasing the vehicle at several premier industry events, including the LA Auto Show, where we are hosting this call from today. widely recognized as one of the most influential shows globally. And two weeks ago, we had presence at SEMA, the world's leading automotive trade event, bringing together manufacturers and buyers in every segment of the automotive industry. While at SEMA, we showcased potential future customization options, as well as convertible and performance variants. And we are now rolling out an exciting integrated brand identity that reflects a forward-thinking, dynamic, growth-oriented electric vehicle company. The ongoing campaign includes building awareness through digital marketing, influencers, revamped website, billboard, print, and traditional media advertisements. We are now in OEM. In our production phase, we have the current capability of producing up to 20,000 solos annually with our dedicated facility through Zeng Shen, our strategic partner. In addition, And as I previously alluded to, to further grow production capacity, we are working to complete a new 235,000 square foot U.S. Assembly and Engineering Technical Center in Mesa, Arizona, in the summer of 2022, which we have the ability to produce up to 20,000 vehicles per year by Americans for Americans, enabling localized assembly operations within the U.S. target market. This frees up our Zongshan capacity, adding the ability to produce up to 40,000 vehicles per year to address additional geographies in the future. Recently, we announced we had completed a migration of SAP S4 HANA Cloud, leveraging the business transformation as a service rise with SAP. The new ERP system integrates the company's finance, supply chain, manufacturing, sales, and distribution operations This technology foundation will enable us to manage rapid growth for years to come and facilitate an unparalleled level of insight into our vehicle assembly operations. In anticipation of a coming delivery ramp, we needed a trusted provider to handle any service repairs or maintenance our vehicles may require. Recently, we announced a strategic agreement with Bosch, a leading global mobility solutions and industrial technology firm. to establish a pilot service network of independent automobile repair shops approved by Bosch. The Bosch Car Service Network will support service and maintenance operations for the Solo, beginning with commercial launch locations throughout the western U.S. and then expanding throughout the rest of the country. Bosch's technology, innovation, and highly skilled technicians make it uniquely equipped for the maintenance and repair of the Solo. With sales and marketing, production, logistics, and service networks all in place, we are now focused on scaling deliveries and expediting our path to profitability. We will continue to ramp production at our Zhongshan partner facility and remain on track to begin production at our U.S. facility in mid-2022. Another focus will be streamlining operations and reducing bill of materials for future vehicle production lines, recouping overhead costs as production volumes increase. and leveraging buying power from suppliers to further improve our cost basis. In summary, we are revolutionizing the transportation space by providing consumers, fleets, and rideshare users a purpose-built solution to solve today's urban driving challenges. Our flagship Solo EV is the perfect answer for open-minded drivers that recognize there is a smarter and better way to drive solo. We've achieved several exciting key milestones in 2021, and I'm incredibly proud of the work our entire team and partners have put in. I look forward to what future holds as we continue to scale production and strive to create sustainable long-term value for our shareholders. Before we open the line for questions, I'd like to thank our team for their dedication and tireless efforts and our shareholders for the support. Thank you all for calling in. And now I'd like to hand the call over to the operator to begin our question and answer session. Operator?

Thank you, Kevin. Ladies and gentlemen, at this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad, and our confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question is from Bruce Chan with Stifel. Please proceed.