Fisker Inc.

Good day and thank you for standing by. Welcome to the Fisker Incorporated first quarter 2021 earnings call. 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 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press part zero. I would now like to hand the conference over to Mr. Dan Galt, Vice President Investor Relations. Sir, please go ahead.

Thanks, Lee. Welcome, everyone, to Fisker's first quarter earnings call. Joining me on the call are Henrik Fisker, Chief Executive Officer, Dr. Bukhar Khunka, Chief Technology Officer, and Dr. Geeta Gupta-Fisker, Chief Financial Officer and Chief Operating Officer. Before turning it over to Henrik, be advised we will be making forward-looking statements within the meaning of the federal security laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results in financial periods are subject to risks, uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of today. We disclaim any obligation to update any forward-looking statements except as required by law. We'll reference our financial measures that do not conform to generally accepted accounting principles or GAAP during today's call, including non-GAAP operating expenses. This information may be calculated differently than the non-GAAP data presented by other companies. Quantitative reconciliation of our non-GAAP financial information to the directly comparable GAAP financial information appears in today's earnings release. With that, I'm happy to turn the call over to Henrik.

Thanks, Ben. Thanks, everyone, for joining. I'm extremely pleased with the progress we've made in the ocean so far. As I've said many times, we have not used COVID as an excuse to delay anything. We're on track for production and deliveries to start in the next year. We completed a major engineering milestone in March this year, which enabled us to kick off tooling and start both test and validation for some key components. The next big milestone is in August, where we will have chassis move builds complete, and that will allow us to do some more testing and fine-tuning. We also will do more builds of prototypes and murals over the course of the year, where we start adding more and more production-level components. And of course, virtual prototypes for safety validations are also in process, and that means that we will have one of the safest vehicles on the road. In fact, We are already working on fulfilling 2023 safety ratings for five stars. That means if you would buy a vehicle today, any vehicle, our vehicle would be safer than the vehicle you would buy today because we really reach for the long-term highest standards. Also, engineering powertrain modeling supports our expected range and acceleration. We'll have up to 350-mile range, and our top vehicles will do 0-60 in less than four seconds. So we're definitely not only going to be on par with competitors, but that's really supercar territory for a family SUV, which is pretty amazing for the price we're offering at. In terms of certification and homologation, we've got a clear and crisp plan in place. I know it's not very exciting, but it's critical for a concurrent launch in both U.S. and Europe. And that's actually something that ensures that we are ready to deliver vehicles both in US and Europe next year. That's pretty unusual. Most car companies start in one market, but we are just actually going to do simultaneously Europe and US. Our supply chain is a major success story. Suppliers are being very selective digging into the product's business case. is not only about the OEM's name, it's also about the viability of their product. And our strategy is appealing because, first of all, we are showing demand confidence. We have growing demand every single day we get reservations. We're now well over 16,000 reservations, and we just see that continuing. In fact, our plan is to accelerate that towards the end of the year. And of course, the fact that we have designed and will deliver a midsize SUV, the fastest growing market segment in the world, I would say we probably have the most compelling design. Our specifications are quite frankly amazing with a type of affordable price we're offering starting at $37,500. And I would actually say I don't think there's any SUV, electric SUV, that has been announced so far coming out even in the next year that starts at $37,500 with the type of design and specifications that we will offer. So when some people are saying that we have plenty of competitors coming next year, it seems not true. There's a lot of SUVs coming out, but they're way more expensive. They're lesser capabilities than our vehicle, and I don't think they really have the design that we have neither. So I think we have a truly unique product. And of course, supply confidence when it comes to confidence that Magna will hit volume targets and ramp timing. Why is that important? Because suppliers do not want to sit with a whole bunch of parts that a company have ordered if the company is not capable of scaling up fast enough. And I know it sounds very enticing and exciting for an EV startup to go and build their own plant and learn how to manufacture a car, but if that means that you're two, three, or four years into actually scaling up, that means your suppliers, you're leaving them hanging. And this is not something that we're going to do. It's something where our suppliers have confidence because they know Magna is a professional automaker and they know how to scale up. And I think that's a very important part of why we get the best suppliers on our side. And then, of course, the long-term growth confidence. Let's not forget, when you combine the FM29 platform and the FP20 platform volumes, we probably have one of the highest volumes combinations in the industry. We are talking about several hundred thousands of volumes already now. We're seeing suppliers giving us great deals on various parts. And we're, by the way, also sharing between the two vehicles and future vehicles. Bottom line, we have turned estimates and targets into reality. We have a clear plan in place for all the 1600 components that goes into our vehicle. Nearly all of the vehicle costs are now based on hard vendor codes or contracts and support our previously communicated cost, pricing, and probability goals. So we will be profitable with this vehicle, even for the price that we are launching it at. And again, that has to do with the amazing volume pricing we are getting direct to consumer and just our lean business model. Nearly all of the, sorry, one thing I just want to mention as well is a clear execution plan from now until SOP that are fully supported and committed by Magna and all our vendors is another important point why we know we're going to start to deliver our vehicles next year. When it comes to talent, we're now fully in execution phase and have the talent in place to execute. We are over 200 people in the company and they're all of the highest caliber. We do take a little longer to hire people because we want the absolute best. And today there are several hundred Magna engineers working on our behalf as well. Hiring definitely accelerated since January. We added about 10 people per month in Q4 last year and 25 per month so far in 2021. Engineering is in a great place. Now we build our sales and marketing talent, and we've already started to hire quite a lot of marketing people, both here in the U.S. as well as in Europe. And as you know, California is the best place to attract talent. Now, I feel really good about over 16,000 reservations. One thing, just to kind of give a little comparison, when the Tesla Model S was about 18 months before SOP, Tesla had about 3,400 orders. We're about 18 months before SOP, and we have 16,000 orders. I think that's pretty amazing, specifically if some people say there's a crowded market out there. And on top of that, In particular, we have daily marketed the vehicle. We really start to ramp up the marketing in November when we show the car at the LA Auto Show, where we actually have quite a few surprises, which I think will add a lot of extra reservation and interest in the vehicle. We expect our Motul Design Technology Packed Affordable Electric SUV can pull from a very broad addressable market. So we went also out and did actually our own data. We went out and did sort of basically a survey on our reservation holders. And what we can say is that about 70% of our reservation holders actually are driving a gasoline vehicle today. Over 15% drive a non-premium brand. and 50% drive vehicle types other than SUVs. And it comes back to my point that we're not just trying to get or hoping to get people out of an SUV and into a fiscal ocean. We're already getting people out of their other type of vehicles, hatchbacks, sedans, and into the fiscal ocean. And I think that's a huge differentiator on our vehicle. When it comes to our portfolio expansion, we are fully on plan for delivering four different vehicles by 2025. As you might have read, we have kicked off the pair program and completed a binding agreement with Foxconn. This vehicle will be quite unique. It's in great shape for launch in Q4 2023. As we are about 30 months out, we have already completed exterior design and sourced several key components. This vehicle, by the way, is not just another electric car. This is about creating a revolution. It's about turning everything upside down. We have so many inventions in this vehicle, right from how you load the vehicle. It doesn't have a normal trunk opening. It has a unique way of usability and functionality in the interior that you have never seen before. The vehicle itself I think it's iconic. I personally think it's my best design work ever. And I'm super excited about this vehicle. I think we will easily be able to sell more than 250,000 vehicles of that a year. Just wait to see it. It's just amazing. In terms of the last two vehicles for the total plan of four coming together before 2025, we actually already have designed the third vehicle and the fourth vehicle we're already in negotiations uh for something pretty unique about that vehicle as well so the four vehicles actually are on plan All right. Finally, competition. There's been a lot of talk about competition, and there will be quite a bit, no doubt. But it's important to put it in context. News outlets on Friday noted there will be 12 electric SUVs on the market in the U.S. when we launch the Ocean. And as I said earlier, yes, there will, but a lot of them will be a lot more expensive. They won't look as good. They won't have the type of technology that we have. Let's not forget, again, we are inserting our advanced technology into our vehicles this year because of our very unique development process that means if you go and buy a fiscal suv ocean next year you will get newer technology than any other car because any other car you buy next year that technology has already been chosen several years before so we are very confident that we will have some of the best technology on a vehicle, and actually we're going to showcase some of it in November at the LA Auto Show. finally esg is something that is one of our brand pillars and you know we have published our responsible supplier policy we have we are in course in q1 where we serve it out workforce to assess where our business can be and we also have a clear framework and we're going to come up with some data that i think is going to be quite amazing we want to be able to quantify what we mean by esg finally We are deep into a company-wide study on evaluating the feasibility of a scientifically-based, truly climate-nutrient vehicle over the mid-term, and that's something we're going to talk about a little later. But finally, quite frankly, I will channel anyone to show me a $37,500 SUV that even comes close to the ocean. And nobody's been able to do that yet. When somebody mentions another SUV, it's always another market segment. It's quite frankly, it's never... peer-to-peer comparison anyway so thanks and i'll now turn it over to buchart our chief technology officer to provide some more detail on our software efforts and if you're a cool technical leader yeah thanks andre yes uh software development is a key priority for fisca