Q1 2022 Arcimoto Inc Earnings Call
Call your attention to our safe Harbor disclaimer regarding forward looking statements. This note identifies risk factors that may cause our actual results to differ materially from the content of our forward looking statements for the reasons, we cite in our SEC filings.
Today's format is going to be a bit different from prior webinars as we have a lot of ground to cover.
Including the introduction of the two newest members of the executive team. So we're going to see the analyst panel for the Q2 webinar.
Folded answers to many of the questions that came in over the say platform and we will take a few more at the end of the call as time permits. So here we go.
While we usually start with a long form video update in the interest of time I ask Carl to compress the last decade, and a half into 30 seconds of video narrative.
With that short intro I'm going to give a little bit of founders perspective talk about the.
Leadership growth financing and the focus of our many shots on goal strategy into our first shot for the wind plan for scale, followed by a factory update from Terry the introduction of Duane lung arc emotive, Chief product Officer, Linda <unk> <unk> Chief experience officer.
<unk> and.
Q1 financing in future look.
<unk> from Doug.
Here we go.
Arco model, we build light footprint Outrageously fund electric rise to transform how we live and move.
Two platforms many shots on goal daily driving in rentals delivery and security and the most advanced E bike class vehicle in the World a quad motor tilting trike that flies the road like no other and can be recharged, while stationary we've been producing for two years and it's time to ramp it up to mass.
<unk> and deliver on the <unk> and game of the Robo valet and a sustainable transportation system for the world.
Alright.
Certain suites.
So I just want to give you all a little bit of founders to perspective.
<unk> said it ramp it up and I'll say it again, our auto is an ultra marathon being run by a 270 strong team to where the brand and a whole host of critical industry partners powered by a community of stakeholders with whom we share the vision of a truly sustainable transportation system, our pace continues to accelerate.
And I want to start by thanking each and every one of you for all of your hard work and support over these last 14 five years and for your continued commitment to finishing the run.
I have been asked on a number of occasions, what is the biggest challenge for our kimono and to be clear building, an easy endeavor from prototyping to get the right idea through product development regulatory compliance and initial production to constructing the right business models.
Scaling approach is an incredibly difficult and complex undertaking.
And while each of those elements provides a significant challenge perhaps the biggest challenge from my vantage point is one of leadership.
Making sure that all of us.
Rowing in the same rate direction, even as we take on more in parallel and dramatically expand the team.
And that's why just as an anecdote I am pleased to report that Friday.
I had the best executive meeting in the history of <unk> and I believe that we now have the right top level leadership in place to accelerate through the next big steps of the company's growth.
She does as a result of a few things.
Our focus on building, a winning culture defining and enhancing our shared values paired with a deep focus on process, how we communicate and work together across the organization and the recruitment of incredibly talented <unk>.
<unk> industry executives focused on each of the key initiatives that are driving the path forward.
We introduced Kevin to work, our new VP of commercial operations and strategy on the last call and we will be introducing.
<unk> newest members of our executive team.
Team during this call.
So before I get to that.
A lot of the questions that came in were related to the financing of the venture and so I want to clarify.
Further expand on some of what we talked about last call.
A number of a number of you have been looking for more answers. So I thought I would further clarify the approach so with partners. Our kimono has put in place a multi pronged financing strategy for growth.
At the foundation of this approach is the at the market facility, we put in place with Canaccord Genuity at the beginning of the year.
This ATM allows the company to sell shares into the market at the current market price. This foundation allows us to access liquidity at will at times, we think are favorable to the company and to our stakeholders as well.
Toxic financing structures that are endemic to the Microcap market.
The next piece is the long term convertible structure, we've put in place last month that allows the company to onboard additional capital on terms. We believe are favorable to the company and to our stakeholders and introduced no near term dilution to shareholders.
The final piece of our near term capital formation strategy is a program we call project ascent in collaboration with <unk> partners <unk> is a leading investment banking advisory practice that has advised more than $750 billion and transactions since its founding in 2015.
<unk> lead director and do serve partners our share has been on the Ark motherboard. Since 2018 and has helped guide the company through incredibly turbulent times and growth from a preproduction vehicles startup to where we stand today members of the <unk> team have been long term investors in the company with real skin in the game.
You sure will be leading the approach we articulated on the last call.
Put in place the right funding mechanisms for the long term growth of the company specifically, we were aiming for the right tools for the job.
Debt financing for our real estate real estate improvements and capital equipment fleet financing for our kimono on vehicles and long term equity with strategically aligned partners.
Longer term as most of you know we are further targeting the federal government's advanced technology vehicle manufacturing loan program for additional financing of the mass production of.
The fully enclosed two seat consumer our kimono vehicle and are in the pre application process for what we believe will be our final application to this program as we discussed on our last call. We see the <unk> funding as being appropriate for the acceleration of scale starting next year.
The preparation for this overall capital formation strategy has involved an incredible amount of work on the development of the mass production plan for the company as well as market research and our commercialization approach and I'm very excited about the opportunity we have crystallized.
One is side related to the capital structure of the company as a matter of best practices are chemo has engaged a compliance driven SaaS provider to track and monitor its shareholder ownership and trade settlement, we want to make stakeholders aware that ownership and settlement analysis over nine months suggests there are some.
Feasible and persistent settlement fails and imbalances in <unk> stock, we have identified a handful of banks broker dealer and clearing participants.
That feature the most persistent and significant settlement imbalances and we've begun a communication strategy to both alert these firms and request explanations for and resolution of these imbalances.
Moving on as many of you are aware.
<unk> core product strategy revolves around our unique EV platform that <unk> significant carrying capacity on a lightweight small footprint foundation that shares the vast majority of its parts with every variant of that platform as we laid out earlier this year.
The key to achieving platform scale first and foremost.
Is to make the platform itself more scalable an initiative we call <unk> X. We are on track to have the first one dot ex prototypes on the road later this spring focusing first on ride suspension and steering.
I want to acknowledge all of the hard work done by the <unk> team and our critical industry partners Monroe and associates Stoffel systems, DW Frits and our many supplier partners to help us hone in on this winning scale three wheel EV platform for the future.
The second piece of the push to the next big step up in scale is a focusing of our many shots into a first shot for the win approach. The discussions we are presently engaged with leading fleet management companies and large scale commercial clients that are operating with global footprint.
<unk> lead us to believe that the deliberate or is the correct focus for this first shot the rapid growth of last mile delivery market, coupled with the fleet mandate for environmentally responsible products and the unique characteristics of our product further confirm this approach.
So that and I'm very pleased to welcome and introduce Duane lung <unk> Chief product Officer, who.
Who is.
First shot on win effort to bring the deliberate or to scale production on platform one IDEXX Duane.
Welcome to <unk>, Thanks, Mark and thanks to all of the stakeholders for your continued support.
Many years of private and product development across a number of industries and customer segments I've learned that ideation and innovation are not financed.
A former deals with the generation of ideas, while the latter deals with their implementation.
And the occupancy of innovation success, whatever the goals of the business, maybe it must make money to do that and get things done.
Ideas do not implement themselves people Dave.
And it takes an organization with Knowhow energy daring and staying power to implement those ideas I believe at our kimono. We have these ingredients and it's incumbent upon us to deliver the right mix of the company to take the company to the next level and we are.
My colleague, Kevin Iraq mentioned on the last earnings call and Mark just called the first shop can win by tailoring our products to suit the needs of business customers. We can offer commercial customers substantially lower vehicle acquisition cost decrease in annual vehicle maintenance eliminate expensive fossil fuels and increase their bottom line for me.
Any of our current owners. This is also true and.
And as we enhance our product mix add capabilities reduce the cost and develop new platforms. We will intensify the use of our product lifecycle. Thank you will leverage market based instruments and improve professional service reliance as well as enable other key strategies.
Our <unk> set forth on a journey to change the world the way the world is sustainable transportation, let's revisit something from our ramp it up event with the same material and in some cases cost consumed and produced one conventional vehicle. We can produce eight five or 100 meter machine. So we're not only.
Materially benefiting customers bottom line for right sizing the footprint.
Transportation, while doing so.
So how can we build on well.
Well without disclosing future product plans that is the amount of the business. There is common critical factors and the most successful product development processes, one product development is a team game.
Leveraging intuitive disciplinary teams to focus on our development.
Two processes key we're climbing use and structure to order and discipline, the ascension from ideation to development and launch.
<unk> speed to market agile practices help us produce new and marketable products more rapidly after making a difference between profitable and nonprofit activity.
And lastly, number four listening to the market during all stages of development, we will engage directly with those who can influence our direction. The most.
And at the moment, we're actually acting on some of those key inputs with a strategic cost down initiatives, enabling us to offer our products at a new price point and serve even more customers taken together. These four disciplines will help our kimono deliver great product experiences to the variety of customers and conserve I. Appreciate your time today and look forward to expanding on our on.
Our drive to innovate in the future venues that we hear that we have thank.
Thank you.
Thank you Duane and very glad to have you on board.
In just the short time that you've been here, we've continued to see an acceleration on the product development front and I think we've got great things ahead.
Want to shift gears from the future to the present moment.
Our current product family, specifically focused around our maturing fun utility vehicle.
And the push to really hone in and streamline the customer experience from.
First hear about an arc of motto all the way through all of the touch points.
To trying it buying it and taking care of it over time.
And I'm very pleased to introduce <unk>.
<unk>.
To us again with deep industry background and expertise Linda.
<unk> is now behind you, our San Diego rental and experience center.
And Lynn.
Just a couple of short weeks.
<unk> already made a significant impact.
On our on our customer experience processes, and we expect that that pace of awesomeness to continues to Lynn.
Hello to our stakeholders.
Thank you Mark and very grateful to be on the team we have a really talented group of individuals.
I wanted to just get a little bit of background.
On my career I've.
I've spent the last 20 years, or so and a variety of sales and client experience leadership role and specifically within the automotive space I spent a few years back in supply in 2016 through 2019 with a few different roles, leading our sales and operation strategy for wet you asked some sector Belzberg, California, Hawaii and also leading our global retail.
<unk>, which was our <unk>.
Engagement strategy, leading programs to support scaling the organization towards the launch of model three.
Focus on my role here is really going to be around evolving our brand experiences from all channels I think it's M&A experience right now in San Diego and that would be basically from building up a thoughtful customer experience that we have now to scaling that first engagement all the way through to delivery.
Being very strategic in how we reach our customers on how we sell our product.
We are currently expanding on our on our channels from rental the driving experience and also the way that we engage in that.
Holistic brand approach for a couple of them.
I sort of see our product having by different channels that we have are in our individual consumer channel. We have our commercial we have small business. We also have the rental piece of it which is another revenue stream as well as they really finding recreational piece that sort of ties all of that together.
As Mark said, we're really challenging the way that people think about moving around and so right. Now we are trying to look at how we will expand and drive demand to scale our business getting from few hundred deliveries 50000 deliveries and beyond and sustaining that growth as we go.
We currently have an experience center in Eugene is all San Diego, we have a few rental partners spread out to Florida, as well as California, and Oregon, and we are also going to be opening in Hawaii.
<unk> coming up right now we are in the process of launching Hawaii as well.
Certainly to come after that we will be launching engagement.
Sales in New York So on.
Again very excited to be on the team.
I truly chose to come here.
For two important reasons, one the quality of product I think we have an incredibly thoughtful platform.
<unk> of products that really multiple different applications for customers and really the people on this is that really talented organization and there is such a fun aspects of our product.
To really reach and multiple different types of client profile.
Again, I appreciate everybody's time.
Thank you Lynn.
Before we dive in I just wanted to explain a little bit. The reason why Fridays executive meeting was the best one I've ever had is because I got to sit through two hours of people smarter than me and every single piece of what we're doing at the company and watch as as every problem that I thought I had the answer to.
<unk> got said before I can get it out of my mouth. It was it was truly awesome to sit around the table.
With both the grizzled veterans that we've had at our kimono that have been tested through year in year out push from startup to public company getting ready to build that scale and then bringing in industry veterans.
In both automotive and adjacent fields that have filled in the gaps in such a phenomenal way.
<unk>.
I have great expectations for where this team goes.
And then so.
Switching gears once again.
Terry are you are you live very good EUA.
You're in the factory.
What's the what's going on with production now.
Good afternoon.
I'm the roving reporter today, so welcome to the Ram. This is our final assembly.
Where we do the final assembly of the parts and pieces that we make in our fabrication facility in our battery facility.
And vacuum forming machining those those parts come here to the ramp for final Assembly I'm on.
Line, which is in full motion 18 stations of people, putting together the Suvs were at a rate right now of.
Four per day bye.
By the end of the month, we intend to go to six per day.
And then.
Toward the end of the year, we will actually double that and do what we need to do to hit our 1000 for this year.
These guys are stellar super proud of it.
Folks that are putting these vehicles together.
And.
It's good to be in motion.
The river is flowing so.
I want to give a shout out to all these people that are just doing a great job.
Awesome. Thank you Terry great work.
Doug <unk> CFO would you like to share your perspective on the growth of the finance team some of the milestones and wins, we've got and then.
Just to look at Q1 through what we expected versus what we did.
Thanks Mark.
The first quarter SUV sales revenue was $5 better than plan due to manufacturing completing the move to the ramp and getting back into production faster than anticipated.
We believe this puts us on target to achieve our full year production plan.
And as we look to exit emerging growth status at the beginning of 2023 I'm very pleased with the growth of talent on the finance and accounting team and their abilities to successfully navigate tighter recording deadlines and Sox compliance.
As part of this growth on April 26, we announced the engagement of demand with our global talent presence as Arthur Motors independent external auditors.
Want to thank DVD mckennon, our prior auditors for guiding our tomato from a private startup to a public production company.
As of this first quarter 10-Q.
White is onboard and we believe they will guide our promoters growth to becoming a global manufacturer.
And I'd, just like to echo that that thanks to <unk> and those guys have been with us from before we went public through the present moment Dave.
Helped guide us as we have grown from.
Team of <unk>.
<unk> in a small design studio to do it.
Sterling footprint manufacturer.
It's been fantastic to have him on the team and likewise.
To welcome Deloitte as our auditing partner.
The team that we believe can be with us through the foreseeable future as we grow to scale and more.
A more global footprint so.
Awesome developments on that front as well.
So.
Before we dive into Q&A.
Jesse fit or Paul do you have any thoughts that you'd like to share with all assembled.
Thanks Mark.
Now that we're coming out of Covid and people are starting to be able to visit the factory.
It's hard for everyone out there isn't able to see truly what we've created.
I gave it to her two weeks ago to an international team.
And when they came out of the two where they are.
Their statement was this is what American manufacturing looks like.
And I, just I was really struck by that statement.
Usually we hear how good our product is and we get the test drives and people get into it and they get out and really that was super fun and I love. It does the thing.
But to give the tour of the.
The facility, that's creating the product.
And for folks that understand what it takes to get to where we are to have them.
Tom with the answer that we are.
Our American manufacturing.
A dream come true for for this team so just wanted to share that.
And strongly recommend getting out here and doing a tour see what we're doing.
I'll Echo that both Jeff and I have had the opportunity, particularly as we as we would come out of the omicron wave to play host to.
A number of our significant partners potential partners potential customers.
We've almost become desensitized I think to joy factor of people experiencing the ride.
But it is very heartening to see just the level of Stoke from people, who have walked through our kimono facilities getting a very close look at what we're doing on the ground.
And just the reality of our present and future plans. So that's been very gratifying.
One of the reasons.
The road for the foreseeable future is that for.
For the next coming months, we have.
A large stream of folks.
Coming our way to see what we're doing and how we're doing it and look forward to sharing with you all.
Before our kimono experience.
Okay.
And with that.
Let's go ahead and open it up to Q&A. Thank you all again for being here.
We will take will take.
At least a handful or two of questions before.
Before we wrap it up.
Alright looking at the questions on say just want to make a note that.
Some of these were addressed in the comments, so particularly around funding.
So if you don't see that question or those questions in particular answer then.
I invite you to go back and take a look at the comments.
That Mark gave at the open.
Let's see here.
What is the biggest concern currently in achieving mass production for any of the arc mono products.
So so I would say again.
Biggest challenge that I've seen a space is one of leadership and that that gets challenged it gets bigger the bigger the team gets bigger.
Problem, we're trying to solve guest.
But when it comes to the specific development challenges it is and.
Leadership is kind of a fuzzy word but it is getting all of the various initiatives that we have and so wanted to ask it includes.
Major changes to the drivetrain in the vehicle.
The ability to integrate a new battery system changes in.
The hard points for where we Mount the upper chassis and so on and so getting all of that to be a cohesive.
<unk>.
Planned and effort that is moving along on all of those fronts. At the same time is that that coordination puzzle is to me the biggest challenge in the push to scale and then on the on the other side of that is making sure that we have the facilities moving forward in the same manner.
It's a it's a monstrous challenge.
And it really is only by having a truly excellent team onboard all aligned around values and.
I would say the other side of this is just the incredible work that the <unk> team has put in on process development.
We want we're aiming for arc <unk> in a box which is.
Not just the product, but the production plan for the product and our product family. So that we can more easily replicate our production facilities.
Both domestically and internationally.
And that's just it's a it's a huge amount of documentation communication development.
And we are by no means done, but making very good headway on that front.
Next question is <unk> currently running one two or three manufacturing shifts to meet demand.
How do you expect to hit 17 production.
I'm not sure if they are asking exactly about the demand of the product or about.
Our plans too.
Get manufacturing more efficient but.
And again the <unk> target is next year's production target.
Target for for this year 2022 as is.
There's 1000 units produced which again is like Triple what we did last year.
And Terry to that point I believe we are on one shift now and moving to two shifts over the summer.
Yes.
One ship now will be to two shifts toward.
Third late third quarter in order to meet and.
Vehicles, but the other thing to know here.
Is the fact that we have.
Put together.
Your line.
That has enough stations that as we pick up speed, we simply put.
Put more resources into the stations and make the line go faster we won't have to rearrange the line the final assembly.
<unk>.
Do have in the plan everything it takes to ramp up the fabrication of the parts that feed the line. So that's how we will be ready for next year.
Excellent.
A question here about battery technology related to.
Recent repackaging does it have any improvements associated with it.
Can you speculate on new improvements coming down the pipe.
So we've actually got multiple battery initiatives underway.
First is the president of essentially the present module design that we use required.
Certain tweaks for a form factor change in the pouch cell that we used.
As well as some changes to the Interconnects.
That first set of modules now through testing and compliance and is being assembled into vehicles that we're shipping out of the door today.
That work will continue through this year there is a longer term.
Process, which we talked about very briefly at ramp it up which is our newest cylindrical cells packing architecture to use the common form factor to $21 70 cells.
The cancer cells.
In our <unk> from and this is we've developed what we think is an incredibly flexible low cost.
Hi, volumetric energetic energy density and thermally safe.
<unk> architecture for 'twenty 170 cells that will scale from all the way from the mainly machine.
Up to very large vehicles, and we have teamed with a company called DWP Frits, where automation experts to work with us to design the automated mass production of those battery.
Modules and packs.
That program will not come online until next year and that's part of the overall onex development effort.
It is it is in place to give us flexibility on form factor flexibility on in terms of range Optionality.
And supply chain redundancy for what is arguably the most critical part of an electric vehicle.
The thing that provides the juice.
What progress was made in scaling partnerships with market leaders in food and goods delivery.
Say that one more time.
Progress made on scaling partnerships with market leaders in food and goods delivery. So.
Might have been seen the Joker pilot announcement this morning.
Beyond that and this is stuff that we have alluded to now over a couple of calls is.
Conversations that we're having with.
Some major players in the delivery space and particularly what we're aiming to get in place in the near term.
Fleet management for our kimono vehicles. So this is.
Financing.
That what Kevin <unk> talked about on our last call, which was comprehensive turnkey solution for fleet adoption of <unk> products.
And that's everything from <unk>.
From financing, so being able to move by the month instead of having to eat the sticker price upfront.
Through turnkey solutions for service.
For fleet management applications for the users themselves.
Really providing robust packages for fleet adoption. This is something I expect that we will have a lot more to talk about in the near future.
When can we expect further expansion in the U S. Specifically states like Texas that should be a huge market for the F&B.
When would you like to talk a little bit about the rollout and approach and the opening of new markets I believe we've got.
Hey, coming very soon and then some more on deck.
Texas is a special day for me too I am very excited once we are ready to go into Texas.
Our plan is to ensure that when we do launch in the states.
Very strategic in our approach and our engagement as well as what our logistics and delivery trends looks like for our customers and try and also that we haven't mapped out with service that your ownership experience is well thought out as well and so right now our focus is currently on the case or are already open and making sure that we're reaching all of those markets. But then the density that the states like California.
More.
Formerly in Florida, as well as scaling throughout the West Coast. We are opening up Hawaii, we turn the process of doing now and we'll have an experience center, there, which essentially will be a hub for a rental center experience delivery to really focus on the holistic a market approach and then rolling out New York After will be the next state that we go into.
In relation to Texas, we don't have an announcement on that just yet but.
Rest assured that when we do launch and the state will be very well thought out and make sure that the.
The entire <unk>.
From the beginning into ownership.
Plant.
Awesome looking forward to it.
There are a few product update questions asking about foreign closure update on MLM can you give any updates on those fronts sure. So foreign closure will be a part of both.
Our first shop of the win program in terms of.
Our delivery fleet solution.
As a requirement that we intend to deliver first in that form and then likewise the funding for the advanced technology vehicle manufacturing loan program that actually requires the production of vehicles that are fully.
Fully enclosed cabin.
Carry two people vehicles, and so that will that will be coming but the full enclosure.
If you were at ramp it up where you saw some of the photos we have prototype full enclosure solutions for the FTB products that we have now.
Likely one or more of those will make it into production as an accessory and that would likely include.
Alright.
<unk> solution with some kind of a soft enclosure upper.
When we actually get to the scale production versions that land on one Dot X.
It would be more of.
It typically solid fully fully embodies solution for those customers. So it'll be a it'll be a stepwise process.
From the chat with the current recession or slowdown would it makes sense to pursue the <unk> loan early instead of equity dilution.
So it really is all about a comprehensive solution of piece of that will be equity a piece of that will be conventional debt we think.
And then the <unk> is really rounded out for the larger scale pushed.
Push to 50000 units approach.
We see a much nearer term opportunity to go for.
Towards a much lower scale requirements in terms of achieving cash flow positivity for the adventure that 50000 number is not to.
To get to profitability, that's to get to real scale and deliver on the mission of the company, but we see a much nearer term opportunity as part of what we're calling project ascent to fund the company to the point, where it can stand on its own feet.
And in terms of dilution.
I would just add that I am the.
Today's the largest shareholder in Arca Moto.
<unk> founder and CEO who's been plugging away at this for a long time.
I am very conscious of dilution of our stock.
I think one of the.
Having a founder CEO with a chunk in the in the equation.
Is helpful. In terms of really gatekeeping deals and structures that are that would be it really in the bad interest of shareholders that are being said.
What I look for are fair deals that trade.
A dilution.
Sure.
Resources necessary to take the next big steps up in scale. So to me dilution is not by itself is not a bad word it is necessary in order to grow the company.
What is what is really bad and we've seen this a lot in the Microcap space.
Our deal structures that just that can turn into.
So called desk viral deals that just just wipe out the cap table and totally screw over shareholders that is something we have avoided and aim to avoid for the foreseeable future.
Also from chat any perspectives or comments on.
Gross margin as production ramps up.
Say that again any prospective or comments on gross margin as production ramps up.
So ultimately as we as we.
<unk> out.
The target for gross margins and this has been true for a long time is right around 20%.
Gross margins for the products at scale would.
Would you look at what we're doing today, obviously, where we're nowhere close to that because all of our manufacturing overhead gets baked into a relatively small number of units shipped.
<unk> as we.
Scale up the number of units that we ship out the door the portion of that manufacturing overhead goes way down per vehicle and then of course, you layer in economy of scale.
In terms of purchasing power for parts that we purchased and then all the work that we're doing on one IDEXX to drive out complexity and cost within the vehicle drivetrain.
And Thats, what gets us through those various steps up.
A question about the.
The App update any update on the App.
We have no update for you on the apps today, but it is something that is.
Very present and that we are.
Chewing away at getting those specified and implemented I think there are ultimately.
The first version of the App is going to be pretty simple in terms of just the basic functionality that you need for.
Checking in on service engaging service vehicle startup.
But ultimately we see a bunch of cool community features that we want to put in that we haven't seen done on on any other vehicle app.
So stay tuned on that front again, the target is to have version one of the.
For customers in the fall at the same time that we rollout torque vectoring.
Yes, I can add on that front.
The team at stockholders working on torque Vectoring has just done a phenomenal job moving that program forward we are.
They are targeting being feature complete this quarter there is a substantial amount of testing.
Because that is a that is drive critical software, there's a substantial amount of testing we need to do before rolling it out to customers, but that's going to have a huge impact on the.
The low speed.
Difficulty in terms of sharing the vehicle and then that also provides.
The foundational layer.
For our autonomy program instead of having the platform be able to to be driven by.
Higher level of supervised III computers and sensors.
And another aside here is that our partner fashion that is the first adopter of the <unk> platform.
<unk> had a very cool demo real they shut us.
A week or two ago I believe it is out there online on their Youtube channel, but it's the first public demo of.
<unk> driving with nobody on board.
Pulling up avoiding people.
And then that provides.
The concept foundation for our <unk> initiative as well as factions <unk>.
Delivery vehicle that they are using for <unk> delivery. So.
Very cool developments in terms of technology on torque Vectoring on the API Foundation and then.
Faction system that sits on top of it.
Can you scale up beyond 1000 units and the demand is there maybe you can talk about what goes into that number and how we came to that production number.
Yes.
Ill, let Terry and Jesse handle this one.
The machine and team in place.
To scale to 1000 with.
With minor additional augmentations that are coming on board.
And then we have a.
A few more pieces of significant machinery that will be necessary to get to 7500.
But this is also goes back to.
Sort of.
The timing and.
And placement of the ATV M is that what we have figured out we believe are the.
<unk>.
The approach that lets us scale to that 7500, plus units without just massive capital spend and with that ill.
Jesse do you want to chime in and then maybe Terry offer will be.
Ill carry it go for it.
Well I just wanted to re mentioned what I had mentioned earlier, what you saw when I walk through the factory was a factory that has been built out with the number of stations to support 7500 vehicles next year. So at the rate, we're going right now it looks a little slow out there.
Because it's efficient and it doesn't take that many people to build four vehicles a day.
As we go into six next month, and then 12 per day by the <unk>.
<unk>.
Full time.
Then it will look busier, but again it's efficient.
The other thing is the equipment that it will take two.
Bring in the fabricated parts painted parts.
Powder coating.
The vacuum formed body panels all of that.
That set up and the other building that's got people in it and they're very efficient as well. So we're quite proud of what we've pulled off here with the efficiency of the factory.
It's awesome. Thank you Terry.
Fritz lets take lets take a couple more and then I'll turn them loose.
Sure.
Question right here about the rental revenue model can you talk a little bit about how that works and how thats set up.
I'm going to pass that one to Lynn Lynn is now.
Over.
Rentals and experience are in your court so.
Let's talk rental revenue model.
Sure happy to jump in on that so we have.
Owned and operated rental set up as well as partner Rev share rental and so right now we have eight partners that we're working with as we just launched those over the last few months. So our most important is that they're set up to be successful in the markets out there and that we're reaching that utilization numbers that we wanted to focus on that as well for both partners.
Sure we scale and if are to increase our <unk>.
Locations around the state that we're currently already and are launching a new states. So it's really important that when we're sort of scaling our rental model whether that be.
<unk> share partner or owned and operated or even for those that have purchased for write offs of their own business that we want to make sure that.
Utilization is there and that the operational piece of it is very easy for the customer experience as well.
Thank you Lynn.
Okay last question just came in or are you concerned about the level of short selling on the stock right now.
I would refer back to the commentary near the top of the hour related to the.
The third party SaaS.
Service that we've engaged that is tracking.
The substantial and persistent imbalances in the reporting of our kimono stock something that we're very we are aware of.
And we have formulated our strategy to address.
This is this is over and above.
The actual reported.
Shorting that we're seeing on the stock but.
I mean, I guess my my personal opinion on it probably.
Probably shouldnt sure so I won't.
But.
At the very least.
I would say.
It's.
We are mission driven.
We believe firmly that we're moving in.
Smart direction with awesome products.
And.
I'll leave it at that.
I did see one other question in there about MLM question Mark question, Mark We will have more for you on the <unk>.
Here coming soon.
But as I mentioned on the last call we have that we're presently building the.
The first multiples of vehicles on that new platform.
And.
Looking Super cool so once once we get those on our road with a lot of.
A lot of vehicles step to show that should be in.
Call It six weeks.
That's an external target MLM team the internal targets much lessen that alright, well guys with that.
Let's go ahead and wrap it up once again I want to thank all.
All of our stakeholders.
All of our supplier partners on the call are our partners on the call and our team.
For pushing through very challenging and turbulent times in.
In the world that we all share and continuing to focus on the mission that we share and getting it done. So thank you all have a lovely day.