Fisker Inc.

Everyone and welcome to the Fisker fourth quarter and full year 2022 earnings call. My name is Bruno and I will be operating your call today. During the presentation, you can register to ask a question by pressing star one on your telephone keypad. I will now hand over to your host, Frank Borak. Please go ahead.

Thank you, Bruno. Hello and welcome, everyone, to Fisker's earnings call. As the operator mentioned, my name is Frank Borak, VP of Investor Relations at Treasury here at Fisker. Joining me on today's call are Henrik Fisker, our Chief Executive Officer, Dr. Bukhard Hunke, our Chief Technology Officer, and Dr. Geeta Gupta Fisker, our 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 just claim 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 accounting GAAP principles today 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. Good morning, everyone, and thank you for joining us today. It's a little earlier than our usual timing, but we moved the call up as we all headed back to Austria this afternoon to continue our hands-on manufacturing and supplier engagement. I want to thank all of the stakeholders, teams, and partners for an amazing progress we have made in 2022. Of course, 2023 is an inflection year for Fisker. as we reached industrialization and pivot from vehicle development to customer deliveries. The 850 strong Fisker team is hard at work readying our inaugural Fisker lounges and center pluses, integrated with our trade-in and after-sales service and repair partners, and uplifting our initial mobile service vans among many other key initiatives. We have a fantastic team and are partnered with world-class manufacturer and suppliers. These strengths will shine through this year and it really is the basis for our business model. Let's start with direct to consumer sales and service. We have made progress on last mile delivery and support infrastructure. California DMV sales license is approved for the Fisker Ocean. We will utilize a third party vendor for customer title and registration services in the US and EU, which will be integrated into Fisker's customer journey. We have home delivery partners identified for the U.S. and all European launch countries to complement our growing network of our own CenterPlus delivery locations. We are also planning initial pop-up delivery sites, specifically in areas where we may not have opened delivery centers yet. Trade-in services are available in the United States and Europe in all the launch countries and launch areas. Our flagship launches in Los Angeles and Munich which are slated to open in mid-Q2. As you remember, they were a bit delayed because of COVID, will be complemented by quickly expanding center pluses, including Vienna, Copenhagen, and Stockholm, where we will offer test drives, service, and deliveries of our vehicles. In addition, we signed an innovative test drive and delivery center in Munich. We are currently in negotiations on more than a dozen properties for additional lounges and center pluses, vehicle processing centers, and service and pickup locations in the U.S. and Europe. We made charging your ocean a more convenient and integrated experience with home charging and public charging partnership in Europe and U.S. now finalized. Fisker's flexible service approach includes third-party service and repair provider plus Fisker's own service solutions. Externally, we have nominated partners for after-sales service and repair in key U.S. and European markets, providing broad geographic coverage for ocean customers right from the beginning. Initially, we will provide service options via FISCA-owned service centers and FISCA mobile service. We have started uplifting FISCA mobile technician vehicles to support our flexible and convenient service option. In addition to service partners, we have quickly expanded the Fiscal Coalition Repair Network in the US and Europe for certified high-quality EV repairs. Now let's come to the ocean update. Our number one priority is launching a high-quality fiscal ocean with class-leading features and range. We are excited to get the ocean in the hands of our loyal customers once the homologation process is complete. The ocean homologation testing is expected to be completed in March. which will be followed by a regulatory approval processes. I had expected us to be farther along when we last spoke in November, but we encountered some testing delays due to weather and COVID absences and some complicated retests that slowed our process. We took on a lot by doing both US and Europe obligation at the same time, but the ability to sell the ocean in so many countries is an important de-risking strategy and gives us the opportunity to increase sales and shift to whichever market offers the strongest growth. And I just want to emphasize that it's not normal for any car company to actually do dual homologation in two continents. But I think once this is done, it's a huge advantage for us because we have also built out our complete service and sales network in Europe. So it really opens up endless possibilities for growth. We recently completed our EPA and WLTP range test, and our internal findings show a longer range for the fiscal ocean than we initially projected. And this reinforces our expectation that the ocean will have the world's longest range of any SUV or crossover priced below $70,000 or €70,000. And Bukkard would go into that detail later. If you remember, we had announced 350-mile range here in the U.S. EPA. And I will just say I think it's going to be closer to 360 than 350. And in Europe, we had announced 630 kilometers. And I think this will be closer to 700 than 630. We obviously can't announce the exact numbers yet because they have to be verified by the two agencies. But we have run all these tests. And I want to say congratulations to our engineering team because they've done an amazing job in refining every little detail that attributes to getting this long range more than the original had expected because we actually use some of these vehicles from our startup production to actually refine and refine and refine. And of course, there's not one element alone that makes this long range. It's really the genius, I would say, of our engineering team that has created this and being a company that launched its first vehicle and achieved the world's longest range, I think is pretty amazing, specifically because it's also an affordable vehicle. So congratulations on that, and I'm super excited when we get the final ratings, but they're going to be good. All right, let's go to manufacturing and production update. I, along with other senior leaders, have been based in Europe, actually, for the past few months, working closely with all our partners, preparing for production ramp, ensuring we deliver the highest quality possible ocean from day one. And I have to say, I love walking around on the production line, talking to the skilled Magna people and employees about the product, about the quality, doing reviews right there with the cars as they come off the line. It's just fantastic to actually stand there with people who has built cars, some of them for 20, 30 years, amazing high quality cars. And they actually, I would say it's the other way I almost learned from them, exactly how you make such an amazing quality car. And I'm super excited about that, quite frankly. Last week, I oversaw the final extreme cold weather testing for powertrain and chassis systems. And I have to say, it was amazing to drive this car on a frozen lake in northern Sweden. We also had our race car driver there, Abby Eaton, and of course, our engineers there as well. And everybody was just amazed how well this car performed. I'm super excited again to get in the hands of people. And I think what you really do on a lake like this, you actually push the car to an extreme that probably no normal customer will rarely ever do. And it really shows how safe, how predictable, how well this car handles. And part of that is not just electronics and everything else, it's also the actual proportions of the vehicle. So it has to do with the width and the wheelbase length. To get that optimized, it's a hardware thing. And if you don't get it optimized, you can do a lot of tricks with electronic suspension. But at the end of the day, this vehicle fundamentally has the right proportional setup. And that's something that is just making an amazing experience when you drive it. The serial production lines are undergoing also final tuning. General assembly staff training is almost complete, and supplier ordering is well underway. The high level of coordination and integration of the entire supply chain and assembly ecosystem has been impressive. Geeta will discuss the supplier ramp in more detail, key risks we are managing, and how we are working with our partners to support the ramp. While almost all of our suppliers are performing, a few have difficulties ramping, so we are happy with our decision to begin with a slow ramp. We are confident we are will be ready for customer deliveries once we have received the required regulatory certifications, and we maintain our 2023 production target of 42,400 units. Now, this is important because, of course, supply chain have to deliver, and of course, there can be hiccups. But here is something very important I hope everybody will understand, and that is, because of the amazing ability of Magna to ramp. And I'll give you the example. Yes, we only made 56 cars since November last year, but that was on purpose. Today, and actually even last week and weeks before, Magna can already make 20 cars a day on average. That's 100 cars a week already now. So the key takeaway is that when we are ramping up, specifically in Q2, we are going to have such a strong ramp that any units that may have been lost early on can easily be caught up later in the year. And that's why we maintain our guidance of 42,400 vehicles for the year. Extremely important note here. All right. Let's get to the ocean demand. Our reservations continue to increase despite new competition and competitors' price reductions. Net reservations and orders now total approximately 65,000 for the Fisker Ocean, reflecting the large and growing global addressable market for a well-appointed electric SUV. As we start deliveries, we expect increased brand awareness to drive even more customer considerations and demand for the Ocean. We price the Ocean extremely competitively, considering the many proprietary features such as class-leading range, California mode, solar sky, solar roof, The amount of horsepower in this vehicle for the price is amazing. The 17.1-inch rotating screen, a digital 4D radar, and on and on. I could keep on that, but it really shows that people appreciate how unique our vehicle is. And as consumers have opportunities to interact in person with Ocean, we expect this value to increase and really resonate and drive even more sales. We continue to showcase the ocean throughout a variety of brand building activities. Two of the larger recent events include media investors and business partners in Austria and Las Vegas. Our pop-ups continue to be very popular with reservation holders and prospective customers, many of whom drove long distances to get their first glimpse of the Fisker Ocean, which shows how passionate and committed our customers are to the brand. And I really, really appreciate that. And I think it really builds Again, a strong foundation for our brand. And since our last earnings call, we also took the ocean to six states in the US, Texas, New York, Florida, Las Vegas, Utah, and California, and also did pop up as many European countries. And of course, we'll continue doing that and actually increase it as we move forward. I want to just highlight a couple of really innovative things that are inside the ocean. One is the user interface, and I know there's been, of course, a few videos on social media about it, but those were all early pre-production versions of this user interface. The final user interface, I just want to tell you, it's amazing. When I go in the car, let me tell you, I actually hate computers, quite frankly. I'm really not good at it, and I don't know, when I use them, they always break down. But I want to tell you, when you get in this car and use it, you don't need any instruction on how to use it. It's just like the first time you picked up an iPhone. It just is intuitive. And that is what's really cool about this user interface. And that was all developed in-house. Now, also what is super cool, and I'm really impressed about what we have done in-house, is the ocean over the air update capabilities. And they are now complete. It's amazing to experience the vehicle getting updated and improved fully over the air. And this was all developed in-house. It's just super cool to see. And then finally, the Ocean will come with advanced ADAS controller and center suite, which is designed to be continuously updated through our OTA platform. And Bukart will talk more about that. It obviously also gives us endless opportunities to bring some really cool features to market later because the foundation is so advanced, like the digital radar, for example. Okay, let me get to a short pair update. The pair program is progressing well. We achieved our goal of a drivable pair prototype before year-end last year, which you may have seen me driving around in LA. It was quite fun, actually. Today, we are revealing more of the exterior production design. For example, the rear lighting is a continuous light strip around the rear window with an integrated high-mounted brake light. The side view has a unique, iconic graphic. and a clean sculptural body side with pronounced fenders that really gives it a powerful wide stance. And it also means the car in this price range is going to handle amazingly. The overall front lights have the signature of Fisker, dual light bars surrounded by high-tech light graphics. And then the vehicle sits a bit higher off the ground, and you also have a high seating position, even though it looks quite sporty. And that really is perfect, specifically for city driving, And that is combined with this big canopy, that huge round window, which I think today might be the most advanced front windscreen on a modern car because there's a lot of new rules and regulations on how to do front windscreens. So we don't see these super round windscreens anymore that we used to see in the 60s, but we have actually achieved that. And it gives you an amazing view of the road in front of you and anything that happens in front of you. Finally, the dynamic shape has already undergone extensive aerodynamic testing in the wind tunnel, and we expect the top version to achieve well over 300 miles. We will offer two different battery packs because I also think because of the price and the size of the pair, this may be a second EV for many EV buyers that already love CVs and drive CVs, and therefore they may not need to carry around a giant expensive battery if they're only using it as a city car. So we'll offer some different variations there. We also have some super excited different interior variations, but we'll talk about that later. And the pair is being engineered using new automotive specifications. And that's important, the new automotive specification, because that's how we achieve the base price of $29,900. That's not a price we just threw out there. We've actually gone through all the development to ensure that that is the price that we're going to achieve. I'm super excited about that. The current payer reservations are just exceeding 5,600. We did release some new images today, so maybe that'll pop up a bit as well. And then finally here, I want to talk a bit about our future product portfolio. Because, you know, at the end of the day, we do have our goal to reach one million vehicles per year. So later this year at our inaugural investor day event, We expect to showcase our future or at least some of our future product portfolio with several durable prototypes and they will all be in new segments. And we are still keeping our promise of always having at least four unique features on each vehicle. So we will showcase the pair, which has some amazing features never been seen before on any vehicle. We will also showcase the Ronin and then we will showcase our our Alaska program, which is our take on a pickup truck. And we have some amazing features that have never been done on a pickup truck before. I'm super excited about showing that. There's another cool thing about this pickup truck, and that is that we actually are able to use a lot of the ocean components in that vehicle, which means we're going to be able to do it faster and more affordable than probably a lot of other electric pickup trucks out there. It's going to look really, really tough. but still beautiful. So I'm excited about showing that. Anyway, I can get carried away when we talk about product. All right, let's get to sustainability. That's another of our super brand pillars. It's really at the heart of what we are here for. And the hard work on ESG continues at the company. We are progressing on company targets aligned with the United Nations Sustainability Development Goals that are materially relevant to our company. Additionally, as we prepare for our next annual ESG impact report, we have completed our lifecycle assessment for the fiscal ocean. And based on our foundation of transparency and lead the auto industry, we expect to publish this LCA or lifecycle assessment during the first half of this year. We are super excited to share the results, furthering our leadership and sustainability. And we mentioned on our last call that MSCI upgraded us. And the positive momentum continues. In addition, based on all our hard work and public disclosures, Sustainalytics, the Sustainalytics recently upgraded Fisker 40 spots in global automotive industry rating. We are now the top-ranked U.S. passenger EV OEM, the top-ranked. meaning we have the lowest risk rating based on ESG risk rating scores. So I want to come back and say I am super excited. I'm excited to get on the plane back to Magnus, see the cars. But I want to say one thing that's really the surprise here. And Gita will go into details on that. And that is that we are going to be profitable this year. And she will explain that more in details. And just think about this for a moment. Because what we could do, not that we want to, But we could essentially just abandon all our future programs and just live off the ocean. That is incredible dearest. And there is no other startup that I'm aware of that makes EVs that is profitable from the get-go, from the first year. And I think that's what I'm super excited about. So I'm going to hand it over to Bugha to talk some more about other exciting things. Bugha?