Q4 2021 Arcimoto Inc Earnings Call
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Alright.
Welcome back Mark Thank you technical difficulties.
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In that case I want to welcome everybody to Arca motives for stakeholder webinar of 2022.
To start with short recap video from the ramp out of the factory opening event that we held last month.
I will share some short remarks introduced one of the new members of our executive team and then open the forum for questions from our guest analysts.
And stakeholders on the same platform if.
If you have not seen the full ramp it up presentation encourage you to watch it at your leisure.
Theres more good stuff, including doors, and some a bunch of different technology advances that this recap doesn't have time for.
So.
With that here we go.
And I would encourage all of the panelists and other participants to make sure you're muted until we're up and running and Chris If you can enable screen share that would be great.
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I always remember to click the button.
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Okay.
We are going to go into the new building.
The ramp.
Okay.
Come on.
[music].
Ladies and gentlemen is the founder and president of our intermodal margin from environment.
We are automotive.
We make the best electric three wheelers in the world.
Our purpose.
Now it's time to ramp it up.
Okay.
Okay.
Okay.
Okay.
Welcome to the ramp.
In 2020, we laid out the big hairy audacious goal of opening a new factory by the end of this year that once at full capacity would be able to build a targeted 50000 vehicles per year and provides a template for global replication.
One bit of housekeeping arc motto is a public company with a public mission. So before I go further I'd like to draw your attention to our safe Harbor disclaimer.
We took possession of this facility in Q4 of last year and transformed it at light speed Reconditioning building, a where we are now moving the assembly line over from the Amp and putting up our automated plastics line and new machine shop by the middle of the first quarter.
In spite of a global pandemic, our kimono doubled year over year production in 2020 and tripled production in 2021.
When considering downtime due to the transition to our new facility and validation of new battery cells, We plan to Triple production again this year after which we take big steps up.
The foundation of every <unk>, we build today the root of our many shots on goal a product strategy is our unique ultra efficient EV platforms that packs, an incredible ride outsized carrying capacity and flexibility for a wide range of daily trips in a right sized human scale footprint.
All of our products.
Utility vehicle for everyday driving rideshare and rentals the deliberate for last mile delivery. The flatbed for general fleet utility the rapid responder for emergency services. The roadster pure on road on machine cameo for filming in events are largely the same sharing the same production line.
Parts and economy of scale.
The key to scaling Arca motor to mass production, therefore, first and foremost is to make the platform itself more scalable.
At our factory opening event earlier this year, we showed the first computer renderings of one dot ex <unk> refined platform design.
Ongoing development effort of Arca motto, and it's critical industry partners featuring.
Featuring both mechanical refinements and major simplification in the electrical system, one Dot X will unlock the big steps up in scale, we're aiming for a <unk> increase in production next year up to maximum output for the facility in 2025.
As we accelerate our push to scale. We are also accelerating the growth of our market presence.
Above and the roadster continues to receive rave reviews from demo writers and journalists are like adding confirmation to our belief that <unk> delivers the most joyful ride experience of any vehicle on the road.
In order to maximize the number of people who get to enjoy our unique ride and drive exposure for the <unk> brand.
And the most on our demo rental program, but the long term goal of turning that first time, new user experience of a vehicle into a profit center for the company instead of a cost sink late last year, we began earmarking a significant portion of our limited production output into this program.
And we plan to accelerate that this year.
For our commercial and government fleet options early trials of the deliberate or flatbed and rapid responder have provided invaluable feedback as we aim for volume production of these products and at our ramp at launch we gave the first sneak peek at the Smokejumper initiative a rapid response first on the scene.
Arco Moto augmented with a fire fighting technology portfolio.
It significantly less fluid to extinguish places we are now working with ecosystem players to flesh out the full suite of offerings.
Leading leasing options and broad service to provide turnkey solutions for fleet adoption.
As we look forward, we see the platform itself, becoming a key standalone part of the portfolio. We aim to make the platform accessible to a wide array of users other vehicle makers schools and research institutions and EV enthusiasts. This arc of modal platform initiative will be a true <unk>.
Where API for sustainable mobility and at our ramp it up event, we announced that faction of Bay area Driverless vehicle endeavor is our first API partner as we jointly demonstrated factions driverless delivery vehicle prototype publicly for the first time.
All of this is phase one of the ramp expansion plant.
<unk> two starting next year is the next step. This will include a new logistics hub on the site. The reconditioning of building be laying of the automated Assembly line, we've been designing with Monroe and team as well as an extensive tool up of key parts of the chassis and body that we believe will allow us to achieve Maxim.
Ma'am unit throughput on this site in 2025 and launch the Robo Val a mass market consumer endgame, we started teasing last year.
Now the conventional wisdom in the electric car space is that the shift to clean transportation is constrained by raw materials, the precious extractive highly refined metals and rare earths in the battery and EV drivetrain.
Let's unpack that it became public earlier this year that Gm's, new electric hummer clocks in at a whopping 9063 pounds, that's enough material to build two model wise.
If we hit our one IDEXX targets there'll be enough to build eight fun utility vehicles.
We truly want to move to a sustainable transportation system.
We do.
Electrification of the drivetrain is only one part of the solution.
Right sizing the footprint is equally critical.
And while <unk> <unk> improvement over Gms flagship is a good start we believe we can push the envelope way further in.
In order to take the next order of magnitude leap in terms of efficiency size and use of materials on a three wheeler, while maintaining stability it needs to lean.
In early 2021, Arca modal acquired tilting motor works and its world class tilting trike technology portfolio at ramp it up earlier. This year, we showed the true fruits of this collaboration for the very first time Arca Motors mean lean machine.
So the feeling of riding it it's very natural just like a bicycle you have an enormous amount of stability at high speed and low speed a lot of this is imported from tilting motor work suspension.
So each wheel is equipped with a high torque of motor tour victory will allow us to deliver the exact amount for braking force, we're driving force each wheel needs.
The vehicle adapt to the conditions of the road this will provide greater stability shorter stopping distance that are turning.
That acceleration in terms of traction.
Front wheel traction is incredible.
On grapple on wet Roes on bumpy.
Sculpsure is out every day.
We forget that the world is delivery and bumpy and the feel of Pedaling. This thing is extraordinary.
Notice the handlers Theres nothing.
Sure no throttle.
I don't know if the shift I don't know if you think about broadly inputs I just pedal and then it goes Hello generator is putting useful energy into the drivetrain.
It can also be used in stationary mode to recharge the batteries.
Without moving.
Ergonomics is stable there's no learning curve. So this is the version three prototypes. The final model will have a battery packaged in here to drive trading will be contact.
And close there will be.
<unk> four double Cedar.
So you can have a passenger kind of slipped down.
So the team at our intermodal is super excited to bring this to market and deliver an excellent product. Unlike anything you've written before.
The MLM will be an E bike class vehicle like no other including features never before seen in a vehicle of this class at the heart of the MLM is a new technology platform, we call micro future drive, which includes <unk>, new cylindrical cell battery design and co packaged electronics suitable for a wide range of micro.
Mobility solutions available for preorder now we plan to launch the MLM into market before the end of the year.
Going back to the bar graph, one hummer to Tesla's eight funds the same amount of material can be used to produce 100 mean lean machines for.
For transportation sustainability is micro mobility and.
In this transition doesn't have to be sacrificed the move away from the idea of the car is more fun less hassle and more livable for us all.
And I hope you'll join us.
Alright.
So if I had if I summarize arca motto.
One word right now it would be momentum.
<unk> rocket and this has been super exciting for me to.
To be a part of.
I think part of this is our our focus that we started talking about last year on culture on leadership development on process.
It's starting to pay big dividends in terms of.
The pace the accelerating pace of the team and also we continue to attract really amazing talent to the venture as we move forward.
I am incredibly proud of the Orca modal family that continues to deeply embraced our mission to catalyze the shift to sustainable mobility and step up everyday to meet the challenges of a growing endeavor.
We're also really leaning into distributed work tools have been.
Common during Covid, two <unk> silo, even as we grow and deepen our shared connection even as we expand the geographic footprint of the team. So I'm going to start with just a couple of notes.
On.
First on the mainland machine.
Interest in the mainland machine has been considerably higher than I anticipated.
I was I was targeting in my head about 1000 preorders by the time, we launched production.
I think about five weeks, we now have more than 700, and I attribute that to a few factors.
One it's totally kickass as a career product developer I can say it is always awesome when an early prototype exceeds your own expectations.
Second is that the E bike market continues to rocket.
Fueled by.
The rising gas prices I think in a growing awareness that we as a culture needs right sized mobility.
And then the third thing is that we see a huge potential for commercial delivery using this platform.
A number of the organizations, we are talking about talking to about large deployments of the deliberate or are saying Hey, we would also like.
Look at the mean lean machine for areas, where we're currently using E bikes for delivery better carrying capacity more stable.
<unk>.
Higher speed there is a lot of benefits that the machine will have versus.
Current electric bikes and areas very dense metropolitan areas. So.
We are aiming for our first multi prototype run in May.
That's coming up real soon.
<unk>.
While we won't announce actual final pricing until we get much closer to launch.
For stakeholders to sort of think about our strategy here.
I'm anticipating a tiered approach. So if you look at the E bike marketplace. Today, you have sort of a very premium E bikes in the $8000 and up range of course, we think the medium machine is going to be.
Premium vehicle in this class like no other.
And then the kind of the sweet spot that we see in the <unk>.
And the market is in that.
Anywhere in the 3% to six range and again, we would see that kind of mainline being probably closer to the high end of that range and as we get to sort of true mass production of the mean lean machine, we want it to be and this would be more of a very base model, we'd be aiming in the in the <unk> range. So just as you start thinking.
About this from a numbers perspective.
We think this is the <unk> is going to be a big boost to the already significant financial potential that we see of the SUV platform family.
If you think back to that vehicle graph.
One hummer to Tesla's eight Suvs 100, meanly machines, and then look at it through the lens of revenue per pound of material.
I think the EV Hummer is like 115 K two model Y is today, maybe 130 at scale production of the <unk> is more like 150.
For that same amount of material, we see the revenue potential in the four to $500000 for the mainland machine. So big win for the planet Big win for the bottom line.
And speaking of financing.
This is a topic that comes up regularly for our stakeholders for 14 years, our kimono has been financed incrementally.
Building value far in excess of our spend and our ATM facility that we have with Canaccord serves as really as a backstop for this approach and lets us be opportunistic when conditions are favorable for our investors.
And tangling us in toxic deals that plagued the microcap market.
That being said, we think the time is right for a holistic solution to fully fund the business plan to scale, including the right tools for the job. This includes targeting the <unk>.
For Big production capital expenditures and most of that will land in what were calling phase two of the ramp development process.
The build out of that does not start until next year.
<unk> also fleet financing for our rental vehicles proper real estate financing and then also long term strategic equity partners.
Great confidence in the team that we have assembled to tackle this effort and I look forward to sharing more on this front soon.
And then finally my last note and then I will turn it over to Kevin.
Is that <unk> continues to grow its executive team with key top level hires to help lead the extraordinary growth path ahead.
For these stakeholder updates we are going to start rotating in new members of the executive team to give added color on the areas that they are leading and so today I would like to introduce our new VP of commercial operations and strategy, Kevin O'rourke, So Kevin meet our stakeholders.
Thank you Mark and more importantly, thank you to all the stakeholders that have joined US here. This afternoon Mike.
My experience my 15 years of experience in the automotive industry comes in many different arenas.
For the last five years my focus has been on helping fleet operators decrease their costs and maximize the potential of their assets out in the field.
As a recent addition to the Arca multifamily I feel it's important for each and every one of you to understand what brought me here.
The answer to that question is vision.
Our kimono as set forth on a journey to change the way that the world used commercial fleet last mile delivery and sustainability as a whole.
So what does that mean and how does our komodo provide a product that will ensure companies can not only meet their electrification goals, but do so in a profitable way.
Right sizing of our businesses fleet can drastically changed their efficiencies for the better and day to day operations.
We all see large diesel delivery vehicles everyday trying to navigate through dense traffic and narrow streets with.
With the expensive fuel maintenance and upfront acquisition costs the.
The impact that these types of vehicles have on businesses and consumers is obstructed.
Not to mention the amount of raw materials required to build the vehicle itself.
Now, let's look at our kimono.
We have the ability to provide a fully customizable solution to our commercial customers that will not only help them deliver packages or provide services, but to increase their bottom line profitability.
How do our platforms do that.
By providing a substantially lower acquisition cost decrease and vehicle maintenance, eliminating the use of expensive fossil fuels and allowing for additional vehicles to be added into the fleet to increase productivity.
Now how do we take that one step further.
We are looking at ways to provide our customers with an all encompassing vehicle package that not only provides the vehicle itself, but maintenance logistics telematics insurance and much more.
Eliminate the need for fleet operators to control expenses with many different vendors and provide them with a way to do everything in one place.
The voices of fleet operators around the globe have been heard and now it's our job to help them get it done.
Before I turn the call back over to Mark I'd like to touch on one more thing is extremely important to me and Thats our team.
As you heard earlier I referred to <unk> as a family because thats, what we truly are the.
The members of this family, bringing the experience knowledge and dedication that is desperately needed to make the changes to this industry than I previously spoke about.
I am truly honored to be here and I'm looking forward to all that we're going to accomplish together.
Marc I'll turn it back over to you. Thanks.
Thanks, Kevin.
It's very good to have you on the team.
You've been.
You've been making a dent in our universe in very short order so great to have you onboard.
And all I will introduce the <unk>.
Rest of the executive team for those.
Who are here today.
Those of you who've been with us for a long time, no Eric <unk>, our Chief Marketing Officer, Doug <unk>, Our Chief Financial Officer, Terry Becker, Our Chief operating officer, and Jesse could Apollo <unk>, our Chief strategy Officer, we're going to take a few questions that came in from stakeholders over say.
And then we are going to bring on the rest of our panelists.
Our analyst panelists and and get into Q&A.
Q&A that's live I would also offer that for those of you in the Wall Street analysts World, who are following along and on the call.
Who would like to be a part of the future panel. Please E mail investor at <unk> Dot Com and we will bring you into the fold.
Already looking at say.
You had a few questions rolling here, what do you see as the greatest challenges to scale up to mass production.
So.
For me I would say probably the biggest challenge of scaling up to mass production from my vantage point.
Is getting an ever growing team to continue to work together better and better to hit the goal and that's.
What I talked about a little bit earlier in terms of our focus on leadership on culture on process. That's all about accelerating our individual contributions even as we scale the size of the venture.
And I guess I would say.
Credibly pleased at both.
Our.
The talent that we continue to bring on board and then the way that we are growing together and working together. It gives me a lot of confidence that we're going to be able to tackle this problem.
I don't layer onto that things like we're facing.
Topsy turvy supply chain for the.
The next several years, depending on which piece youre looking at chips or batteries or.
Everything else you've got.
Geopolitics that play a role in that sometimes in very negative ways and then just the challenge of <unk>.
Continuing to develop and refine super cutting edge products, and then bring them into series production with Terry has talked about is that.
And then production is one piece of that right. So the production is cranking them out the door, but then there is the logistics of getting them to customers. There is ongoing building out of the service network and then <unk>.
<unk> to build the market presence required to actually support that production operations in the first place.
All of those are big challenges, but it starts with leadership culture process.
How long until the SUV can be sold at sub 15 came prices. So we have targeted sub 15 K.
Entry level base model price for when we are at that full capacity output.
The ramp which is <unk>.
<unk> 2025 is where we're targeting that kind of maximum output capacity.
I would say this.
No need to wait.
You are talking about a few thousand bucks.
A couple of years of delayed joy.
Not worth it.
Tesla has said they won't be letting other providers use their charging network, where automobile use Tesla charters. So this is something that actually have a number of our customers have asked for we have.
Many of our early adopters are also Tesla customers and so to us. It makes a lot of sense that they would be able to share the same home charging plugs.
Then as we look at the <unk> X program, we're looking at being able to add much higher capacity charging to the <unk>. So that would be you could do more of a DC fast charge at that point it would make a lot of sense and then it's a matter of just builds.
Building the business relationship to make that happen. So we are strongly in favor I think Tesla has done an absolutely outstanding job.
In terms of building out a charging network that is.
It really covers the world.
And it's very easy to it's easy to use trip planning I mean, it really made that piece of the puzzle elegant and simple and thats something we would like to support via partner.
Are there any plans to expand into markets and build factories in India, or China or mono type vehicles are extremely popular.
We see the world as ultimately the Arca modal market. It makes the platforms. We are building, whether youre talking about Europe or southeast Asia.
<unk> got dense cities with crowded streets.
<unk> already high adoption of smaller form vehicles, we build.
Vehicles in that category that are Super awesome, and so we think those markets make a ton of sense.
Not just for distribution, but for production as well and we are Dilip <unk>, who is our chief International business Officer last year.
I think later this year, we will have some interesting stuff to talk about on that front.
When will the ramp start rolling out new units and what is the expected output by Q3 Q4 and into next year. So we ramp has actually already output new units we are.
The two pieces of that Q1's production.
Will that are keeping that very constrained or one was the shift over to the ramp and then second the validation of new battery modules.
The move over is done.
The validation of new modules is almost done.
And we expect that early in Q2. So we are we are slow rolling out the door today.
But but starting I believe the internal target is April 24.
The new modules to be bigger.
Begin production again and at that point, we'll be cranking. It up we have not given guidance and are not giving guidance on quarter by quarter. This year, but we are as I said in the video we are planning on.
Basically tripling production this year, which is so we did.
331 units of production last year, Doug is that right.
Yes, that's correct alright, so we want to break into four digits in 'twenty, two and then as we get <unk> on the road, that's going to be what unlocks our big scale steps forward. So aiming for a <unk> of this year next year up to maximum capacity by 'twenty five.
When will the new project launch and I assume thats, referring to the medium machine.
That would be my assumption as well.
We're targeting end of the year for the official launch and sale of the first units of the mainland machine.
And again, we're likely to start with a what I would call. It very signature series version of that product.
When we show you what we're what we're doing with the next round of prototypes I think you'll understand why.
When do you plan on getting doors with windows.
So we actually showed doors with windows in prototype form at the ramp it up event.
A few different varieties and some of those.
We're testing a few different approaches for the current FTB platform.
<unk>.
One or more of which may make it into production and then as we look to the products built on <unk> X.
We'll have those we will have windows is an option out the gate.
Can you go in depth on how our kimono can license, it's new technology to other manufacturers between batteries General Assembly and other patents how large of an opportunity do you see this being an accelerating growth and financial stability.
So.
There are a few pieces of this the architectural platform initiative really is all about.
Driving adoption of the arc of mobile platform by other companies by research institutions.
Even into the enthusiast realm, so that people, who are really interested in making experimental vehicles could be a part of that effort.
The one piece that we sort of really teased at the end of the ramp it up presentation was the both.
The new cylindrical cell battery pack architecture that we're developing and the agreement that we have entered into with DW Fritz to explore pairing both.
Both the license of the design with the actual automated production line that goes along with building those batteries.
And so we are exploring that will be likely the first real exploration because we see that is that new pack architecture is really having the potential to be an industry leading solution.
That debt that has application.
For anything from.
Micro mobility devices, all the way up to very large vehicles.
And we will have we still got a lot of work to do to get our get our own.
A piece of it into production and truly proven out.
But I expect that we will have a lot more to share on that topic later on this year.
Where is our come out of that in the <unk> loan process and when do you expect a decision.
So as.
As I kind of mentioned in the financing section. There are couple of pieces is one is that what we are putting together today is really a holistic approach to fully fund the business plan to scale.
The AGM is one part of that we see that really coming in and Jesse I think you can add a little bit of color to this which is that as we have.
Continued to.
Bring on Rockstar talent and refine with Monroe.
It's really meant.
Our cost shifting of a lot of the.
A lot of the big expensive pieces of the program until next year and beyond.
Yes, I think mark that not I'll take that not as the additional color alright perfect.
Alright.
Let's say.
<unk>.
R. R. <unk> analysts have been very patient, let's let's bring them on.
Scott.
Do you want to you want to call on our marks.
No Barry sine Mike's liskey.
Jeff Campbell is that there were did we get.
I think there were a couple of folks who are who are dialing in are they did they get booted somehow.
Well alright.
If we had.
Craig Irwin or Jim Mcniel rate somewhere in the chat let us know.
Alright, Jeff are you are you camera camera ready you can complete our Hollywood squares here if you are.
Alright, well.
Barry since since you came out and join us for ramp it up why don't we why don't we start with you.
I'm just going to say, it's more like a brady bunch layout.
Other choices.
Either way.
Two questions if I can squeeze in one of the things I was able to talk to dozens of <unk> people and just a great attitude and one of the things that I heard quite a bit you didn't talk too much about today was the rental program and rental will give you a recurring stream of revenue you've talked to that rental.
I think Theres two company owned locations and then add partners, but you've said you want to handle.
Unintended ramp up that program as well so could we talk a bit more of that about that and has significant might that be in terms of revenue generation in 'twenty two 'twenty three.
I would say the first goal for US is is and I think we're now up to eight.
Rental either company stores or our rental partners in the market.
Have we have Hawaii coming online here very soon.
I believe we are targeting may one to get our our lease in place and then thats going to let us actually unlock Hawaii, both for sales and for rentals.
Hawaii, Southern California, Florida, those are really our beachhead markets.
No pun intended.
But.
The first goal is brand and brand awareness and sort of try before you buy that is pretty much a requirement for almost everybody purchasing of motor vehicles.
Almost everyone wants to actually try it before they are willing to I think a lot of money into a purchase.
And we think that that long term that rentals is not just a way to provide a.
A way for people to try it and beautiful places enjoy it for day, but actually to become.
Breakeven and then ultimately profitable.
The typical new user.
First time user experience of the vehicle actually comes at great cost to traditional vehicle manufacturer, whether youre talking about.
The sort of the franchise model of automotive or the company store model of.
Every I mean Tesla has been the real pioneer here, but then you've got <unk> stores and solar stores.
Lucid stores so those.
In those scenarios, you're either putting out.
Chunk of the margin or you are putting out a lot of opex and capex that that never comes back other than the sale of the vehicle and we see that rental model as being why don't we turn that piece of the business into a profit center.
We are so.
So our first goal is.
As butts in seats next is drive awareness on the road and then third is profitability for that piece of the business.
And if I could squeeze in just one more please.
Getting the profitability starts with a positive gross margins later to talk about that and maybe see you guys expand upon that a little bit. So there's a couple of things that I am wondering if that after ramping up event at <unk>.
<unk> spent a lot of quality time understanding and Ram and his team and you've talked about vehicle designs. The second thing is and I was able to get it firsthand look at the New Assembly line, but there's more to come with automation, So automating the assembly and the <unk>.
Second part and the third part you've talked about getting the volume unit numbers as you put more volume through that line.
Big part.
Cost of goods sold is always fixed cost.
<unk> depreciation so it seems like Theres a lot of drivers in place to get to positive gross margin and then that would be the.
The key to getting to positive EBITDA and then EPS could you talk about that please.
And I think Barry the one the one I would add to that so so.
It's volume it's assembly optimization.
And then.
It's sort of the out the hot vehicle design.
That is the simplification.
Simplification of things like the chassis and then.
Ultimately as we move to that mass production stage, it's really a change in material production.
Production methods.
But what we have as we look at the bill of materials today.
The big the Big chunk is.
Battery Electronics Motors, that's our that's the majority of the costs in the vehicle and Thats really what the one dot ex program is all about so it's really driving the simplification.
And ultimately automation of those core components of the platform.
That will be the first big step in the <unk>.
Bush deposit margins. The other piece of that is that and this is really where the.
The work that Kevin and team are doing on growing the commercial opportunity is that when you look at.
The pricing structure of our commercial offerings, they are actually higher than our consumer offerings by a good stretch.
And as we put in place the tools that let fleet adopters.
Actually.
Adopt our kimono vehicles.
As in Opex, rather than Capex.
Then you you.
Start to look at it in terms of what is what is total cost of ownership. But then also what is what is my monthly on the arc of motor solution versus.
Delivery truck or van or whatever and we think that even with.
A higher sort of intermediary retail price that we're going to be able to deliver a dramatically lower cost to businesses for those solutions.
And Thats why I think.
We go particularly into next year, that's going to become I think a very big part of the business story of the <unk> family.
Okay. Thank you I'll, let somebody else ask questions.
Mike.
Hello, Mark how everybody else does.
So maybe I can start off with a question just on the <unk>.
So far the cash outlook with our margin outlook.
For the year.
Thanks Nathan.
How much of a furnace here.
We appreciate it.
Hi.
So Doug you want to take take a swing at that one.
In terms of.
What we have looked at and I'll just preface it with as we look at the spend over the.
The next 18 months to get to.
What we see as sort of positive.
Positive run rate on the company, we look at that total over 18 months as being in the <unk>.
I want to say $100 million ballpark the bulk of that is in capex. So.
I don't consider that burn.
And actually I don't consider even the spending on the people in development as Bernd I consider investing in the future, but that's as we look at all of the different pieces.
That that sort of holistic financing puzzle thats that is the number that we're landing on and that gets us. We believe if we execute well and this team has been executing.
At peak performance that we think we get that that would get us to.
A positive run rate for the company now there will be additional scaling an investment that happens after that but that's.
A significant near term milestones.
It's not lost on me that.
For 2023 is 'twenty one that's what we saw in 2021 as far as production.
This adjusted net debt would be a good.
Level of cash.
Cash flow positive.
That's that is our goal and I think thats, what we put in our K if I if I recall correctly is that right.
Yes.
<unk> to add if you look.
If you look at our operating expenses in R&D.
R&D is increasing substantially and thats part of the investment Department.
Okay.
I want to ask for any quarterly guidance, but because were on March 31st now they tell us maybe how many you might have.
The shifts in the quarter are attending.
Two hours.
Terry how many did we build and ship out of the ramp.
These are not audited numbers for 2022, but if you got a ballpark.
So we built.
When completed about 25 vehicles in Q1 in spite of the fact that we were moving from one factory to another setting up doing all of that.
And I think about eight of those have come off the line in the ramp.
Alright.
That's where we're at it's all testing it's dialing in the processes.
It really wasn't even expected to be in this quarter, but.
In the active making a move and dialing it in.
All of that.
Anyhow.
Political let's get to the fourth figures sorry, yeah, how many went out the door there could have been some left from Q4 last year that went out the door in Q1. So I don't know the final number of what actually went into revenue in Q1.
Got it so clearly there will be a must have that run rate probably in Q4.
And by the way.
This is consistent with what we talked about on our Q3 call. We were really expecting basically zero output in Q1 with the move in with the battery Val.
Validation.
So I certainly look at this.
<unk> actually getting vehicles out the door in Q1 in addition to those steps as being a good thing, but we see the obviously the bulk of the output coming in Q2 and beyond.
Thank you for that Mark and Terri.
My last question is on the smoked up a car.
On the call political asked this question before but.
You don't go through any kind of special on certification or especially R&D to make sure that that is available too.
<unk> Biopharma operations or it is going to be the product customers looking at Florida.
Our non government entity.
Jesse do you want to just use really been leading the charge on smokejumper. So I.
I don't think that we've gotten to that stage yet but.
Jessie if you can offer anymore.
Programs degree, yes, Mike we've got we've got a team that we just brought in to help us understand the requirements of that product officially from the standpoint is the folks who actually use it. So it's just become.
As you know has become more and more of an exciting product offering that we have that has a lot of potential for it.
And so we bought over the last couple of months, we've been working with some folks down in California kicked that off and make it real both on the testing side.
Moore configuration, and then whatever the.
Regulatory stuff, we have to go through.
Got it.
That's great color I'll pass laws that somebody else. Thanks, so much guys.
Alright, Jeff.
You are up.
If you are muted.
All right.
While Jeff.
Worked with technical challenges Barry you got to get anymore.
And the UN mute.
Lot of questions on the ATM.
Not sure about the what is the government process goes through that when do you submit the final.
And then what steps should they have to take to vet that out and what might be the timeline and I assume once you submit the final we will see a press release on that.
I would expect that we would we will let our stakeholders know when we submit that final application and to me. This really comes down to.
Submitting an application is not the actual goal.
Submitting a successful application is the goal and that means basically making sure that we have the holistic package put together to fully fund the business to scale.
That part of that comes down to obviously the continued development of our market and then also that we have the pieces that the <unk> can't pay for that.
That those are covered by other sources of capital.
No.
Those are those are all elements that are going to come into play we think in the very near future and that's so that's another one where we've got another call coming up with stakeholders in six weeks and I expect that we'll have more updates on lots of good stuff at that point, but.
As we said it ramp it up.
Got.
That's sort of a I think.
Plan for a continuing stream of.
Good developments a lot of that had been cooking for a long time so.
Certainly stay tuned.
And it looks like Jeff got it figured out Jeff.
Welcome.
Can you hear me.
Can.
Okay great.
Yeah.
Ignorance of clients by technology.
Doug noted that the 2021 R&D handoff that was significant.
Lehman machine development, apparently well along do you expect.
Some of our R&D spend in 2022 and Pos.
Possible world the trend.
In 2023 or do you think it will moderate.
I think when.
I guess I would say to that is that the.
The R&D spend of Arca motto, the actual spend of <unk> as a whole.
Relative to the industry that we're in the problem that we're trying to solve and the potential for the products that we're building in the market.
Is so much smaller than any other organization that we see in this field.
And yet the yardage that we make continues to.
I would say I think that we are that our accelerating pace and the super cool stuff, we're coming up with.
Says that we are deploying those resources wisely now.
To the point of the Meanly machine that's actually.
A very small part of our overall R&D spend although we do see giant potential for that product.
Although you would certainly have to factor in the acquisition of tilting Motor works. When you think of the cost of the mainland machine development program.
But that's a small piece when it comes to scaling up to mass production when it comes to.
Developing with partners, our Robo valet initiative.
We're going to be continuing to invest in the future and in the mission.
Going forward likely at levels equal to or exceeding what we did in 'twenty one.
A lot of the.
And in 2021.
Improving the electronics existing SUV.
To make it more cost effective.
Okay. That's helpful. Thank you.
I just wanted to follow up with her.
But financial one I thought the direct and technologies pilot in Australia was quite interesting. So I'm wondering if you could speak about the timeline there and also what might be involved in the quote unquote eventual homologation to Australia and safety standards that was mentioned in the press release.
So.
I've been on now several calls with the directed team and with some of their customers.
And I.
Without violating confidence I can say.
The excitement that they have expressed.
Now not just for the deliberate or family but.
Moving into the meanly machine space as well.
Has been very high.
So we see I think our challenge is going to be just making sure that.
We are able to tune the product family to their requirements.
And that.
That we've got a bit of a bit of.
What what's the term belt and suspenders work on getting the Homologation pathway figured out.
For for that market.
I don't have a lot more detail to share other than that we are in very active conversation with them and we see that as a huge opportunity.
For our kimono for the deliberate or <unk>.
For the mainly machine family.
And that we're super excited about it.
Okay, great. Thank you.
You want to add Jesse.
Just a little bit more at the ATM, maybe I am seeing some chat snuck in there.
There might be some confusion of what the <unk> MLP funds can be used for that program is for scale.
And what our kimono has done really well over the last two years is organically growing the company in a way that we think we can achieve.
Success on our mostly on our own.
And use the funds of the ATP and to build out the factory and scale from there so that is that.
Those funds get used next year.
So again to Mark's point about the mission is a successful application to the ATM LP and the Doe program. So that we can show them. We have a really good plan and that we can execute something.
That program was intended for.
And with adding people like Kevin on the team and getting his knowledge and understanding of our fleets work and how we might be able to pivot the company and a little bit here and there to have a better plan has been what we've been working on so.
It Hasnt getting worked on there is a lot of documentation that we have.
In the words and ready to submit and I'm feeling really good about where we are with that so a little bit more time is worth it.
And.
I just this is going to begin.
Thanks Jesse.
I understand that.
As we progress along.
We are we're certainly a learning organization and we adjust accordingly.
To hit the plan that we think is going to be best to achieve the mission and I'm going to go ahead and leave it at that and wrap up the call, but just to say.
Once again.
We are komodo would not be here without the support of our stakeholders.
You all have brought us from.
A napkin sketch to.
Production vehicle operation with we think global impact potential.
A product family that is world class in terms of environmental efficiency footprint utility and certainly the fund factor.
And we.
Yes.
Want to say, thank you again to everyone out there who has continued to push this along continue.
Continued to fight with us So yeah, you guys have a fantastic.
The rest of your week and we will see you next time.
Yeah.
Yeah.
Yeah.