REE Automotive Ltd. Q2 FY2024 earnings call

• Achieved significant milestones with a strong product offering and secured sufficient production capital with a strong funding position.
• Secured a strategic supply chain management agreement with Motherson Group, de-risking production ramp-up. Motherson is a major automotive supplier with global expertise.
• Kicked off US production of P7 lineup with Roush as contract manufacturer. REE will manufacture REEcorner technology in Coventry Integration Center.
• Order book up 15% quarter-over-quarter to ~$60 million. Dealer and service network expanded to 78 locations in North America.
• Collaboration with Airbus on autonomous drive project for aviation. REE's technology is core to the project.
• Completed a $45.35 million capital raise, with M&G Investments and Motherson investing, strengthening financial position.

Second quarter net loss narrowed by 57% quarter-over-quarter and by 59% year-over-year. Free cash flow burn continued to narrow with a 19% reduction quarter-over-quarter. Liquidity was $60.5 million. Order book increased by 15% quarter-over-quarter and is valued at approximately $60 million. The order book contribution is from full vehicles and chassis.

• Updated production plan to start deliveries in 2025. Expect revised production and revenue plan to benefit addressing larger orders from fleets and OEMs.
• Anticipate improved unit costs and faster path to meaningful free cash flow generation with collaboration with Motherson.
• Once deeper into the plan with Motherson, will share updated numbers including positive margin on production.

• The company's actual results may differ from forward-looking statements due to various factors beyond control, such as the ongoing military conflict in Israel.

Q: Could you talk about the Roush contract manufacturing agreement, including vehicle build process, qualification, and capacity?

A: Roush is for full vehicle assembly. Collaboration with Roush started in Q2, preparing for production. Roush will build to REE's spec. Production to start in Q4 2024 with deliveries in 2025.

Q: About cash burn, will there be incremental expenses for customer deliveries in 2025?

A: R&D expenses will decrease as R&D is mostly done. SG&A may slightly increase but overall cash burn will not increase due to collaboration with Motherson and Roush.

Q: How are customers selected for 2025 deliveries?

A: Prioritization is based on factors like order size, price, fleet electrification readiness, and future potential, scored and prioritized accordingly.

Q: Are the three OEMs mentioned the same as Penske and U-Haul? And about software licensing for OEMs?

A: The three OEMs are different from Penske and U-Haul. OEMs are interested in REE's software-defined technology for licensing, which can be implemented in various vehicle classes with different REEcorners.

Q: About regulatory incentives for purchasing REE vehicles?

A: Regulatory incentives are still in place, with no major changes seen, and additional states providing incentives.

Q: Process flow of manufacturing corners, chassis, and full vehicles?

A: Corners are manufactured in Coventry. Chassis and other components are sourced locally. Roush does final assembly. Motherson aids in supply chain management.

Q: Production start timeline and capacity of Roush facility?

A: Plan to start production in Q4 2024, deliveries in 2025. Hypothetical full utilization of Michigan facility could scale to 5,000 vehicles on two shifts.

Q: When will updated production plan be shared?

A: Will share updated plan once deeper into the partnership with Motherson, which will include positive margin and faster path to positive cash flow.