Q4 2020 Arcimoto Inc Earnings Call
<unk>.
The report carries very serious allegations about the company's practice and I want to say straight up.
It is a report that is chock full of falsehood and misrepresentations, starting with the very first one and alleges that the company has faked preorders and order to fake demand.
This.
Totally false.
Automotive, we consider our commodity practices regarding preorders now and can be clear Ark model has accumulated something getting near 5000 net reorders.
In the course of.
And.
Existence.
We consider our practice.
His line preorders to be best in class for the industry.
We have.
Never considered E mail sign ups to be Preorders. For example, we have seen other companies go out there and the vehicle space collect tens of thousands of email sign ups and then claim that they had tens of thousands of preorders, we have not done.
Regarding <unk>, we have seen companies build preordered books.
Just on non binding letters of interest alone collecting tens to hundreds of thousands of of <unk>.
Indications of interest.
<unk> has not done that to date, our preorder numbers do not include at all any non binding letters.
Net interest, although we do reserve the right to go look for non binding letters of interest from potential fleet customers as indications of market demand and going back to our IPO. We have always characterized preorders as strong sales leads.
And when an individual customer cracks.
<unk> and the wallet puts down a 100 bucks fully refundable at any time for any reason, we consider that a strong sales lead not a book sale and we have never characterized them as such.
Report goes on to allege that arc and motto has deliberately hid a relationship with one of our key early investors.
Who also is our first franchisee for rentals and key West and again. This is a gross distortion arc mono has been clear about our relationship with <unk> capital and since our disclosure of their investment and our kimono and 2018 the idea this.
As.
Is.
And a 2018 scheme to pump and dump in 2020, we think is utterly absurd.
And the report went on to make what we think is a grave accusation that Arca motto has failed its obligation to report.
It's recalls through niche led to its customers.
And again this is totally false.
<unk> mentioned of one of our customers.
Look our tours down in San Francisco that they had contacted go-cart tours and Go-carts had said that we had not notified them of recalls so I'm just going to quote what.
Nathan the CEO of <unk> said he said.
And I was never contacted and as far as I'm aware no one and the company has been contacted by anyone regarding recalls on any of our vehicles certainly not anyone who has any relevant knowledge on matter.
Further we would never share that kind of information with and unknown and third party. We suspect. This was a fabrication we are and frequent communication with our kimono.
<unk> and had been notified of all recalls.
We have preordered 40, Arca motor vehicles, and we have so far converted two of those preorders into final sales.
And like many businesses and San Francisco, we were forced to close during the pandemic and and the timing wasn't ideal to move forward with the purchase of 38, new tourists rentals at one time.
Our commodity is a valuable partner and we look forward to adding more suvs to our fleet when the time is right.
So the question I think I want to.
The note I want to let our investors know about because and again a number of you have written to us and asked about the allocations and this report and then of course the follow.
<unk>.
From legal firms, who posted repeated press releases on our ticker.
And to understand that we believe that this report.
And the other five short seller hit pieces that have come out about our kimono since our last earnings call, our and effort to deliberately mislead investors.
Cause investor lack of confidence and our kimono stock and depressed our stock price in order to profit.
This is something that is known as it's sort of a dark secret of this particular market that we're in scheme called short and distort and so at this point.
And we're.
We're really recommending is that our investors familiarize themselves with shortened distort schemes.
And to understand through the context so.
What we noticed as since our last earnings call and really all throughout 2020, our kimono has seen.
And a tremendous appreciation and the value of its stock.
And particularly.
Particularly after the November call and we started to notice and public filings on nasdaq's and accumulation of significant short interest.
And the company and as as that short interest increased we saw an increasing volume and these so called hit pieces.
So we think this is transparent.
Current attempt to manipulate our kimono stock shake confidence and the company.
And to those of you out there who are attempting to manipulate our kimono stock.
And with hit pieces in order to profit.
We believe that you are barking up the wrong tree.
And so as one of the reasons why.
I am happy that we have a new merch item available.
Available in our merch store as of just yesterday.
Our go long Johns they're great for those those cold long runs and perfect for covering your shorts, so let's get back to it.
Again and.
To recap 2020, and current events articulate Arkham autos, not so secret masterplan.
Get into our 2021 road ahead, and then dive into questions.
So what do we do and.
In 2020 despite.
Our production shutdowns and actually in every quarter of the year major supply chain.
Challenges as all of our suppliers, we're going through the same pandemic, our kimono managed to deliver 97 vehicles to customers, which was a 110% increase year over year. We also introduced new products, we launched pilots of the deliberate or and the rapid responder.
And our solutions for last mile delivery and emergency services and.
And as we get towards the tail and I'm going to talk about some of the feedback that we've gotten from those pilots we introduced the cameo which is actually a vehicle that we use.
For for our on road filming I'm pleased to report that the cameo is now through our certification testing process, which also has implications on another product that I'm going to talk about.
And then finally, we introduced the roadster, which is our peer on road fund machine, we're targeting production launch of the roadster and the first half of this year and we had a chance to show it off from the very first time publicly down and Daytona bike week and.
I'm going to talk about that again at the end of the presentation.
We launched.
<unk> pilot programs with early adopters of the deliberate or in particular and again, we build at a handful of deliberate as to date, we are increasing the production rate of deliberate forcefully demonstration.
Throughout this year, but we had.
Early pilots with a group called Carryforward here and Eugene.
Delivering COVID-19 relief supplies to the in house, we have.
Delivery drivers with our partner hire car doing deliveries and deliberate has got a lot of great feedback from them <unk> key west our new Wahlberg franchise bought a deliberate or as a sort of a mobile branding platform.
And we.
We launched a pilot with the city of Orlando and we've gotten some great feedback from them as well as our pilot project with Eugene Springfield Fire Department with the rapid responder.
We teamed with DHL global logistics giant for the efficient delivery of our products.
This was a major win because it gives us a very consistent platform.
Form for getting vehicles out initially to the lower 48, as we begin to open more and more states and ultimately we see them as a as a viable partner for international shipping as well.
We teamed up with Monroe and associates.
And this is.
We made the call and about.
About the middle of last year that we see the market potential for this product family to be a mass market solution, we teamed with Monroe and their team in order to get to scale production. This is their bread and butter and it gives us great confidence as we look at the next steps and then I have a little bit more detail on the team up with Monroe.
Monroe later in the presentation, but this was a major win for <unk> and it has continued to bear fruit.
Since.
We announced the opening of our very first market outside of the West coast or East Coast beachhead. If you will with the opening of Florida, and we have now delivered vehicles into Florida. This.
This quarter.
We entered into a purchase agreement for a new facility that will that we believe will be capable at maximum capacity of producing 50000 vehicles per year and we've now gone through the first step of due diligence on that facility to kind of the early planning work in terms of materials moving.
And and logistics and we are expecting to close that transaction next month.
We made our first corporate acquisition.
With the purchase of tilting motor works in order to bring on their both their existing product line as well as technology that we believe will be foundational to arc motives second.
And second platform, which is squarely focused at micro mobility.
And by the numbers I think it's hard to understate, what a transformational year 2020 was.
On the revenue side, we more than doubled our cash position went from being a real challenge.
<unk> to being well funded for our next steps.
And we've eliminated all of our corporate debt in terms of our senior secured and convertible notes and only debt that we carry today, we've got a little bit thats, a PPP loan and that's going to be forgiven, we believe and then some insurance and equipment financing.
And then finally.
We.
Did everything we could to help preserve the health and safety of our team through a global pandemic. Our team is our lifeblood and we were proud of the fact that at <unk>. We had only a single confirmed case of Covid that was asymptomatic that.
And that we were able to.
To detect.
Using advanced surface testing techniques developed actually by one of our pure startup companies here in Eugene.
And this is I think.
Okay.
The health of our team and.
And the relationships, we have with the people we work with are truly Paramount, particularly as we look to go to.
<unk>.
So that's the the short review.
The next thing I'd like to really talk about kind of the big picture of our kimono and and why Oracle model exists.
And where we're going and really lay out what what's the 10 year game plan for the company.
Yeah.
Starting with what is our kimono as a named arc and Moto arc.
It means archetype or the arc of the future.
<unk> Moto means drive so the automotive brand means future Idrive, it's the brand identity for the next generation of drivers and what we.
We are a fundamentally doing is mining the gap between the bike and the car we see this space as being the real growth opportunity for vehicles over the course of the next decade.
We are.
And.
This is.
Is.
If you just sort of think about.
What.
The disconnect between the car and what we actually used cars for two cars are these giant machines capable of carrying 500 to seven people hundreds of miles at a time and yet we typically use them by ourselves.
Shelves or with just one other person.
So.
I'm going to get to the final Y at the end of this.
But what I also wanted to say right upfront and this is a question I've gotten asked multiple times, which is what is arca motives durable competitive advantage.
And I think to me it is summarized in.
And mission values and culture.
We have had.
The challenge of getting a vehicle company on the road and to scale is enormous.
And so what we have that is durable is our adherence to our mission to catalyze the shift to a sustainable transportation system the values.
And by which we measure our decisions continuous improvement aiming for the utmost and environmental efficiency and making sure. We've got a lot of fun on the road.
Pause for just one second because someone's knocking at my door.
Hey, Mark.
Sure.
Okay.
Yes.
And I should also add that this.
Is the final earnings call from my living room. So.
The barking dogs, and the unintended Knox will be a thing of the past.
<unk> from May going forward.
To think about <unk>.
Sure.
And just the <unk>.
Automotive from an economic product lens is.
Really disruption theory, one and want our kimono is building a canonical disruptor and disruptor is a product or.
Service that meets the utility threshold of a market and does so at a much lower cost and that is the goal from from an economic standpoint that is the goal of building a.
A platform that is a fraction of the weight of a car the fraction.
Of the.
Battery capacity of the <unk>.
<unk> electric car, so that we can ultimately deliver on a product that is.
Hits, a price point that is a mass market price point ultimately what we're shooting for at very large scale is something in the realm of $10000 for and everyday capable electric vehicle hitting the wide swath.
<unk> of the marketplace.
One of our analysts calls this multiple shots on goal.
And we now think of this as really many shots on goal.
And that is a single vehicle platform low center of gravity dual motor front wheel drive.
That is capable of solving a wide range of every day.
Trips.
Something like what I call the 80% niche.
So today we've introduced.
And the fun utility vehicle deliberate a rapid responder cameo roadster, what you see there and the lower right corner is our first iteration of our flatbed version of the arc of motive is actually feedback that came directly out of.
And our Orlando pilot.
And the ultimate and game of.
Our first platform is something that we have talked about for a long time, which is what we call personal mass transit. So a lightweight ultra efficient platform that is you can someone from the touch of a button and most.
Efficient most convenient most fund most affordable form of transit. This is about transportation equity. It's also about environmental efficiency and really a rethink of our urban fabric.
We are targeting a three year time horizon to demonstrate this platform one and game.
Meaningful way.
So that's platform number one.
Platform number two is.
And what we're calling now our kimono with tilt division and I should say at the outset that ultra light electric vehicles are absolutely core to the Ark and Moto mission.
As the micro mobility.
And Peter bicycle.
Low and motorcycle type of vehicle.
And that is again in order of magnitude more efficient. This is why we acquired tilting motor works.
And this begins a multi product strategy and that we will just begin to touch in on in 2020.
And so on and continue as we look to the global marketplace.
So if you.
You think of.
The arc and Moto platform one.
Is to the automotive platform one is to Arca modal excuse me from a platform to is to automotive platform one what our kimono platform one is to.
'twenty water car, it's that next order of magnitude of improvement and efficiency weight cost and again designed to really go after and really understand the core usage pattern of vehicles on the road we are incredibly excited about.
About what that product family.
Two the only represent and we're going to have a lot more to share about it later and.
So.
The Big picture why.
<unk> is that.
We don't get to where we need to go if all we do is electrify old ideas.
That it is going to take a.
Fundamentally.
It's going to next level.
Materials reduction of utilization efficiency to get to the carbon reduction that we must get to agriculture. If we are going to avoid the worst effects of climate change.
<unk>.
My Dad always said face the danger and ROE away from it I think that's a piece of it I think the other part is.
And that we are rolling towards and opportunity of <unk>.
<unk> reconsidered city.
<unk> launched to parks and more livable world for all of US that is why we do this day in and day out.
And that is that's ultimately what 2020. One is all about is laying.
Foundation for this next decade.
Which is to say we are are going to be demonstrating sort of all of the pieces.
Of the overall <unk> business model and plan in order to chip to map out.
It really provide.
The basis for arc <unk> growth over the course of the coming years.
And we'll run through a few of our top level goals.
And before showing a couple of short videos and then we're going to dive into the Q&A.
First one articulate the full our commodity product family we've done pieces.
As of this we've got a few more on the way that we will be refining.
And to show really what.
The breadth of opportunity that our first platform represents will.
And we'll be introducing our first platform to product.
So stay tuned on this this is something.
And that I personally am incredibly excited.
About that.
Skunkworks team Thats developing it is incredibly excited about and and we will have a lot to say about that going forward.
We're going to demonstrate our share to arc and motive business models. So we think that the Arca motors are.
Fantastic vehicles for individual consume.
We also think that Ark and auto has a place to play in rideshare and fleets.
And so on and that's something that we're going to we intend to show this year.
We will also we also plan to demonstrate our first autonomous Arca modal and this is again, we have developed the platform.
From day, one with the idea of autonomy and mind, we believe that that technology has matured enough and that the time horizon is close enough from when it can be more meaningfully deployed that now is the time and.
Partnership to show that.
We plan to open experienced rental centers.
From and key destinations. So this is something that we talked about.
For at least the last couple of years.
That was curtailed almost entirely by the onset of the pandemic as we come out of the pandemic as vacation travel resumes and as our away team is able to travel this.
Centers thing that we expect to make great headway on and the near future as we open additional states for sales and service. So automotive is presently only selling vehicles into four states.
We're going to add additional states to our sales and service capabilities over the course of this year ultimately aiming to make sure.
This is something really good coverage.
For the bulk of our preorder customers by the end of 2021.
We aim to acquire the scale production financing that is going to be necessary to build at a much higher scale.
<unk> entered into significant diet.
Along with the Department of energy, we have been working furiously on our application for the advanced technology vehicle manufacturing loan program and.
And we expect its submission.
Very shortly after after the <unk>.
Conclusion of this quarter.
We plan to expand our campus two.
We've got scale production as I mentioned earlier and the call.
We've now gone through that first stage of due diligence.
Primarily for the purpose of planning transportation materials, moving and logistics on and off the site, we are anticipating closing that traction.
Transaction next month.
We.
And to achieve some initial production work happen.
Happening in that facility, we believe and 2021.
With the spinoff of our automated plastics manufacturer.
And then we are going to.
We're targeting personally targeting October of 2022, as our startup production.
We will have what we're considering the mass production version of the platform and if youll recall.
And.
Our earnings call and summer of last year. This was August we set a big hairy audacious goal of getting started production within 24 months, we're now tracking.
About a month behind.
For the original.
Big goal and again as we get closer and closer to <unk>, we'll have continued refinements.
And what that schedule looks like and the meaningful accomplishments that we've made a long way.
And what we're ultimately doing with this factory is prototyping scale replication. So.
And the idea with our what we're calling the ramp is that we are going to be demonstrating.
Higher volume production that we can replicate into other market regions as a production operations.
That we are figuring out.
And partnership with a fantastic team.
And how to produce.
Our vehicle platforms at scale and then how do we bring those platforms in the market into production and various other markets all around the world.
So.
Finally, our goal is from a production side is to substantially increase our year over year production from 2020.
We are targeting the production and delivery to customers of more than 500 vehicles. This year.
And the big supply chain stoppages that we talked about last quarter are easing, but we expect knock on pandemic glitches at least through the end of this year and so even considering.
As we think that 500 is a target that we can hit.
We are also aiming on the production side for a smoothly flowing river.
Which is to say that we've had a lot of that.
Even into this quarter a lot of the sort of accordion effect all the way from sales through.
<unk> them materials delivery and so on and so they're really for 2021 getting a smoothly flowing river from the sales process all the way through to final customer delivery is a huge priority because that really sets the stage for much higher volume delivery in 2022 and beyond.
And then.
In addition, two vehicles that we build for customers we plan to.
Deploy additional vehicles for shared fleets and for pilot deployments that will again help build that Q4 mass production sales.
As I mentioned on the call last quarter we.
We were targeting by the end of Q1, which is today.
To demonstrate four units per day of production.
That was today.
The day that the production team.
Was slated to do that for in four out of four vehicles beginning on the line for.
We're coming off at the end.
And we will hear from Terry later. This later this afternoon on whether we expect that we're going to achieve that goal.
Finally.
And the planet is to is to refine our continue to refine our products.
Through <unk>.
Millet pilot feedback and.
And get a lot more butts in seats.
We have our.
Our on road and marketing activities have been essentially completely curtailed.
For almost the entirety of the last year.
And our very first.
Sort of on road market and give it we had a couple of our team members and we're able to get vaccinated early and.
And send them out to Daytona for bike week with the roadster and have a short video clip here and a second that describes that experience.
But what we've found is that the.
In addition.
Experiencing the vehicle online.
For the arc and mono sales process to flow smoothly potential.
Potential customers need to be able to actually experienced the vehicle for themselves. It's a critical part of any electric vehicle story, but particularly when we consider the feedback that we get from prospective customers once they've had a chance to try it.
And two which is a critically important part of the arc of motor story, as well and I'm talking a little bit about.
So one of the very first pilot studies that we did was with Eugene Springfield Fire Department.
And I just wanted to share a little bit and the feedback that came from Chris Happel, who is the fire.
And.
And one of the questions. He added we asked and was things like how satisfied are you with your experience that was the nine out of 10.
To be the ideal vehicle for your desired use case, what improvements can be made to it and what they said is you know if they had a cargo version it.
It would be more in line with their with their present needs.
We think they would be unlikely to purchase it and its current form but would be likely to purchase it with the cargo version and so that is what prompted us to develop.
Something we're kind of tentatively calling and the rapid deliberate or which is emerging of the rapid responder and the deliberate or.
And based on that he says 910.
Likely to recommend to the rapid responder to other fire departments and departments within the cities loves the attention that it gets and really the only the only piece of feedback that I think.
Is it should be obvious is that he said our ability to deploy the unit. During COVID-19 was extremely limited our intent was to use it at special events sport.
Games Marathon Olympic trials and so on.
And that just hasnt happened because those events have all been pushed back so.
Again, as we look at our as our pilot deployments and.
Orlando is another great experiment in terms of the feedback we got.
And what that is doing to the development of.
The product and we'll have more to share on that front in the coming weeks, we think.
So that's sort of the big picture story of where we are now what our goals are for 2021 fundamentally we are building the foundation.
For the next major chapter of <unk>.
Growth the team is very excited.
These next steps and I'm, just going to leave off with a couple of quick videos.
One is more focused on the feedback that we're getting on the delivery vehicle and then the other is our is our piece from Daytona so with that.
Here.
And we go.
Today, we're out here at the Fairgrounds Vaccinating people with their second doses and so and expansive side as you can see and we need and again from signing aside and front to back and as quickly as we possibly can and every and since our volunteers and our staff are and just so excited.
And driving things are having a volume yes, we've been using these last couple of weeks they have definitely and then a game changer for us.
Sean and al and the CEO and owner and mountain the reserves, we've been here in Eugene, Oregon from last 21 years and.
Side of the fight to our commodity assets passenger and delivering vehicles.
We got to test went out about a month ago.
And we wrapped it with promotional materials and we knew then that the promotional value of having a custom sign deliberate or was in and of itself worthless and vehicles and because of that we decided to order too and we have them and circulation I'm.
Steve Travis and I drive and Archie Moto deliberate and the deliberate or is absolutely.
And I go and perfect I have not even fully filled it up.
And then I can run to the post office and the range and don't have to worry about anything getting worse.
And it's really been the perfect vehicle for work.
And for funding.
I just wish I could give this opportunities.
And because I can tell you and where and how much volume it was and continues.
Myeloma based upon him right and yet, but until you actually sit and it.
Neil It around you and your I think you don't comprehensive Hello, and mixing those experiences.
Really healthy.
And put as many but.
And as mentioned and experience that off to Brian.
100% margin.
[music].
Okay.
And Mike as point there.
And as.
We've obviously been.
As with just about everybody had a real challenge of having direct customer relations.
Over the course of the last year.
We expect that now that our team is eligible as of Monday for.
<unk>.
Vaccinations here in Oregon.
And that we will be able to get.
Our away team.
Vaccinated and back out on the road and relatively short order.
And so the final quick I'm going to play before we jump into questions. This is again this is our very first.
And on road marketing tour in more than a year.
And in terms of putting actual potential customers into the driver's seat for feedback. This is our experience at Daytona bike week.
Alright, and what are your real thoughts.
<unk> got a lot of power.
Okay.
Yes.
And.
And we.
<unk>.
And.
Yes.
And.
And.
What did you think of the Suvs.
And so much pick up speed and it's ridiculous.
Right.
And the church.
This is the opex.
It sounds like about the freight.
And we've got really good Greg squeeze on anything and its albums and.
Pricing bear and charge runtime seems to be applicable for what's available.
And that's an awesome all from machine right Bill.
<unk> got plenty of power all the power you need and it.
And just to beat.
It is incredible and first of Russia, and gets comfortable and carbon seats and Colgate.
Yes, and talk with the units, yes, yes, that's right yes.
Yes, Thanks, David.
David and his staff.
And so the funding cost.
And.
<unk>.
Yes.
And.
Okay.
Okay.
And literally a smoother ride and.
Very quick on the acceleration I think this is going to beat the index future.
Hum.
[music].
So and.
And with that.
You know again.
We see as we look at as we look at the path ahead. We think there are a number of pieces that we need to put into play obviously to really scale. This business to make sure that we've got the customer pipeline that's going to.
And be able to fill our production in Q.
But we take our early indicators of market traction.
Both from people who've.
Put down a little bit of cash sight unseen to very consistent responses that we get from people who try automotive products.
Very good indicators of the future.
So of the product platform.
And ultimately our ability to succeed and the mission that we've been cranking away out from now more than a decade.
So with that I'm going to invite.
Invite the executive team to Unhide themselves.
And and we'll.
We'll jump into some of the questions from say and then transition over into.
And the.
Let's see if we've got this.
Calendar year.
So.
Yes, so I think it looks like we have.
Lost Doug.
Doug can poli.
He has been ups and six in the morning yesterday.
Curiously getting this earnings release out so.
We're going to rely on the rest of our management team Erich Fritz Chief Marketing Officer, Jesse Fittipaldi, Chief Strategy Officer, Jerry Becker, Chief operating officer.
<unk> to run through the Q&A and Fritz do you want to do you want to be the sort of the reader of the questions here from the wild.
I would love to.
Let's start by going over say.
And.
Yes.
Alright, So you touched briefly on the ATV and alone.
And it can be asked please provide an update on the status of the eight T V M.
Loan program application and not familiar yet please provide an effective date of submission also comment on how long.
These loan applications typically stayed true secret response, great question. So.
And in terms of where we are we are in the.
The final push on polishing that documents for submission.
I think the submission is imminent.
Potentially even before the end of this week.
What's from that.
Amongst our filings when that goes in and that will have.
Likely a little more detail about the full contents and.
And there are a number of pieces that go into that one is obviously all the due diligence that we did on the new factory.
And the progression and the planning work with Monroe and where the actual.
Production.
And the mass production version of the vehicle.
In terms of how long it takes to actually get funds dispersed.
That can be we've heard from the Doe it could be six months it could be a year.
Whats really important marker there is when they determined that our application is quite substantially.
Actually complete.
Because that's the point at which we can begin to accrue costs too.
<unk> alone that would then ultimately be repaid out of the proceeds of the App.
The loan.
Grant so.
Yeah.
Is that a timeframe that is likely to be much sooner.
And either six or 12 month time horizon, but what we're doing.
It's going to be basically a whole lot of work to get all the planning done and the research done and then.
Really push go and make sure that we're in very tight communication and move through that process.
And in order.
Alright.
Net.
Okay.
Next.
Mike Dee.
Hi, congratulations on and you're building purchase how long is it going to take to retrofit the new building for full utilization of full manufacturing buildup.
So so.
And as I mentioned, we're targeting a start of production of the mass production version.
In Q4 of 2022 that is our present target Jesse.
Jesse do you want to offer any additional color sort of on how you see Jesse had been really spearheading.
The.
Initial site.
And some of the construction planning.
For the new factory.
And do you want to share maybe a little bit about how that's going to rollout.
Hey, everybody.
Thanks Mark.
Before I answer that question and I'd like to comment how often I think the chat is and the positive.
And the dose.
Aspiration and gone on over there its been fun to watch and it's been great.
Great listening to Mark on the successes of last year and what our goals are for this year and I think it's.
Hi.
And it's been a great journey and there is a bunch of people that are making this happen one of those groups as the.
Positive Rockstar consulting team that we put together.
To do the due diligence on the factory site in short order.
And the mission was to validate whether or not we can do what we need to do on that site from the city's perspective zoning occupancy environmental.
And those things look good.
From a manufacturing standpoint can we meet the goals that we have set up for and is that site capable of doing it it looks great and.
Now it's the.
Our mission is to start once we have acquired the site immediately start working on the logistics.
And how are we.
And it's all moving and stuck in and off the property.
And.
I think we're going to see some pretty major headway and beginning of next year, where that places looking.
Looking good and and ready to start putting.
Putting equipment and for production.
Alright, alright.
Jason L. What is the bottleneck of production of the current facility when do you see that being resolved what's the projected run rate by the end of 2021.
So Terry do you want to address this and I mean I think so.
I'd say sort of supply chain supply chain and supply chain.
At the moment, but I'll, let Kurt.
Sure I'll jump right in and thank you.
Thank you for and a great question. This is this is Greg.
And a lot of you might anticipate.
The answer to the question and what's the bottleneck is just that it's the.
And back up.
Getting supply chains to flow like the river and that they need to flow.
To feed our factory.
Turns out that building and assembly line and a factory.
And to assemble the vehicles is not the biggest challenge by any means.
Bottle and the bigger challenge is to have all of those factories that build components and parts and pieces that have to get on boats and trucks and trains and come to your factory and then get fed to the line.
And that is the biggest challenge.
Don't want to overplay, the pandemic card at all.
Because we take these challenges and we tackle them and we saw them, but it is kind of true that this year has been challenging and last year has been challenging because of some of that.
Going forward, we have means to mitigate those things and.
And stick those bottlenecks.
<unk> and I'll go ahead, and and just jump in there and and.
The run rate that mark alluded to earlier.
We did a test we did a test today actually just to make sure that we're getting ready on our run rate and the Assembly line.
13 station Assembly line that builds and SUV from station one to the end of the line.
Yeah.
We very intentionally did this test a few weeks before we intend to go to the next incremental jump, which is two four vehicles per day.
And that's that's one vehicle popping off the end.
The line every 135 minutes so.
And not shabby and.
Here again the key.
And is not not putting them together, so much but to.
To be sure that the river is flowing toward that.
We successfully achieved.
<unk>.
Assembly of four vehicles per day.
Quite handily.
And my manufacturing team and materials team.
There are stellar.
And when the parts are there if flows.
So.
I'd really like to give a shout out to them.
They are ready to go.
Go to that step when we pull that trigger here and the next few weeks and then by the end of the year I think I heard that question as well is we intend to jump up again from the 4% to at least five per day and.
And as sales pick up and and the demand is there.
We will be able to go and our second shifts and double that quite handily. So.
<unk>.
And we're ready for it and.
To answer that question, though what's the bottleneck and.
And the unknown that would be the supply chain.
Thanks Jerry.
For instance.
A couple more from say and then kick off.
Let the.
Great, but the Wall Street heroes get their get their moment sure.
<unk> had a few that got uploaded all kind of consolidate three questions two of them were regarding technology, specifically any thoughts.
It's on par.
Partnering with Tesla for supercharger technology, what is our plan for autonomy and then his third question was regarding.
A previous slide that we've shown that showed that global expansion and can we shed any light on our strategy for international development.
Definitely.
Non.
So I'll take on these these three.
As it relates to partnership with Tesla on technology, and we don't have anything.
Obviously something.
And that we would be interested and they.
The leading charging network they've got a great.
And adapter and they've got amazing battery sales, they've got amazing autonomy technology and all of those.
Could be significant.
Additions to the Ark and motor platform. So.
Conversation, we're certainly.
And would have would have interest in engaging and when it comes to Ark and photos strategy really.
Chart two autonomy in particular.
We have planned.
Our total platform to be and autonomous foundation for mobility and.
And so the work that we're doing our focus area is on the vehicle platform itself, having a very lightweight ultra efficient vehicle platform.
Weighted driven by wire.
And the next piece of that obviously is the sensor and software stack.
Actually less to drive on the rotor and particular areas and for that we're actually looking to a number of different potential partners.
Out there and ecosystem that.
That is their core folk.
And that can be.
There are actually.
Literally dozens of different.
Folks taking in some cases very different approaches to it.
Thomas piloting and vehicles, and we think that the Ark and motor platform.
And we'll provide.
And the ideal platform for.
For those vendors that are looking for.
Pathway from autonomy into the marketplace. One other thing I'd like to add there is just that.
We think we have a.
A new twist on autonomous vehicle sharing that is going to bring the potential for the deployment of shared autonomous vehicles.
Interest.
And much closer term then.
And we needed to have a full level five works all the time robo taxi type approach and.
When we as I mentioned earlier, we intend to demonstrate this year are first autonomous arc and motor vehicle.
And at that point I think we'll have a lot more to share about our vision.
The REIT or autonomous vehicle sharing.
And then the final question was related to international expansion as.
As you might have noticed we just two day was actually the starting day of <unk>.
Our new Chief International Business Officer.
<unk> comes to us from Mahindra, where he.
<unk> led multiple projects open up U S office with the Korea office.
And we are very excited to have him on the team.
And it particularly as you look at not just our commodity platform one, but our second platform that is targeted at again and even lower and sort of.
Lower.
Cost portion of the market and you think that will have applicability truly global.
And so that's going to be I think.
A piece of the overall story is we as we get through to the mass production version and we are designing it with.
With international regulatory compliance mine.
Lower because it will have a <unk>.
Fantastic second platform that will have truly global reach and so.
Stay tuned on all of those fronts and.
And I think Chris without I'd love it if our panelists could.
Hit their cameras on and let's let's do some round Robin.
I'll give this.
And we can go a little long, let's let's play and ongoing.
And until 15 past the hour if that works for folks.
So you can each get a couple a few questions and.
And she has raised Mike Michael you had your hand raised for the last 45 minutes. So let's say, let's go to you first.
That sounds about right.
And we thank you Mark can you hear me, Okay, yes, loud and clear.
Alright, great.
And I wanted to first ask about a little bit more detail about the marketing outreach from the products and by the way if you wouldn't mind introducing yourself first I think every day.
Good point, we had the logo here.
She'll give carrier's security from on the analyst covering.
Talking about oilfield and a little bit over a year now that market a year and a half maybe even.
And again, thanks for all the answers along the way hopefully today as well.
And so I wanted to start off asking about the marketing plan.
Products going forward you had mentioned there is going to be some kind of low teens are waiting and it goes from place to place.
During two things are there any fixed marketing points you've got planned.
And besides <unk>.
Rental fleet and it's just one activity and secondly, do you have some market the roaster differently and then the other products and.
And is there any additional costs, there and kind of getting more of a mass channel marketing.
Great questions I think I'm going to take.
Again, I think a little bit of this and then Fritz do you want to add some more color on it that would be great. So so.
We've got a multifaceted approach to market development.
And that starts with.
Starting with online.
Learning about the brand through online videos.
We've made video.
<unk> core competency of the venture because thats.
We found the absent actually driving the vehicle that's the closest we can get to showing you what it's really all about.
And the experience rental is another really key component of that so targeting destinations where people can.
Rent a vehicle for.
And sort of a day or a day or in the case of rideshare and maybe just for 2020 or 30 minutes.
And in order to get an experienced and the vehicle and a way that is for US long term, we think going to be a revenue generator rather than a perpetual coursing.
And then on the fleet side, our goal is to is to get.
<unk> excuse me for the next 18 months is not to sell vehicles to delivery type fleets, but rather get.
What is now a very limited number of delivery focus vehicles into the hands of key potential fleet adopters.
They can try and vehicles for two weeks to two months.
In.
So first give us feedback about what works and what doesn't so that we can feed that into the development of the mass production version of the deliberate or and then second begin to collect letters of interest for some standard more substantial fleet purchases that give us additional confidence and the market tracks ability of those products.
Ordered and I leave anything out.
On the roaster side, we had a fantastic.
Fantastic feedback from our trip to Daytona.
And this is this is this is bikers, who who love.
Big loud gas burning bikes and I think our team out there was.
Yeah.
And we even potentially a little surprised at just how positive the reaction was.
But for it and if you got anything more to throw on there it would be great share sure I thought you were asking about.
A difference and marketing those two products and there will be we will be targeting different segments and a slightly different strategy just based on.
And the regulatory requirement.
Pleasant around the two different vehicles, what is most clearly a motorcycle one kind of straddles the line between motorcycle and some states have and Otto cycle definition.
And kind of straddle the line between motorcycle and car. So there are certainly considerations that we're thinking about both on the marketing side and the regulatory side there.
Yeah.
Alright.
Great.
Can I ask secondly, about your cash burn.
And we have plenty of cash thanks for some reason.
And the capital markets.
Just curious if you could give us any kind of quarterly or monthly you feel for how you might run through that going forward. I think we'll have more to talk about I mean, we've maintained and maintained a pretty steady cash burn.
And actually maybe a little bit of a decline and that in 2020, I mean, obviously expecting that to go up.
We'll have a little bit more clarity to communicate on that front at our Q1 call.
But I would say that Ark and motto has I think made a.
A point of being incredibly efficient with cash.
We spent a grand.
And total of $42 million from the napkin sketch to first production vehicles off the line.
It was.
In terms of generating return on value for shareholders. It has been.
A pretty extraordinary right and that's a discipline that we intend to keep as much as we possibly.
And as we go to scale that is that in the event that we.
Dilute shareholders.
And minimally in order to incur.
Increased value. The goal is always to increase the size of the pie.
Way ahead of the shrinking of the slices.
Got it and want.
And then my last question for you here is.
And on the gross margin and EBITDA breakeven outlook, you work with and.
And relative associates for quite some time now got it and sorry coming soon but the current A&P.
Hi.
And where you can update us on whether you've been pulled down their volume.
Get to breakeven on the gross margin or EBITDA, what I think we made it we made a decision last year that we were going to go for a much higher scale and I think had we and we said okay. We're just going to stick with the current amp.
And pushed maximum production capacity out of that that would have been a substantial undertaking just two.
Need to ramp up or the way that we presently build vehicles and we saw the potential to achieve.
And if positive cash flows in the end of 2021 kind of a timeframe.
Don't think that that is going to be the case with the addition of the plan for the ramp I think now we're looking at.
And to basically we'll be sort of well into.
Our first production year.
Out of the ramp.
At the earliest before we would see things start to flip positive.
And again.
I would just anticipate that orca Moto is going to be growth focused for the foreseeable future.
Alright got it Mark.
I'll leave it there. Thanks, so much and best of luck here and that Q2, Thanks, Mike Alright, I think the second one was from Amit if you wouldn't mind.
Turning on the Cam and introducing yourself and Thats.
And can you see me alright.
Alright, Thank you Mike.
So with respect to sort of the.
The preorder book of the sales leads reorder defined that is there an opportunity to start taking advantage of that list and using the balance sheet that we have.
Maybe.
Deliver orders to ore.
Vehicles to folks who have shown that level of interest.
Yes.
Yeah, and I mean, if you wouldn't mind, introducing yourself real quick and social as line yes.
<unk> run rate have been covering <unk> for a couple of years now.
And so if I understand your question correctly, youre, saying with our.
Our indications.
And what we are what we call our preorders or strong sales leads.
Is there an opportunity with those two.
Two.
And we're definitely looking to deliver vehicles on particularly some of the folks out there. Some of you have been waiting a very long time.
Arc mottos and Thats really.
A piece of that is.
And really two pieces of that one is the major scale push that we're doing that has the knock.
Knock on effect and substantial cost reduction and then the other is making sure that we opened.
New state markets as quickly as we.
As we reasonably can.
And those efforts have been.
Significant challenge.
During the pandemic, but we expect that again as we sort of hopefully begin to come out of Covid that we will be able to.
Both expand our.
Expand our geographic reach to hit a much wider piece of our peers.
Book.
And then and then.
Again, the real big push and this is the overarching push for the venture is get to scale and that's.
And that's consuming.
And the bulk of our attention.
Over the course of 'twenty, one one even as we are demonstrating.
And the breadth of the venture and what we're planning to do from the next decade.
Mark can you remind us which states we are certified for guarantee well. So the vehicle is certified on the road.
All 50 states, but in terms of where we are presently selling.
And this really has mostly to do with making sure.
Sure.
<unk>.
That we have service in place.
For our early customers because and this has been again a substantial challenge throughout this last year.
<unk> had certain circumstances, where customers have had to wait for too long to get their vehicles repaired.
To get warranty work done.
And so we want to make sure that our customers have the best possible experience with the arc mono product and that really has a lot to do with not just how awesome. It is on the road, but the care and feeding.
The product after the sale so.
As we are able to scale our service network that will also.
Or is to open up new states.
Right.
<unk>.
Platform two versus platform. One is there any cannibalization in that or are these very different products and you don't expect much overlap there is very different products.
Principal overlap would be on.
So all of that.
Materials construction and I think on the things like the battery and the battery management system technologies will have a lot of shared effort between those which of course makes up the bulk of.
The single largest item on our bill of materials.
And so.
Sort of one advantage I think that we will get by producing.
A larger vehicle that has 20 kilowatt hours plus onboard.
Is that the economy of scale that we will be able to achieve from battery purchase will be advantageous to the cost structure of our much lighter weight lower.
The vehicle products.
Understood and just one last one from me on the quality issues and those addressed and resolved already and do you still working through them and equal or.
I would say that they are they are we believe they are largely addressed there has been one.
Real real challenge that we've.
Cost one of our electronics components, and we are hopeful that lost revenue from our supplier addressing those issues.
But.
We're aggressively testing those new components, and and we will not stop obviously until.
And we've got.
A vehicle that is.
Truly exemplary for all.
And that's all thank you so much thank you Matt Alright.
Alright, I think Jim Mcilroy, you might've been net.
Yes, thanks Mark.
And with Bradley Woods.
Mark can you.
Can you share with us how much.
Tilting motors will contribute revenue and cash flow for 2020 one.
I do.
We will have a much greater clearer picture of that at our next earnings call.
And Terry if you want.
A wild swing at that.
But.
Soft wallet.
I actually have to calculate if and my head I don't have anything that we're selling I can't about every couple of days and it's roughly a $15000 per kit.
However, we're moving.
Want to take the company from Seattle down to Eugene where bringing in house a lot of the manufacturing components, we will need to hire people to to assemble them and so there's a lot of infrastructure that we need to put into place and so we will.
Likely intentionally.
Moving to crazy with numbers, but our goal is to let it ramp up and.
And im pace that we can be sure we get the quality and check the vendor supply chain and check and.
And then of course, the dealers and distributors that sell them something motor works products out there and the check.
And just to just to clarify.
So we acquired tilting motor works they had an existing product line and it's a conversion kit for large motorcycles to turn them into vehicles.
Vehicles.
And that was not ultimately the driving reason and for the acquisition was their existing product line although.
So we think that it is going to be additive to the overall, our total picture. It gives us a nice beachhead additional beachhead into the motorcycle market.
But that is distinct from what I talked about earlier as far as our sort of platform to product family.
That we are going to be introducing the first product.
And that new product family, but that won't happen likely until late this year.
And does the.
Nations that Monroe is making.
Has made Linda.
And when will those be integrated into the product.
And it's going to be a mix.
Some are some of the insights have actually already made it into the product and I would and so there was one.
They.
And they've got a.
And notion of.
And that Sandy talked about.
Bob.
And folded one arm builder.
In terms of heightened design.
And parts to.
Easy to assemble and to be able to be assembled without error.
And we have taken some of those approaches.
Existing parts on the vehicle and in some cases those have been applied to all the vehicles.
So we will see some of those those development insights make it into.
The vehicles that we're selling now and in the near future, but the real bulk of the effort that the Monroe team is doing is on planning out higher volume production.
For lower cost and our new facility and that's again to start production on that is October of 2022.
That is our target and we will.
And obviously continue to keep folks updated.
As we as we move down that product development path.
Okay. Thank you.
Yeah.
Alright, Rommel welcome please introduce months.
Thanks, very much Mark I'm Rommel Dionisio, one of the other sell side analyst.
And it's kind of stock and nine months interest capital.
So mark and just.
And obviously, you've got a lot of irons and the FRE, but.
Just wanted to ask about the federal opportunity, obviously, you've already been targeting some state and municipal agencies, but with the new buys and administration.
And it does seem like they're making a big push for electric vehicles.
And our mission vision free type of vehicles can you maybe talk about the long term opportunity that you foresee there and how your product might be tailored for that well I would say.
Stay tuned we've got some things that we have not talked about yet that we think might turn into opportunities and the relatively near term, but and the long.
Term I think I've been very heartened by the bold goals that the bite and administration has set forth.
Or or vehicle electrification.
Electrification.
And we think that the automotive platform family has.
Potentially a very big role to play and that push.
And it could be anything from.
Vehicles driving around army bases to last mile delivery for postal services.
And.
And anything in between in terms of campus they fleet type vehicles. So.
And we look.
We're engaging on.
A number of different levels with the federal government.
We've joined the zero emission Transportation Association.
With the goal that that group's goal is to go 100% electric.
By 2030 and.
So that's I think the combination of all of that will.
Pushed the relevance of automotive platform.
With the federal power.
Okay.
Just one follow up you did touch on now.
Days ago, we saw press releases and hiring.
International Executive.
Yes, I wonder if you could just maybe just give us a little more color on what the low hanging fruit there might be obviously theres a lot of countries around the oil and to some of them and frankly or even.
And maybe a little further down the curve in terms of.
Electric vehicles and here in the United States and I Wonder if you could just share some color there in terms of the near term.
Near and long term relationships.
Think of that as sort of the midterm opportunity for the company and.
And the bigger picture sense.
The near term opportunity is that we have we continue to have.
Hi.
Substantial amount of inbound inquiries from all over the world for arc, and Moto platforms and products and so having.
And the reason that we moved to bring Joel on board.
And the immediate term is just a really begin.
And to understand the dynamics of market entry and different areas and the world size out the market opportunities and various different areas.
And understand the potential for partnership for manufacturing and distribution sales all the rest are all over the planet.
Build out I really don't.
And I haven't gotten it all day and yet for that.
[music].
Pretty much mark.
Thanks, Rommel Alright, Jeff Campbell coming to you.
Sure.
Youre up and then we.
Might have time for one more question or Glaxo and.
You hear me and Mark I can here.
Loud and clear.
Okay great.
The first question was just to follow up on something that you talked about earlier and the call today.
Wondering if the changes that the farm and test that you talked about the changes that they recommended would that end up increasing and the cargo capacity of and Arca modal.
What.
What day, what they're looking for is really just the deliberate or that we've already got.
But as a and he's specified it in more detail it was sort of like they want to have one deliberate or and one.
The rapid responder as we've currently articulated it so they can have a three person team with a bunch of gear.
Go out and here in terms of a rapid response.
And the one thing I guess I would also add is just that one of the advantages I think that we really have at this point of.
Of this sort of new wave of electric vehicle company is that we actually have vehicles on the road.
In the market and we're able to get.
To test those via.
Vehicles with potential adopters really understand what their needs are as we look to a much higher scale production.
And that's really what this is.
And it's part of our mantra of continuous improvement but.
But it's really all about gaining a deeper possible understanding.
Hospital and understanding of what our customers need.
Need in order to build the right solution for daily and mobility for them.
Okay, and it's getting late so I'll limit myself to one follow up I wanted to ask about the recently announced higher of Delek underarm.
As Chief International Business Officer, formerly worked from the Edinburgh, which itself office commercial three wheeled vehicles simple.
<unk> and.
And electric last mile delivery solution and I was just wondering was he hired specifically and for his three wheel experience.
Are there other.
And his background and that was important to automotive and I think his.
So his is.
Depth of experience and international vehicle deploy.
Deployment and electric vehicle deployment with certainly one one big part of our key to just bring them on board.
The other was just.
And this is true of <unk>.
The vast majority of our commodity hires is just that.
When <unk> came to us and expressed.
Profound alignment with the mission of the company.
Stable and mobility is something that he has been passionate about for many years and he looked at what we were doing and said this is the solution for the global marketplace and I want to lead the charge.
That was a pretty compelling interest.
Okay, great. Thank you.
Alright, we want to do a lightning round.
Mike.
And a quick follow ups.
Mark you can you hear me okay, yes.
And I'll ask it with and kind of a I'll kick it off to work.
Yeah.
Alright.
And I like my other question is.
Was curious.
You've been talking a lot about micro mobility recently, I think you've got a speaking engagement coming up and.
And that sector are you waiting for platform two to put a price into fleets or just the current SUV and its current iteration.
Have a.
There I.
And I see when your competitors and the.
Aerospace is now doing a clean and Phoenix are you talking with all of these things about the current <unk> rollout and that product and micro mobility applications.
We see the current platforms from our platform one family of products has been really kind of on the edge.
Edge of micro mobility.
I think the technical threshold is 1100 pounds and R.
Our one point O is about 1300 pounds.
Yes, we absolutely see opportunity and deployment of <unk> and its variance in micro mobility type fleets and really it's those combined fleets where.
What are you going to have the bicycle class vehicle as one option.
The pickup truck as another option and F. UV type vehicle, where you are.
There's a quote that I loved it and people aren't looking for quarter and drilled theyre looking for a quarter and Joel so the real potential for vehicle sharing.
Sharing is having the right tool for the job whatever your job might be and we think that the Ark modal platform one products fill a huge potential swath of the on road vehicle needs as we go forward and.
And really it's the platform two is all about that next the other side of the gap between the bike and the.
Alright.
Who wants to take the last question.
I will.
Alright do it.
And you hear me did it Jeff you got it okay.
And arc <unk> filings note that its R&D spend focus there's a large.
And while reducing the cost of products and that sounds like a pretty smart goal.
I was wondering what are the major cost nuts to crack between now and mass production.
Uh huh.
Well, the big cost centers of the product or the battery and electronics and everything else.
Large bump so those are the three buckets.
And I would say that we've got major initiatives focused and all three areas.
And.
And some very interesting technology developments that were not quite ready to pull the wraps off of yet but.
But that will certainly be a part of our story going forward.
Okay. Thanks.
Alright, guys with that I'm going to I'm going to call it.
It is.
It is where our and 20 minutes in.
Really appreciate everybody tuning in.
2020 was was it.
A year that is hard to put into words.
I'm incredibly proud of the accomplishments of the <unk> team <unk>.
During that time and going forward very excited about the road and deeply grateful.
For all of our stakeholders who've been with us for a very long time. Some of you who are just tuning in.
We appreciate your support and we do look forward to seeing you on the.
Our road and that will be happening soon so thanks, a lot and tiers.
Okay.
Yeah.