Fisker Inc.

Good afternoon, and thank you for attending today's Fisker Incorporated fourth quarter 2021 earnings call. My name is Austin, and I'll be the moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Dan Gals, VP of Investor Relations. Dan, go ahead.

Thanks, Austin, and welcome everyone to Fisker's earnings call. Joining me on the call, as usual, are Henrik Fisker, Chief Executive Officer, Dr. Bukhar Tunkha, Chief Technology Officer, and Dr. Gita Gupta-Fisker, Chief Financial Officer and Chief Operating Officer. Before turning it over to Henrik, be advised we will make forward-looking statements within the meaning of the federal securities 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 and financial periods are subject to risks and 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.

Thank you, Dan. Thank you everyone for listening in. I think we've got a really exciting earnings call. I'm super excited about it. This year has just been taking off extremely fast. We are still on target with our SOP date of November 17th this year. That hasn't changed. In fact, I'm really excited about flying over next week to actually get into an ocean and see it come off the prototype line. I've already had a look at some of the first parts that came in. They look extremely high quality for being this early in the phase. And we, of course, have people on the ground over there inspecting all the parts, et cetera, and working really closely with Magna. And I have a lot of faith in Magna, I have to say. We are working closely together. The quality of work they have shown so far has been amazing. And I think we're both in for an amazing high-quality launch in November this year. And of course, the acceleration of reservations has also really taken off this year. It's actually been a 400% increase per day versus 2021. So I'll talk a little bit more about that as well. Again, you know, priority one for us is launching the ocean. And we are working extremely hard and we are working with all our suppliers to make sure that despite any chip crisis or supply chain difficulties that we are solving them week by week and it's something that takes a lot of work to do it's not easy to do it but so far we have managed it and so far i am still uh fully uh sure that we will launch in november because we have this amazing team and these amazing suppliers and that's something that i think is i want to commend the team for because they are really working hard and i also want to commend our suppliers for that as well I think one of the reasons that our fiscal erosion have increased in, uh, in reservations this year is because of course we showed the vehicle last year, but this year it's clear for people, this vehicle is actually coming out this year. And when you compare the fiscal erosion to any announced EV coming out this year, it's clear that we are the leader in so many areas in our price class. For example, There is no really cool looking SUV on the $40,000. Let's just make that clear. Secondly, when you look at a $50,000 or even a $68,000 SUV, there is nobody that even comes close to us when it comes to range. The Ultra, which starts at $49,900, comes out at 340 mile range, which is clearly leading of any SUV or crossover in the entire world. and the same with our fiscal ocean extreme, which comes out of 350 mile range plus. Now, that's not the only thing that differentiate the fiscal ocean extreme and the ultra. The extreme are seeing the highest reservation interest probably because that we have so many industry-leading features, in fact, features that no matter what you would pay, nobody even offer. Even if you go out and try and buy a $400,000 Rolls Royce, you will not have California mode. You will not have, you know, solar roof. You will not have a lot of the things we have in the Fisker Ocean. One of the things that I'm super excited about that normally belongs to supercars is our torque vectoring system in the powertrain. I personally drove it on the test track. it just makes you feel like a race car driver. And I think once we get journalists and customers out and experiencing this sometimes later this summer, I think we're going to see another amazing uptake in reservations because that is just in its class of its own. So with all these extra things in this vehicle, I think we just offer that cannot be compared. And I want to ask for the last thing, which for me sort of was a natural when I picked up my iPhone and turn it around to watch a movie. I said to our engineers, why can't we just do that in the car? They were grumbling a bit, but finally they said, let's do it. And I have to say our engineering team did it. We have a, you know, world's first 17.1 inch rotating screen in the Xtrema standard. Just a push of a button, it rotates. You can sit and watch movies. And it's by the way, also, I believe going to be the highest resolution screen in the world, which again is something that sets the ocean apart. Now what I'm excited about announcing today, which is brand new announcement is our world leading warranty program. And why can we set out a world leading warranty program? But that's because we will have a super high quality car produced with Magna in Austria. And of course we have some extremely high quality international suppliers as well. So with this warranty, We are having a basic warranty of six years and 60,000 miles on our powertrain and battery warranty of 10 years and 100,000 miles. So powertrain and battery warranty is 10,000, 100,000 miles. And I think that is one of the key things that's going to get people that hasn't had an EV before jumping into a Fiskeros because they want to feel that comfort that they're going to get the best warranty in the world. And that means we're standing behind our product. It really shows our confidence in the build quality, the technology quality, and the overall durability that we expect of this vehicle. Now, we think that, you know, what we can see, we have done, of course, our internal data on our buyers because we are able, because we interact directly with our customers, we're able to go out and actually do regular surveys to our existing reservation holders. And what we have seen is that they really appreciate some of the features we have in the vehicle, but overall, design is number one. And that's something, again, that sets us apart. And of course, it was easy to design a cool car. I assume that most giant automakers will never have a flop, but they obviously do once in a while, so it's not that easy. So that's something I think we're number one in the world, and we're going to remain that. And then number two is our commitment to ESG and just creating the world's most environmental-friendly vehicles And, you know, the sustainability aspect of our vehicles go beyond the electrification, as the vegan interiors, the recycled materials, as the solar roof. You know, all these things are things that people care about. If they have a choice and can get a sexy sustainable vehicle versus an unsexy sustainable vehicle or a sexy non-sustainable vehicle, why not get both, best of both worlds? And I think that's what we are seeing in our uptake in the reservations. Now, of course, how can we come out with a vehicle this compelling at this great a price. And part of this is, of course, that we have an internal development process, which is focused on developing vehicles for low cost. And this goes, of course, hand in hand with our asset light business model as well. And finally, we have a development process, which is probably the fastest right now in the world. And it allows us to put in the latest technology, which usually, by the way, is cheaper than the old technology. And therefore, when our customers take delivery of a vehicle in November, they'll get the latest technology that we had only chosen probably last year and even some of the early this year. So when you normally buy a car, that technology is probably already three or four years old. So I think that's where we make a difference as well. And I also want to say finally, you know, we are seeing a saturation in the luxury EV market. And I think we have to recognize we were the first ones to think seriously about getting in to creating affordable EVs. And I think that's really something that is now showing its fruits by the reservation that we have created. And of course, you know, with the pair that we just decided to go out and open up reservations for, one of the reasons is that we have quite a lot of private people that had asked if they could put reservations last year for the pair. We were really hesitant to do it that early. We kept on getting some pressure there. And then finally, when we now lately have been in discussions with some global rental car companies that were interested in larger volumes of both the fiscal erosion and the fiscal pair, I personally thought it would be fair to offer reservations for the private people who already asked for it last year. Because obviously, once we make a deal with a large rental car company, they'll scoop up a large amount of these vehicles. which will mean it will be more difficult to get your hands on one of the first ones. So that's really why we opened up the reservations. And I also want to say that the PAIR program, we actually just here last week passed one of our first engineering milestones in the PAIR program. So it's actually quite on its way. Exterior design is pretty much frozen. Now, why wouldn't we just go out and show this vehicle? Why not just show it and get a lot more excitement around the PAIR? Well, you know, the pair looks nothing like the ocean. In fact, it looks nothing like any other vehicle in the world. And I even hesitate to call the car. I call it a mobility device. And the reason is that this vehicle is so different in how it looks, how it's going to function. Some of the features, some of the way you store things in this vehicle has never been seen before. And that's not something we want to give away to the competition anytime soon, quite frankly. But I also want to highlight another thing that is the essence of Fisker and what we're doing with technology. So one of the things that's very important for Fisker and I think we're taking the first radical step in the world of any automaker is, as we always said, we're a digital car company. So our plans in the future is have an overwhelming amount of over-the-air digital features and updates, rather than a whole bunch of hardware options. And what that allows us is to create a reoccurring revenue over the lifetime of these vehicles. And of course, it opens up totally new revenue streams, not only for us, but also, for example, for a global rental car partner, where you don't anymore have to, for example, You remember clearly when you, a few years ago, had to order a navigation system and you actually had to take a little bag and carry it out in the car and put it in there. You know, with our vehicle, we're going to offer probably dozens of over-the-air upgrades that you can do in your rental car and that we and our rental car partner can make money on. And you only really need to order it if you need it. And you can actually order that probably any time during the time you use the car. And that, of course, also goes through into our flexible lease, where we will own this vehicle for 12 years, and imagine the reoccurring revenue you have over 12 years on a vehicle that has been paid off after probably about four years. That, of course, is a long-term vision, but I think it's important to have it in there because we are here to redefine the car industry as we know it. Now, coming back to the ocean here for a moment to talk a little bit about the revenue and the mix of buyers, so about 80% of the ocean reservation holders are planning to buy one of the two top trims. And how do we know that? Again, we went out and we did our own survey with our reservation holders. That's one of the advantages about being direct to customers. We can do these surveys and get feedback within 24 hours. So 80% intent to buy one of the two top trims, which gives us an average selling price of about $56,000 for the ocean, which of course then will give us an average revenue of about already a potential revenue at this point in time with, by the way, we just passed 31,000 orders. I think we are now 30,000 an hour ago, but we actually passed 31,000 orders. So they just keep coming in faster. And with that, we have just passed a potential revenue of $1.7 billion, which I think is amazing. Now, we see it again, as I mentioned earlier, with the payer reservations are coming in fast. I think it shows the outstanding product features and expectation there is to Fisker and the brand that we will deliver something super exciting. Now, finally, conversion of reservations to orders. That's obviously going to be something that we are going to focus on later this year. We have sort of a placement hold of a website and a configurator. We are planning a very elaborate, I think, industry leading configurator coming out late this summer. And that will allow people to go in to truly configure their vehicles into the minus detail in an incredible, engaging way that has not been seen before. And after that, in October, we'll start reaching out to customers and firm up their orders. And my expectation is that we'll be able to firm up orders that mean we will be totally sold out for next year. I mean, seeing the rate that we're running in at now is 31,000. I don't see any problem in easily getting way past our goal of 50,000 reservations this year. In fact, probably a lot higher. So the conversion into, you know, 50,000 firm orders shouldn't be that difficult. I'm fully convinced about that. And, of course, also we are opening a couple experience centers here this summer. Now, why are we not blowing, you know, millions of dollars on TV commercials and all that? Because, you know, we have all these orders coming in. And I want to have that firepower when I need it. And that's probably going to be more next year. But we, of course, still have done some marketing in a very innovative, efficient way, which, of course, is the reason why we keep getting all these orders in. Now, finally, I just want to talk a little bit about the future product that we are planning. I want to say that, you know, Somebody is asking, why are you starting the second car when you haven't even started delivering the first one? Well, here's why. The real market of EVs, and I'm not talking about the EV luxury market, which is already starting to be saturated. But if you think about the rest of the car market under $50,000, that is so thinly occupied. I mean, if you look at gasoline cars, you have at least a dozen and many segments, two or three dozen alternatives in every single gasoline segment. Today, there are segments in the EVs that are completely unoccupied. You can't even find a car. I challenge you to go and find a real sexy SUV, and I didn't say a hatchback or crossover, but SUV for under $40,000. I'm challenging you to find a sexy, high-tech electric vehicle under $30,000. Just anyone. Now, with that in mind, think about what's going to happen in the next two years. All this market share is going to be off for grabs. And if we are having a vehicle amount to very few, we will have the ability to take a much larger market share than we normally would have if you would have 50 competitors, and we don't. All these competitors that everybody's talking about is coming out with $60,000, $70,000, $80,000 plot cars. We are coming out with vehicles and segments that nobody's even in and nobody's even announced in the next two years. And let's face it, even if you announce a car today, it won't come out before 2025. The pair, because we announced it yesterday doesn't mean we started yesterday. We started that a year ago. So we are already well ahead of the curve. We are well ahead of anybody that we are seeing as real competitors, in my view. And that's really what the advantages with Fisker is, and that's why we are starting not one product, not two products, not three, but four products, to be sure that we have four segment-leading products in production before 2025, because we want to go out and take a large slice of this pie. All these different segments that we're going into, we're going to have the best vehicle, And that's why we're going to be able to accelerate in our orders. We're not here to say, hey, let's make one car and then three years later, let's start another car. That's not how these times work. The whole world's moving way too fast. The good news is Fisker, we are moving the fastest and we already took these decisions two, three years ago. So with that, I'm sure I forgot a few things that for me was maybe not so exciting about numbers and how many people and all that, but I know we have a lot of other capable people to talk about this. I want to hand it over to Burkhard, because he has some exciting stuff to talk about when it comes to technology. Burkhard.