Fisker Inc.

Thank you for joining and welcome to Fisker Q1 2022 earnings call. My name is Brika and I'll be today's event specialist. There will be a question and answer session. If you wish to ask a question, you may press star followed by one on your telephone keypad. Your host for today's call will be Brock. So please go ahead when you're ready.

Thank you, Brika. Hello, everyone, and welcome to Fisker's earnings call. As Bricka mentioned, my name is Frank Borok, Vice President of Investor Relations and Treasury here at Fisker. Previously, I was at Hyundai Capital America, where I was responsible for financing a $40 billion plus balance sheet comprised of automotive finance assets. Joining me on today's call are Henrik Fisker, Chief Executive Officer, Dr. Burkhard Hunke, 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 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, Frank, and thank you everybody for joining the call today. Let me just start by sharing how super excited I am after having driven a fiscal ocean prototype in Europe at Magna's plant. It was just amazing. I've been part of a lot of product launches in my career, but I have to say driving a vehicle that are a little more than six months away from startup production without any squeaks and rattles is just fantastic. And this really hats off to our engineering team and Magnus engineering team and manufacturing team is just outstanding. So I'm just so excited about that. I, of course, reviewed a lot of details of the vehicle. I'm flying back over. uh in middle of may actually to the bridgestones proving grounds uh to do more fine tuning and testing also together with our race car driver abby eaton that's uh we have hired to help us set up uh suspension in the vehicles that really handles like a sports car but have the utility of an suv and we will make sure that it still drives comfortably uh this this was just so cool Now, then we also went on a little tour in Europe where we had shown the Fisker Ocean, and I'll get back to it in a second. I do want to mention that our reservation actually has accelerated even further. We have well over 45,000 reservations, which actually represents about a $2.5 billion potential revenue. And with this continued growth, we should hit 65 to 75,000 reservations by the end of the year, which obviously means we are way above what we would be able to produce next year. So what we also are discussing right now with Magna, in fact, we have, I think, really decided with Magna that we want to increase the production at Magna in 2024. Originally, we had planned 50,000 units, but I think as we see with this incredible demand that are continuing, and I expect to continue as people get in and actually try the ocean and we get the vehicle in the street, we are planning now to triple the production in 2024 to as close as 150,000 units as we can. Of course, that also means getting our suppliers with us, which that's the next step, going out to all our suppliers. And just staying on that for a moment, we have a task force that are working with all our suppliers between Magna and Fisker. And I think Gita will talk a little bit about that later. And so far, we have done extremely well working together on that because we're still on target for production, startup production on 17th of November this year. And we will start deliveries immediately thereafter. So it will be deliveries this year as well. We have a very strong balance sheet. We got over $1 billion in cash. And the business continues to scale. We now have well over 450 people. That represents about a 40% growth year to date. And we continue to grow throughout the rest of the year. We are really in a hyper growth mode. And I mentioned earlier our marketing efforts. Just to kind of give an example, we were in Denmark where we had a prototype in one luxury mall for, I think, about 10 days. And at this point, just in Denmark, we have over 1,650 reservations. That represents about 6.5% of the Danish EV market. that's phenomenal for a vehicle which has only been shown there once and where a lot of reservations were taken before it was shown and as it was shown we saw an incredible acceleration in the orders so i can really see that once we start getting this vehicle out and people get to see it and then later try it i have no doubt that we're going to be able to easily fulfill or really deliver every vehicle we can produce. Also lately, recently we had, actually it was last Friday, we had an executive strategy day, and we actually, the leadership team reinforced our clear future products and technology strategy roadmap. I'll let Bukhar talk a little bit about the technology, but I just want to mention a little bit about our strategy with our four vehicles, because I know once in a while people are saying, well, why don't you just make one vehicle? And then when you're done with that and you produce and start selling it, then you talk about a second vehicle. Well, if that, if that would be how we did it, we wouldn't have our second vehicle out until 2026. And obviously that's not the way we want to go. And that's also why we chose our unique strategy. And I actually would call it our hyper product development strategy. And what I mean by that is that in an, in any other EV startup, you are dealing with two enormous tasks. One is building factory and learn how to manufacturing a car and the others to developing a car and technology. In our case, we are only looking at developing car and technology because we've got amazing, an amazing manufacturing partner. So we don't have to worry about that. We know we're going to get high quality cars from the get go. So what we have done is we have set up an organization within Fisker which is geared towards making multiple vehicles in tandem, developing multiple vehicles in tandem. And I call that the hyperproduct development mode. What we have done is we have set up a UK entity, which is already up and running, and are run by our senior vice president of engineering over there, which is running one of our new programs, the Ronin, and I'll get back to that. And then, of course, we have our development teams here in Los Angeles, which are running our high-volume vehicle programs, which is the ocean and the pier. And I was never a believer in giant teams where a thousand people try to get, you know, into developing one vehicle from the start. In my view, small teams, agile, moving extremely fast, moving people around in a unique matrix organization, that's the way we have set it up. And Bukhar and I has spent a long time discussing how we maximize this effort and this advantage of being agile. And we have now, I think, really shown that our development, our unique development process of developing a vehicle in less than two and a half year actually worked. And of course, we already started the pair last year, and we started also the Ronin last year, and those two programs we'll see the benefit from all these lessons learned and we're already seeing these benefits. And that's something which I really think sets Fisker apart because I believe before 2025, that's really our chance to take a huge market share. And if we can bring four vehicles to market in segments where there's not a lot of vehicles already and where we have at least four unique features, either we have the longest range in our segment, like for example, the Fisker Ocean with 350 mile range, This is the longest of any SUV or crossover in our price segment. Or, for example, the California mode that's in the ocean. So four features that are either unique or segment-leading, that needs to be part of every vehicle we do. So let me just finalize here the ocean update. We have completed the first prototype build phase, and we have already done a ton of testing. We have done window testing in Sweden, which Bukart personally traveled to. and we are doing now a whole bunch of different tests as well, whether it's chassis systems or the ESC, the suspension, the brake tuning, all this has already been done and is now followed by a round of next vehicle dynamic testing in Italy, which Bukka and myself will fly over to as well. Now, let me talk a little bit about the demand again. Our original goal was to have 50,000 orders or reservation by the start of production. So on November 17th, we already have 45,000. And it's clear that when we get to start production, it'll be closer to, like I said, 65,000 to 75,000. So I think it's very important to mention that with the high gas prices and everything we see, I believe that the demand for an affordable SUV is going to grow tremendously. And we don't have a lot competitors in this segment and specifically as now as we also see Europe is picking up with reservations we think we're going to have a really strong stance in Europe as well with our vehicles over there and it brings me a little bit to our marketing like I said we have done relatively little marketing we tried now out the pop-up shop in Denmark and that as was so successful We are planning now to bring our vehicle to Norway, which is one of the biggest EV markets in Europe right now, and we have already done very well in Norway. We also plan a few other events through the rest of this year, but we really want to kick off our larger marketing event a little later in the year once we have fully finished drivable vehicles coming off the production line in Austria from Magna. We don't really want to blow everything out right now as we have all these orders already. So please be patient with that. I don't think it makes sense to spend a ton of marketing money right now as we are doing so well. A little bit to the PEAR update. This program is in full speed. We are now increasing the efforts on PEAR as some of the engineers are starting to gear down and out of the ocean program or have simply just less to do in the ocean program so we can now divert a lot of these extremely talented people over to the PAIR program. And that's, again, the advantage. By having these fast developing processes, we can actually use people right when they get off the ocean program. They don't have to sit and wait to start another program. We have already started the second and the third program. So we are taking fully advantage of our team at Fisker. Something new about the PAIR I just want to mention. I'll leave some news. We have decided in our strategy session now to go forth with having three derivatives initially on the pair platform. It's really a result of that we see as such an efficient platform. It will be fairly low cost or I would say really low cost to manufacture. We are aimed to take a lot of parts complexity out of the platform, concentrate on spending money on high technology. and really interesting consumer features that have never been seen before. There will be two other variations of the pair coming out, of course, after we launch the pair in 2024, and they will come later in 2025 and 2026. But ultimately, these three derivatives, we believe, will enable us to sell a million pairs a year sometime in 2027, so fairly soon. And we think this is going to be a really important story, the growth story of Fisker in the future globally. Third vehicle update. You might have seen that I announced Project Ronin this morning. And this vehicle has a unique space within Fisker in the sense of it's really the technology testing platform to a certain extent. And what I mean by that is that as we develop PAIR, we need to be able to develop some extreme technology make decisions whether we bring it into pair or not it could either be because it's not ready or because it's too expensive but we already see some interesting synergies between even though pear is a very low cost vehicle and the ronin is very expensive once it comes to technology it's really more about the the value of that technology when it enables you to do and if it's ahead of everything else so for example We're developing, I think, a world-leading wiring harness that is super simple, super light, and very low cost, but it's really effective. And Bukhar can elaborate on some of these technologies, but the Ronin is really there to allow us to explore some of those ideas early. It will be a vehicle that is super unique. It has really never been seen a segment before, and I know we showed a picture, and it wasn't really clear to see what it actually is, and some people said it was just a four-door sedan, and it's not, and maybe that becomes a little clearer in the next couple of days. I'll elaborate a little bit on that, what's so unique about it. Also, I've set the engineers a very tough task of reaching 600 miles. We already know now that it for sure will have over 550-mile range, but the target would be closer to 600 miles, and if we can achieve that, that would be equivalent in Europe testing driver throughout 1,000 kilometers. So the idea, of course, with this vehicle is that it truly will replace the luxury gasoline Grand Tourers out there. And I think ultimately, the way we have positioned the Ronin, it will be able to both compete against all the luxury electric sedans, all the luxury gasoline sedans, and all the luxury sort of sports coupes and all the luxury convertibles in the market segment, but from $100,000 and up. And when you look at that entire segment, it could be an interesting segment if you can take an unnatural large part of it. And I think we'll be able to do that with the Ronin when we show a little bit more about what it offers. Again, that vehicle is developed or run out of England, our magic works. So it really is not about focusing or we don't have the ocean team suddenly focused on this vehicle particularly. It's done in a different development group. So of course, it's matrixed into here for electrical architecture, powertrain, et cetera. But it really is a product that's run separately. And let me end by talking a little about our advanced sustainability vision. We just published our inaugural environmental policy and also expect to introduce our first ESG impact report in the next few months in alignment with our belief in transparency. And that is well ahead of startup production. So I think in this regard, as we've always said, we aim to be the leader in sustainability, create the world's most sustainable vehicles. And I think that we have shown that we live up to this commitment. So overall, I'm really optimistic about Fisker's future, despite the uncertainty that's going on in the world. And I think it's really to do with our incredible strong partners, Magna for our ocean program and Foxconn for our pair program. Being with such large global companies is obviously something that clearly has helped us weather the storms of supply chain issues, chip issues, et cetera. And so far, I can only relay again, we are on target. to start production 17th of November this year. And with that, I'd like to hand it over to our CTO, Bukhar.