Q3 2021 Fisker Inc Earnings Call
Good evening.
To begin today's the skirt, Inc. Third quarter 2021 earnings call.
Emission 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 will reference our financial matters 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 non-GAAP financial information to the directly comparable GAAP financial information appears in today's earnings release with that I am happy to turn the call over to Henrik. Thank you Dan welcome everybody I've got some real interesting news.
I want to share in the end of my.
Presentation, but I'll just start with some some high level of all its around the business. We are still on target with the ocean to launch it in November next year. In fact, we're gonna start ramping up the prototype Bill was magna already in Q1 next year.
Only Mason prototypes club from about the end of Q1 next year, we expect to start building two vehicles date, I think that's pretty outstanding well over eight months before we launched the vehicle and that'll make sure. When we launched we can ramp up quickly ended the high quality vehicles and that's on target we all.
Now hired a lot more people be continues to hire probably somewhere between 20 to sometimes 30 people in months.
And we have well over 300 people in the company now.
Our balance sheet remained solid blue about $1.4 billion in cash.
And also we continued checks Hillary.
Sure.
Reservations, my will talk a little bit about our marketing push as well, but just gearing up to unveil a bill ocean here at the auto show.
Where are the Prs based on 17th but will actually have a special event.
84, which will scream worldwide. So we are really excited about that is going to talk a little bit more about that closer to that event date.
We also.
Got into validation face that Blue cross will discuss and get a little bit minds of detail about.
And then of course at the show.
Where we are in late August or we are going to really talk about the specifications of the vehicle show our brand New design interior with some pretty amazing features definitely some.
Currently don't exist in any vehicle today, so I'm super excited about that.
Also we have made progress on the pier program and actually our internal team.
Come up with an extended strategy.
Round Oss Pat development Messick, and what we're looking at it it's much more.
IP sharing between the ocean and the pear, meaning a lot more components that we have developed and create IP on throughout the Ocean program and what that means to the ocean is that when we launched appear in 24, we're going to start being.
Being able to use some of these components in both vehicles and much higher volume that ultimately will actually lower the oceans build the materials the cost of the ocean even more so I'm also really excited about that.
Let me get some marketing and sales.
Expand the team dramatic Avi have hired an agency, which we have working with creating marketing materials, we're really.
Waiting to golf course kick off a big marketing push to around to 17 from November when you showed car, we obviously needed the vehicles to feature in advertising online.
Digital media et cetera, and all of this is in the works right now we're going to launch both in U S and Europe major campaigns I think they have some real itchy cool stuff and I'm really excited about it and that's going to go full blast from the 17th of November and I expect that we will start seeing major acceleration.
<unk> in our reservations at that point in time is obviously going to get more known.
Across both the us and Europe.
We have also made progress might Ust initiatives.
And.
Really looking at.
Wanted to be able to explain more details and use real primary data.
About the full cradle to cradle lifecycle analytics and will be as we get closer to us. Our started production will get more into details on that now let me return to sort of the real Big news here, which is our new sign deal with that C. A T L for batteries and I wanted to.
Lap right a little bit about why this is such a big deal.
We're going to launch very uniquely the Fisker ocean with two different battery Chemistries of course, two different packs.
And you're already running tests on these past of course, they're going into older.
[noise] types as.
As well next year well, what's unique about these two different taxes the base pack.
Actually.
Is amazing when it comes to cough, because it's a using L. S T.
<unk> and that's a much lower.
And that's how we are currently able to achieve.
The low cost of the of the fiscal Ocean specifically in data base price of 37499, which I think is unrivalled by.
By any competitor also the type of range are you gonna have there is going to be more than adequate appropriate for most people and quite good actually.
And then of course, we have the second battery.
<unk> and the advantages of that battery is not only in the silver really in the pack and also will be done with the structure of the vehicle in terms of the design of the pack itself. So our package is not the the Spaceball pack is not the typical squares space is seen every single.
There is a slightly different.
Configuration, which we're not planning to show off to our complaint first too soon but what it allows us to do is get the world's longest range in our statement for and it should be in an hour price slash.
So of course, you can make that 150000 $200000 carbon incredible range, but to Mega vehicle.
Between 50 and $60000.
Such a long race that we have achieved I think it's really magnificant and it really shows what are phenomenal engineering seem to have great partnership, we're having with THL and I'm really excited to show those numbers have daily Auto show in fact, we will have models that people can choose.
Between the sport model.
Which will have the LSP battery extremely oil price and then we have the two other models, which will reveal the names of the other order show, but both of those two will have the longest range in this segment and as you know right now the longest range for sale hand in the U S and so that 50 to 60000 dollar for.
Iron issue via crossover is about 326 miles and will be well over that with both these two other vehicles and but I'm really sorry about that.
It's also unique about our powertrain is the efficiency because in the end of the day, we have an issue.
I didn't want US you know.
Sort of skip out here and just do another hatchback crossover great aerodynamics that doesn't really look that great. We wanted to create a vehicle that can sell globally and the fastest growing market in the world was is that <unk>, that's what people loved a lovely utility they love the looks and that's what we're going for what we want to be different and I'll compare.
Editors and despite having that larger SUV vehicles, but all the utility that comes with it.
We still have a vehicle that's class meeting in range and of course as I mentioned, it's partly to do with C. A tail is partly to do with our energy dense battery pack is partly to do with how our vehicle actually is designed and engineered in terms of the space for the battery and then our incredible powertrain, which we're going to talk.
More about at the end of our show as well, but one thing I will say that we haven't announced yet is that every version of the ocean will have silicon carbide Inverters also the base vehicle and that is part of our contribution to our really really high performance powertrain long range really.
Efficient.
And I think what's interesting here is.
Why would we be ahead of the competition well we chose all this technology. This year. So when you get a fisker Ocean and 12 months from now your technology is the newest of the news if you buy any other connex to your most likely that technology was chosen the three years ago. So that's why they're different and that's why we're going to be crafty and I went ahead and.
Over to boot cart to talk a little bit more about the details of what we're doing on the ocean program prevent things.
Things and they can really come everyone.
Andrew could fit this whole thing poses for ocean is down to just a small two parts of the show of items. So we have moved into this industry utilization phase of the program.
The combos close to tears the boats routine physical prototype boots.
Orange begin earlier this year and will be ongoing through most of next year.
You need to do the hardwood to ensure the components seamlessly integrated.
On trick to to all of the attributes we potential to calm.
We'll meet all the safety performance durability stem that's in all weather conditions and that it can be manufactured with.
<unk>.
Drifting of build so called New London was completed some time ago. This was primarily on statistical relational ritual safety testing, which physical results.
The medium to build is complete and testing is ongoing as continues W. One testing, but also at poetry.
The battery electrical system functioning platform durability.
The only statistic compete but you can function in cold weather industries.
Finally, as you can see from the photos on the earnings release.
Very happy to have started the Knicks put it in a bid to though amended victrix isn't PM dogs do.
Using protection intend components.
And can tell you it's super helpful video upload to build prototypes in the actual production facilities, which is unusual for a small dog.
The body shop is operational Similarly assembly is up and running the shop is capacity produce up to two cars per day.
I'm very proud of only take me to the teams.
At <unk> Magna.
For accomplishing a lot in a short period of time.
The right plan to achieve on time slot of production.
So that's been through all of the required test and validation work to prove quality visibility and durability from the start.
Thanks in no time.
Two people.
Thank you broke out in documentary, but I'm really excited to be here today overall I can say I'm really pleased with what these accomplished as a team infestation pollution entropy Jesse yearly over 90% of the Ocean, Dennis Mckinnon announced sourced and the remaining components, mostly just off the shelf parts.
No. Thank you I'm sensitive definitely not easy, but ultimately the successful advocating a sickness a significant amount of advanced technology, which would result in an amazing carnac.
Pack the class meeting beaches.
Beyond filler thing the development process is difficult Ocean has taught us a lot.
Various components and made it technologies at both the system and a subsystem level has been budgeted exciting <unk> own the intellectual property that they intend to put to use on all our future make a program and 10 digit are needed to know.
Recently announced back to you that reservation agreement that team.
My final long lead and then the most critical items in the vehicle of course to do company would have been working together on development validation and testing since last year and now they really think that we can share with the public a committed long term capacity agreement and I want to make a statement that he actually did.
C T L. In 2019 and had spent three to four years developing trust and a phenomenon relationship with leadership F. C. A T F and it's evident from the quote that the president of C. A T. L made and I joined press announcement, we have committed to die of over five gigabyte our capacity.
Initially this <unk>.
Students in chemistry, and you had mentioned a long range and and see chemistry is based back which is a high capacity back in the gas. So that the boat segment meeting range and a high value back which uses LSP since the cast though that's it both that supports the compelling fries or physical ocean sport widespread.
Lighting range and acceleration consistent but the much more expensive E V.
See this is very deep and a strategic relationship.
That's part of our contract we have the ability to jointly 10 12 months ahead of time to increase our capacity AD VT demand in the market, including opportunity to look like production in various countries globally. All the time, we are now needy working with our suppliers and partners on the test.
Validation space and book I mentioned supported by a robust ahead of time ninth milestones and shed deliverable.
As the move from the sourcing face to the industrialization faith I have been able to turn my thoughts can focus so to the balance sheet as well as preparing the business to scale by focusing on operations hiring and building building processes, we took action to bolster our balance sheet and all this this tale breathing 667 five.
$5 million in a convertible note offering and 2.5% interest rate and it's 30% conversion premium to cap call.
We used part of the proceeds to find the cast call <unk>.
[noise] Reemphasize me tell you the same convergent premium and he is part of the proceeds to find a cat cause that takes the effective conversion side to $32 50, 710 or 115% of the top right at the time of the conduct this was an impatient <unk> to the balance sheet and needed funding, but additionally.
Programs the dining goes by choice it was not out of a neat and the gas call signals about confidence in the future value of the company based on our internal view of both progress to date and they sell a product line plea intend to launch.
Official site and.
And the head of mentioned it also had a phenomenal year in hiring me of 100 people last year. We now have over 300 employees that includes 20 extremely season, Vice President have done a great job in building their own departments and the entire organization and we have empowered the entire company very attractive performance based risk.
Get stuck in it bonus we does not pay today existing employees to be part of the success of Pisca, but it's also helping us immensely entertaining and hiring talent and the target market.
We are now working with advisers onset of setting up a global entities worldwide and I D systems that date is from the development company endured revenue generating power company with customers worldwide and handed covered the <unk>. The work we need to be that the customer experience function that are critical to launching the successful product.
The number one focus but if we don't have right idea systems in place to support those products the business simply cannot scale now turning to our results and outlook.
Operating expenses and cute faith alive keep it into any expectations capital capital expenditures will be below our expectation as many of you know Catholics is lumpy invade the lines at the timing of getting some supplies, which can sometimes be hard to predict forecast as you finally billing and it's been so that would be expected despite ongoing work.
That bidding activity has picked up significantly so find Q4 does he have good visibility that Catholics will increase meaningfully in queue for as implied by a guidance occasionally the increase in irony in Q3 versus Q too.
But the problem with the result of increase headcount increased prototypes spending and modest engineering design and integration refinement as the enter into our industrialization faith, we expect a more modest sequential increase in queue for on head count and at the prototype book continues to raft the increase in SG&A expense in Q3 of us.
Q2 was the result of Ohio.
I, a professional services and get engaged to global advisory from Quebec, stretching and I'd be spending on Gilbert E. S. T systems in Sci M installations, we expect N G. As in do you need to more than double in queue for due to kick off of marketing campaigns debate that thread, including significant spending on the any order shall unveil a fiscal ocean.
An activity surrounding that event plus we would begin to accrue leaves expenses on our flat Kid any experienced Snk property. We recently signed now turning to outlook as noted in the press release, our overall Opex gets capex guidance case unchanged at 490 million to 530 million.
But there have been adjustments in the category.
Our R&D increased 15 million at the midpoint. This is related to consignment at the test and validation plan for the remainder of 2021.
<unk> increased.
By 10 million due to a more of a bunch of marketing plan for Q4, and the flagship store at least I mentioned earlier higher I'll fix is offset by about 25 million lower capex spending which is related to receiving late invoices from suppliers work is progressing on track they spend time defining when they.
I hate to be both for their work overall I'm extremely proud of our entire fiscal team for all the competition I'd be made some fire in 2021, we have a lot of work ahead of us Fisher as they enter the critical industrialization faith that we have a lot of confidence in the <unk>, we have established to execute a fantastic profitable passed on time and.
<unk> and I can wait to unveil the physical ocean at the end of all the show where now happy to take your questions. Thanks.
Thanks, Kita Aaron can you place compiled Q.
Q.
Certainly we will now take him to today's session. If you would like to ask a question. Please press star solid that one on your Touchtone keypad.
For any reason you would like to remove that question. Please press star followed by to Ya.
Again to ask a question. Please press star three we.
We will talk to you briefly fill out questions Hunter Green.
So first question comes from Joffrey, mainly John with Peter <unk>, Holt and company. Please proceed.
Maybe everyone. Thank you for taking my my questions. My first one is on batteries and I appreciate the detail in yesterday's relief and some of the teachers from today's call on the characteristics and also how you spoke to the Eliana two weeks for much more detail at your very much looking forward to it but is there anything where you can give us just today.
As we think about pack costs between the two chemistry thing any more detail on the range as you think about those would be helpful as well.
So you know we want to give our customers all the information they need.
Need and desire, but we don't want to give all information what our competitors want [laughter]. So I can't take it make any sense for us to give the exact price of our batteries, but I think it will be can say as we know that they are on par with some of the biggest car companies in the world in terms of cost.
But the real advances here in terms of cost of the pack is the fact that we are using LSP and the base vehicle I don't think there's any vehicles in our class right now in the U S is using that that might be one of those using it going to use it but.
I think that's one of the bigger adventurous and the advantages of the design hour battery volume and all cats. So we can get quite a lot of power or the L. A P.
P. Because LSP. The reason this little part of the reason as well of course it was all so as not energy dense as NMC. So you won't get the same power, but if you have volume you can get a pretty good amount.
Power into the vehicle and that I think that's what's gonna set the ocean apart.
And also maybe maybe.
Pardon.
You can go ahead.
No I was just going to say you know range you asked about the range I mean, we kind of want to wait and surprise people at daily Auto show, but I think the real key again here is some people may not really need to carry a giant battery around.
Therefore, we have that LSP solution, which makes it extremely price competitive, but if you do one range than we do have a really cool long range and like I said it will be the world's longest range an hour segment and our pricing. So of course, please don't comparison vehicles that cost in the hundred $150000.
We can compares to vehicles now what price class and the type of vehicle all vehicles, we will have the longest range in the world and the ocean and the two versions of sits above the base sportswear.
[noise] understood I'd appreciate and understand that we'll have to wait a couple of weeks to really get the detail Uhm a second one's just on marketing, there's clearly a lot going on as you all highlighted just preparing for the L. A auto showing the marketing pushed to kind of a company to unveil what they experienced center, we secured and broke in the customer experience teams.
I was wondering if you could just talk a bit more about the the game plan for the marketing part of the strategy do you think about growth and reservations over time.
Yeah. So we are creating content right now and will continue to creating content over the next couple of months and what I mean by concept is you've got to make real exciting videos that can be used as a online digital.
Add some engagement with the <unk>.
Potential customers, we have higher some unique agencies that are specialized specifically in digital.
And.
Et cetera, how we reached the right customers, but in the end of the day and he'd come and I know a lot of people have been saying why don't you start blasting a whole bunch of stuff off now I think it would be waste of our money.
Four months away from delivering were sold out well into 2023, but my expectation of all marketing teams are that we will have at least 50000 reservations by before we start production next year.
We have a really really strong marketing plan that is comprised online cause that.
Other means of marketing and PR hurting you.
PR moments.
We obviously are in Hollywood, and therefore already planning and have already secured us being in a couple of different films and television series.
Cause we have also plan to host of events.
Throughout the Us and Europe, and then we're gonna open experience vendors, we have a whole new strategy that nobody's use before when it comes to.
Displaying our vehicles and how we deliver our vehicles is all about creating the ultimate experience I believe I think the automotive industry is so far behind an experience you look at how quaking in order a pair of shoes on Amazon and then.
<unk> what happens when you order a car and how long it takes to get them. How many papers you have to sign up considering it's maybe 40 or $50000. How does that experience, we want to create and be the number one and experience in the world and that goes on everything or interact with the brand to how purchased the vehicle of flexibility the vehicle how are you.
Ownership goes throughout the time of your vehicle, what we're going to do it over the updates et cetera. So all of that of course, we are going to elaborate on over the next 12 months to show. How we think we are taking the lead in many of these areas and Jeff I just have one more point to add I mean, that's what you have to put it in the press release.
Got over 70000 registered App users.
And we think it's pretty unusual for people to reserve a product more than a year in advance when they don't know what the content and features this so we're really happy with our reservations today, but we think just talking about the details of the content.
Pricing of the entire ocean lineup the range all of these details about the car triggers quite.
Quite a few of those registered App users to reserve and it also helps with fleet sales because most fleets are certainly not going to get into detailed discussions about products that they don't know exactly what the contents and that's all going to come out in two weeks.
Can we go to the next question Aaron.
Thank you very much.
Thanks, Jeff absolutely.
Thank you for caring design.
The next question comes from Joseph Slack with RBC. Please proceed.
Thanks, very much everyone.
Going back to the battery announcement, which which seems important here uhm two questions. One the decision to go to our P to offer you know more compelling.
Oh on vehicle does that at all change your potential demand outlook for that variance and then secondarily. If you could just talk about your your scope to grow your allocation of <unk>.
[noise] time if needed.
Yeah. So there was always all plan will always since quite a while it was a strategy to.
Use our vehicle.
Or put a a vehicle in a much higher potential buyer.
By a group and you normally see so if you look at all electric vehicles out there today that are issued via crossover so let's forget the hatchbacks.
They're all very expensive and they're also staying pretty much within and narrow spectrum of pricing and I think the unique thing about the ocean is that we started at $37499 or.
And that that is an amazing price the average price of a car today I think that's gone over 40000, Mel So we're really among what you would really consider affordable and reasonable for everyone.
Secondly, with our flexor beliefs, when we start that.
And we're going to attract a whole new by a group that very few other car companies are.
<unk> to reach because of the way the structural flexibilities, we can give the car back anytime so absolutely I think that we have a real possibility once we get production going.
To potentially scale up on the side of the LSP then finally.
Your question.
About <unk> and what happens if we for example, see that we can tell a lot more cards that we expect as Gaeta mentioned maybe.
Maybe that slipped through the cracks, but we actually have an agreement that possibility to increase our volume significant it was CHL really if you don't have any limit on and quite frankly.
We just happen at 12 months planning heads up and if I see middle of next year that we have a terrific sales on on the on the reservation numbers, we can call CHL and saying look we need X amount more whether it's double or triple or whatever it is.
From 12 months later, so so now it's just a matter of how many vehicles can we sell.
I'm really really excited about this specific battery deal.
Because it allows us that and I think very few other startups probably have that ability also remember most of the startups up buying sales or make known packs. In this case you know she had chills Magna packs, let me get a full finished solution.
To us and that gets from my point of view also some other advantages down the line.
Great. Thanks, and maybe just a second question on.
You are coming out of my auto show and you're going to show. These vehicles I mean, how soon.
After that.
The open Configurator. So you started to get a sense of of that mix. So you can properly let your suppliers no.
How long does that process sort of need to be and then when should we expect that configurator open.
So we are already working on that that's gonna be open the day off the 17th so they will go ahead and configure vehicles and then we're going to expand on the Configurator later and introduce more features on it but you will be able to go in and configure your car if you're going to have all the different option packages shown the different fee.
Teachers, and that's quite a lot of them a lot of them a segment bleeding in my opinion, and that's all going to be available.
Already on the 17th of November.
Okay. Thanks, a lot Joe.
[laughter].
Thank you Mister stack.
The next question comes from.
Evansville, Pittsburgh with Morgan Stanley. Please please.
Evans Soderbergh here for Adam Jonas question on the batteries for.
For the five gigawatts or the initial five gigawatts, where will they be sourced from.
Of the country.
And you know you guys have made the emphasis of ESG with you are making the most sustainable E V as in the World, obviously batteries pretty dirty.
Dirty business as we sit here today, so what steps have you made with the C. A T. L partnership that helps you secure a sustainably sourced battery supply.
Yeah, Great question, Evan So touch upon all the <unk> is in China. So the batteries are coming from China. They have a pretty elaborate so sick mechanism when it comes to different raw materials. So we do have a responsible supplier policy that we announced earlier this year that we put in place that we share.
All of our suppliers.
Expect to see at T plus they have a copy of my policy and now as we get into industrialization. They look at the source of some of the raw material, but also very importantly C. A T O themselves have put together very extensive recycling program and we will be working very closely with them looking at.
And apply fused and looking at recycling what can we do to make of course the carbon.
Floor now in addition to that.
I don't want to sit here and talk about <unk>, but of course today. They have 65, 66 gigawatt aloe capacity and as everybody knows it is now the biggest battery company in the world and they have plans to go global which means that they will be in countries outside China sneaking cells, and we are knee deep in discussion.
<unk> with them on the global Downs as well since we are a global company and it is not only the ocean, but of course, the fast program and other variants on.
The Ocean pass on I also just want to add one thing and sustainability.
Lexical lease program.
We are working on actually keeping the vehicle all the way to end of life and recycling the entire vehicles that would reduce it out for 12 years, which I would consider pretty.
Pretty much end of life.
Resetting the vehicle after that so you are looking at a complete you know.
Closed circuit really.
Not to mention of course, the fact that we will get a lot more profitability of each battery being able to lisa's vehicle over 12 years, you're talking about.
More than 250% margin on these vehicles long term.
That's some helpful color. Thank you and one more if I could squeeze it in.
Obviously, you guys are a outside party to this transaction, but you know it was announced what was it a month or two ago about the Fox plans to try to buy the lordstown, Ohio plant from large town Motors has there been any discussions between you and Fox Con about the.
Potential for making pairs at that facility should that deal go through or any color on potential production facilities for the pear. Thanks.
Well I think yeah, I think we already mentioned that that's our intent to produce the pear in that facility.
It's a giant facility, which can probably get up to close to half a million vehicles a year. So again that gets huge potential for us in the growth of the pair that initially you were looking at a greenfield that would have started with 150000 vehicles a year obviously in that facility as it turns out we are a lot more successful than.
And could be then we could crigger move up to the 250000 vehicles that ultimately as our own gold short term long term I think we can so much more than that but it does allow us to move a lot faster than we are constantly in contact with such fun as we currently work on the pear program and of course Venus.
Discussing and not only.
The place in the manufacturing because that I think is sort of determined although as you mentioned Fox kind of have to do their own final deal.
If that deal come through that would be the place while we also looking at intelligent manufacturing.
In terms of being able to check cost out of the vehicle as I mentioned earlier, we have an extensive program within fisker of sharing parts of the ocean, which means we don't have to go out and procure these parts and.
To sign them from scratch, while we can blood to resolve current suppliers I'm, saying actually we need on that part instead of whatever the every now and the 400000 a year and that means that you are able to lower the price and for both the pear and the ocean. So all of these discussions are constantly going out.
Thanks, a lot of it I appreciate it Aaron can we go to the next.
Absolutely. Thank you Mister sober bank.
The next question comes from John Murphy with Bank of America. Please proceed.
Good afternoon guys.
For simple question, what is the five gigawatt hour capacity imply as far as your pack or vehicle.
Just could get a.
Drink.
Is day chemistry here, just curious what you think that applies or what does it imply based on your mix.
That we know exactly what it implies but we're not going to.
Not going to elaborate on that again, we have a lot of I think for the customer is super important to know the range I don't think they need to know as a country duration executive Ah battery pack or exactly how we were able to packet.
That's something all our compared to some would love to know, but that's not something that we're here to talk about at this point it would probably come out close to launch because that would take a lot longer than two copies.
Okay, and then just a second question, but the the lifecycle.
Analysis and I'm just.
Why you think it's necessary.
To do that and what you think the conclusions will lead to I mean could just you know put you in a position to do more green bonds or more do ESG cap razors, just curious what the motivation is there what you think the conclusions will be and if that opens the door to more funding.
Well first the motivation because we we want to be the world's most sustainable car company. We have clearly said that and we're trying to do everything we can to make that a reality and that takes a lot of work and a lot of different areas. As I mentioned before we are going in the ocean and a C O two neutral factory next year.
That's part of it and then there's all the materials views and then as Recyclability.
So you know, it's who we are as a company as a brand and then maybe you can elaborate on it yeah I think the point of the lifecycle analysis is it's not enough to just say you have a climate neutral car or a kind of a low emission car you really need to prove that you need to measure it.
And you need to measure all points of the life cycle from upstream store thing all the way to end of life like Hendrix said and there's actually an eyesore standard for doing a lifecycle analysis. It's really takes a lot of hard work, but we have the plan in place where ongoing on that plan and really the intent is to be able to measure and prove.
How sustainable our vehicles are going to be maybe one thing I can just add is that the reason I think we have the possibility to be number one in the world on this point this because.
We are we are building.
Building everything from scratch, we don't have a legacy that we have to turn down and get rid of.
We're going all out and we have gone out of this from when we started the company.
It's been a focus always as a matter of fact, we just kind of came up with a couple of months ago.
This is something that has always been one of our main brands pillows and will continue to become one of our main phone calls.
Great. Thank you.
Thanks, John Aaron I'm, just going to break in for a second as as we have done every earnings call. So far we've collected retail investor questions from the fake technology platform I'm just going to go through a few of those and then if we have time, we'll get back to the analysts Q.
So the first the first one there were there were several questions about kind of competition and differentiation. So.
So the first question is what differentiates fisker from the other <unk> makers, what is unique about discourse proprietary systems.
So I think I think.
We have a unique design that's obvious and you will see that when we get into vehicle as well the user expense experience will be phenomenal. It's a whole new take on what a user experience should feel and work like once you get into the vehicle.
It is headed up by.
Hour ahead of user experience hair from Microsoft on this team that really I think none of them come from the automotive industry almost most people come from gaming other.
Areas of the digital industry. So, we're taking them home and take them that I think that's going to be really really different to sustainability aspects. We already talked about it I think is a huge different shades I think a lot of young people today want to identify themselves with a brand of stands for something meaningful.
And we have already seen that in the over 18600 orders there'll be auto reservations, we have the powertrain performance in our class is fantastic.
On all levels that includes as I said before class leading in range, but not only that we have a very unique system in our price range that makes it pretty much feel like a formula one driver or makes you drive extremely safe.
With conditions and it's something we will elaborate on when we launched the vehicle in two weeks.
Is phenomenal I've driven it.
I've gone out on a test track and being able to drive our vehicle.
About 10 miles faster through a corner and any other vehicle without this device. So that's something that we're going to be talking about and then I think the value for money.
Everybody's going out, making luxury eevees and quite frankly, I think we're going to have a flooded market luxury vs.
And even the traditional car companies are making luxury. These we are tackling the market not just with a little tin can hatchback under 40000, we attacking the market was most of the site.
Like a vehicle in the world, which is an SUV and I think you're going to be impressed and everybody's can be impressed to see the value for money were able to give in this vehicle and part of it is.
That we have been able to work with our suppliers very closely on getting the right pricing because they've been even though a volume because they believe in the design and the desirability of the vehicle don't forget the suppliers have access to all the secret details behind the curtain of how our vehicles can perform you have.
Access to college, Hulu look spelled it truly is going to be experienced and they believe in us and that's why we have a lot of amazing long term partners like CHL stepping in to be part of this.
Adventure.
Thanks Henrik on <unk>.
About the solar sunroof, how much power will generate or how useful in that regard.
Thanks for the Christian so at this point, we belief that undergirds.
But good conditions, the technology can generate around a thousand miles per year completely climate neutral free driving.
There's a lot of IP industry motor TB developed a unique converter to enable direct challenging of the high voltage February.
Hello roof.
So to understand the question directly believe the optional sooner move will be very useful and more importantly expected sort of that's how technology get more efficient and blue and costs to what time, which is why we are very excited.
To be feel in the country.
Maybe one thing I just want to add to what <unk> just said.
Showed in a different way, we also internally calculated it out.
What it would mean for the average driver for every time you would completely charged the vehicle. So if you think about some sort of what is the total range of the vehicle I would say the way to look at this as well as the big could increase the total range on the vehicle.
About 25 miles it could calculate how many time to charge the vehicle over a year. So there are many ways to look at those and obviously, yes, you do have to live in an area, where there's a fair amount of sun, but most of our vehicles right now are actually reserved in those areas.
Got it. Thanks Henrik we also had a bunch of questions about sales and marketing as you would imagine a couple of weeks before the auto show. The simplest one was what can we.
Oscar Ocean launches in 22.
We've covered a lot of that has anything to add.
Inc.
A couple of things I didn't add was.
We're going to of course have media drive next year.
And then of course later it really in the end of 22 are probably more than 23, if you're going to start with customer test drives, but also leading up to all of that I think it's about creating brand awareness globally and as I mentioned before we do have two amazing cramps of agencies there'll be of higher that together with our crafts.
Some teams we are creating campaigns that we're going to launch all over Europe and all over the U S and they are going to be starting that launch already on the 17th November So I'm really confident in our marketing plan I think is phenomenal and really show the first experience sender.
Some time I think the second quarter next to your hand in L. A we are also taking a very different approach there, it's gonna be really really different super cool.
That will attract a lot of attention as well.
Great. Thanks Henrik.
Can we go back errand to the analysts Q, we have a little bit more time.
Absolutely. The next question is from Jeff Osbournes Kelly. Please proceed.
Okay, Great too quick one one on the commonality between the Ocean and the other platforms can you talk about what the longer term opex in Capex applications are that the second question.
Had was just if you get further elaborate on that.
Decision to use silicon carbide, what the incremental cost is relative to the incremental range that you'll be getting.
So.
And the second one just to have that first I don't think we want to give.
Anything away to our competitors on that one but I wanted to highlight that we have that hi tech in our vehicles, even and the vehicle is starting to $7499 and I think that's what's really unique and that comes back to the value that we offer our customers in terms of the shared parts between.
All all platforms actually we have spent a lot of time internally.
Looking at how we can drive down costs long term by using common parts in many areas of our vehicles.
L. A program that we're in the middle of executing civil probably maybe talk more about that later plug maybe either has a a few things you want to talk about in terms of the Catholics, Yeah, Hey, Great question. It's getting you. So yes. If you look at the Ocean in terms of all thanks, I'll focus a little bit and R&D and they need to spend money we obviously.
Have hired as we said over 300 people and they'll keep hiring COVID-19.
Other thing is kosher of engineering, the developing of deep learning and vehicle integration second area. We all think you have to like find suppliers Mcintire is a development back now and again to learn to lock together tug area is you have supplied E D and D. So that's Kelly the synergies that Henry talked about.
But there are certain catty over park lunches engineered then is simply carryover data and that creates the commonality of fights in the fourth critical area of the book I talked about I think last dining in today as well is everything you do in the prototype and testing so to creator globally, who located.
Pickles audio crash model, you'll see how you truly look at optimizing testing how did you look at data How'd, you put together a very high quality vehicle to do that clearly.
The key areas the area when it come to Opex is also seek software so.
All all of the different control unit different fights you've got a program software we're learning as a team and keeping you can carry over some of that stack. Some of that according onto your next generation of Fox now all of that all pets, you can use across audio maintenance models, not let's come to Capex and some.
Mr. You might be able to use existing tooling increase capacity lower the cost of five across ocean and other models, but in some cases by example, when it comes to body and wider it come to Kathy boxer. It comes too heavy <unk>, we may have to do local standing so I think that there'll be huge.
Synergies a lot.
And more importantly will also be Elizabeth the commonality of five achieved aggressive timelines.
I appreciate it.
Thanks, Jeff next question are in place.
Thank you Mr Osborne.
The next question comes from pulls down will come along with Raymond James. Please proceed.
Thanks for taking the question I remember earlier this year you were lobbying.
For an adjustment to the E V tax credit.
Partly to make sure there is a cap on the vehicle price of eligibility and it looks like something similar will be included in the build back better plan.
Given what you've seen from that from the legislation R U.
Happy with how it turned out.
Well first of all when you say lobbying I just want to make a character during the call. We don't spend any money on bluffing are lumping us all into.
Internal communications team.
Putting things on the Internet or I am linked then wherever you can do it and of course.
No call somebody bus.
Coming back to the plan are you happy with how it turned out I don't think it's turned out yet.
Something has been voted in yet and I I personally I don't.
I want to talk politics, but I personally doubt, it's going to be voted in exactly this way because if you have noticed there is pretty much every major car company in the world except for the three big ones in Detroit.
Pretty much spoken out against us.
Plan here. It also violates agreements the U S have with Canada, Mexico and Europe.
I think it remains to be seen whether it comes out this way as it is now however, I could imagine and I think it's still makes a lot of sense.
To have a cap on on.
The price of the easy that gets a tax credit and May think whether it's going to be whatever's propose now maybe not but I think that will kind of come a cap and I think that's of course, a big advantage for us because we have a very affordable vehicle and it's a vehicle that pretty much fit some everybody's driveway, it's something everybody.
Once and you know with a reasonable good easy credit everybody might be able to afford it and I think we're standing really really well against the competition and in the day. The automotive industry is all about products not just about size, we have seen big car companies fail the models because they weren't desirable even if the biggest in the world.
We have seen some of the biggest car companies lose huge amount of market share I think the market in five years will look nothing like it looks today and I think by 2030, 50% of all vehicles sold will be sold by none other traditional car companies of today. So it's an exciting time and we're really excited to take part of it.
Okay.
And let.
Follow up on the <unk>.
Mix of reservations, you've broken out thank you for that between sleep and consumer can you also give a geographic breakdown for example, North America versus Europe versus China.
Yeah, we don't we don't we are not taking any reservations in China at this point, we're in the middle of setting up a Chinese entity that should be set up.
Later this year I think within a month or so fairly quickly.
Need to have a Chinese entity to be able to actually take reservations because of data protection, taking deposits and all that stuff.
So that's going to probably not happened before beginning of next year and I'm really excited about that I think we have a huge potential in China in terms geographically.
Graphically between U S and Europe.
We have done.
Cero brand awareness in Europe, we are going to go to a European.
Events next year end of February and that's really when we start the big push it over there right now just it off of my tongue I would say probably about I would say 80, 85% of our reservations come from the U S or North America.
But I expect that rapidly pertains to close to 50 50.
It could even go higher in Europe, when we think about an hour.
About half of all vehicles in Europe are sold business to business, meaning large banks or other companies are buying vehicles are leasing vehicles for that cost for their employees as an incentive because in certain tax rules et cetera, and we have already has you know secured several of these orders way ahead of even.
Any specifications for our vehicle.
So so we see a huge potential for our type of vehicle to be sold into these speech a b and also.
We are targeting the top 100.
Companies in Europe is focusing on ESG and sustainability and we think we are the most attractive vehicle on the planet right now to them and alone between these companies you're talking about hundreds of thousands of vehicles.
I think we have a very good chance to take a huge chunk.
Out of that in Europe, So, we'll see whether it goes but I have high expectations for sales in Europe, a reservation in Europe on <unk>.
Yeah can I appreciate it.
Okay. Thank you Erin we have time for one more question. Please.
Currently the next question comes from I T. My Kelly with city. Please proceed.
Thanks, everybody. Good afternoon to just two quick ones for me one just read that back to the ocean with the most of the sourcing largely complete now if we can just talk about how you're feeling about the prior gross margin targets for the company it sort of that the mid range Asp's and secondly, maybe for Henrik you mentioned flex leads a couple of times I've done the call I'm just curious.
Just just how prominent will Fluck fleet for please be as part of the initial strategy for the Ocean and many how how comfortable are you taking the mix of flux least to something that's still prepared material very high terms with over a potential volume.
The flexible lease.
I think is a huge competitive advantage is however.
It also is of course, a product that really starts to make you a lot of money about three to four years later and after four years, you are kind of printing money because the car's been paid off your <unk> I mean years, you're just having ownership of a product that somebody's just paying in money for every months with little or no service.
And on top of that.
We can sell various products over the air to these customers again and again and again every time somebody new comes in and like I mentioned over a 12 year period, you are talking about more than 250% profit margin that's without selling any additional products. So it's a phenomenal.
I think a product of you have come up with and it's something that traditional carmakers, probably can't do because of dealers.
And we can do it so I'm super excited about that and we have some.
Internal discussions about how fast you could roll it out I think we're going to we're definitely going to go out and test the waters immediately when we.
With a fairly low number of vehicles, because we are still a startup and I'd like to get some cash and first but as the test the waters. If we see that this is a huge success. We can obviously decide together with the right financial partners. If we want to take a much bigger market share than than we are.
Planned right now and I think there's a good potential that we most likely will be rather than the situation in the beginning where we probably can't build enough vehicles in the very beginning to fulfill the market, but one.
The full ramp up.
Could be a way for us to increase our market share faster than we have planned today in my opinion.
Yeah I'll take the question you asked about gross margin. So I think we feel really good about the content to be put in the car and the margin.
With respect to the content based putting the cart obviously the world is still in trauma when it comes to logistics and there are still some unknown. So I think.
Hopefully as we get closer to a ramp up in volume deliveries, we have more visibility on there now what.
Let me touch on a couple of Super exciting things. So the first thing is obviously with the back to announce that which being the biggest.
Sure of the bomb.
Excited about what we've achieved for the volume than I think with our relationship the TTL, it's only going to get better. The second thing I want to say is that.
Wendy originally.
First thing commodity prices were quite high and the feel good lately I've had the bomb and they need to monitor that commodity prices go up now one thing that I want to highlight which is really exciting that there is obviously the difference between aluminum and steel and Denise such needs done show.
Does that still future far more favorable than aluminum.
And there is always some upside and downside risk, but I think based on what the source of the car and Daggy commodity pricing I think they're really really good Paisley unabated balance place. Okay. I just want to add one more thing about the flexor beliefs and the potential if you saw the announcement about hurts, which wants to.
Police.
A vehicle.
Tesla too.
<unk> driver for 300, I think it was about $330 a week.
I mean, there's about $1300 a month.
We are leaving our base vehicle out the flexible lethal $379 a month. So I can double that price make 100 per cent profit margin and I think both the EBA Guy and us will be really happy so very to see the advantages.
Thank you.
Hi.
Thanks, Thanks, a lot.
And thanks, everyone for joining the call Aaron that's all we have time for so if you could close out the call and we'll talk to everybody next quarter.
Thanks, everybody.
I can create.
Third quarter 2021 earnings call. Thank you for your participation and enjoy the rest of your day.