REE Automotive .(US:REE)2023-05-23 15:10Financial Data and Key Metrics Changes - The company ended Q1 2023 with liquidity of $126 million, which includes cash, cash equivalents, and short-term investments, with no debt [15] - The expectation is to end the year with $65 million in liquidity, which will include financing for the initial 25 vehicles for internal testing and deliveries [15][17] - The company anticipates a need to raise $80 million to $100 million to support the ramp-up to production due to working capital requirements [17][33] Business Line Data and Key Metrics Changes - The introduction of the P7-C chassis cab complements the existing product lineup, focusing on 0 emission Class 3 to 5 vehicles [12] - Initial orders of approximately 100 vehicles have been placed by the growing dealer network, which now includes 8 dealers and 3 fleet customers [14] Market Data and Key Metrics Changes - The demand for 0 emission Class 3 to 5 vehicles is expected to increase due to the California Advanced Clean Fleet regulation, which sets ambitious targets for commercial fleets [13] - The company is targeting a production ramp-up to the low to mid-thousands of vehicles by the end of 2025 [11] Company Strategy and Development Direction - The company is focused on a two-phase production plan, with Phase 1 targeting pilot production in the low hundreds and breakeven gross margin by the end of 2024, and Phase 2 targeting production in the low to mid-thousands with breakeven EBITDA by the end of 2025 [11] - The strategy includes a CapEx-light approach, differentiating from competitors by building vehicles with partners [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving certification by the second half of 2023 and initial pilot vehicle delivery by the end of 2023 [11] - There are no current concerns regarding the supply chain or deliveries despite recent developments with the battery partner [44] Other Important Information - The company is actively exploring options for raising capital, including both debt and equity, based on business cycle progress [23][33] - The company has not flagged any going concern issues in its report, but will continue to assess this on a quarterly basis [36] Q&A Session Summary Question: Will the company raise capital before receiving orders? - Management indicated it is too early to decide whether to pursue equity or debt first, as both options are available [23] Question: What is left to ensure REE has a road-ready vehicle? - The company plans to build homologation vehicles ready for Q3, with no current roadblocks anticipated [24] Question: Why does the company now need to raise $80 million to $100 million? - The need arises from working capital issues due to the time gap between payments and customer receipts, not from a change in circumstances [31][33] Question: Will the need to raise capital affect the auditor's opinion? - Currently, there are no going concern issues flagged in the report, but this will be evaluated regularly [36] Question: How does the company view order growth? - The company believes there is significant potential from existing customers and is focused on building a dealer network [37][39] Question: Will Phase 1 production be solely in Coventry? - Initial production will focus on Coventry, with plans to build out U.S. production capacity in 2024 [41] Question: What is the status of the battery partner relationship? - Management does not foresee any risk to the supply chain or deliveries despite recent developments with the battery partner [44]