Q3 2022 Fisker Inc Earnings Call
In about August this year and that was going to take effect in January 23, obviously, nobody can plan for our U S manufacturing plant in four to five months.
So we think is realistic to give a couple of years chance to actually figure out how we get to a U S manufacturing and Thats really what were incur.
Encouraging the U S government to think about and we are seeing that already are discussions.
Between EU and U S to maybe losing some of these rules, which I think would be meaningful.
Okay last months, we have revealed many new features of the Cisco Ocean that are Super cool user interface.
Taco traits for example for driver and passenger seat or hidden glove box received controls.
<unk> is really cool for if this vehicles is used for.
Ride hailing et cetera, and also we have a digital rearview mirror, where you really don't need to care about your rear windows is clean or not or if you have filled up the trunk you can always see out through the rear supercool feature and there's other features that you will see and discover when we start delivering vehicles.
And as we get closer to ESOP and continue to be increasingly transparent with respect to our product and what customers are getting for what price. Our extensive human centered design process led us to update our web and mobile experiences and we will rollout our new fiscal connected App on November .
<unk> this year.
Continual updates into the spring we will also introduce our new <unk> configuration on November 17th redesign navigation vehicle order and transaction flow as well as the seamless ways for our customers to interact with the vehicles. All of this will be available in multiple languages.
We also plan to localize our reservation ordering process in several additional countries in first half of 2023, including large potential markets, such as China and India. In addition to opening the reservation process to these large global markets. We have started to examine opportunities for local.
And in India, which.
Recently visited where we see significant potential for the physical payout.
We are going to youre going out in phases, which will help plan our production forecast and after sales infrastructure build out.
Yeah.
While the payer is already planned to be manufactured in the U S. With the Ocean. We are in exploratory discussions about U S manufacturing with several parties.
This could include licensing our ocean platform and the sale of emission credits to an OEM partner in the interim we continue to.
True advocate as I've mentioned earlier.
Four.
Consumers have more choices and also.
To see that we can get.
<unk> manufacturing plant here in the U S at the right time.
Yeah.
Okay, let's get to the.
Pierre update.
It's happening with <unk> factory investments needed to position peer production for I R. A compliance with a time <unk>.
Production partner Fox Kahn started planning for lean production system.
Oh, a reduction so reduced the product and process complexity will lead to a more profitable vehicle.
All car manufacturing processes will be done in-house stamping body paint gea M. P. T Fox Fox from factory will have a smart automated automation maintenance digital factory and production facility.
Industrialization phase will focus on state of the art equipment and tools people qualification and launched quality management final face of production readiness will be process control verification and quality control checks.
Stamping will be cable for big dimensional and complex parch, the body shop will be flexible integrated and modular structure. The paint shop will have brand new ecosystem, which will be the most environmental friendly General Assembly will have effective and efficient production lines.
Current pair reservations currently stand at have exceeded just about 5000 reservations.
Let me talk a little bit about marketing events, an experienced senders and partnerships due to our strong ocean demand pipeline and uncertain macro environment or marketing spin has become more targeted and shown increase increased effectiveness. For example in the past few months, we have experienced a roughly 10% off.
Lift and premium trim configurations, and that's really due to this targeted marketing digital marketing that we are doing in house re reason to share that our first launches will open next year, while the construction delays unfortunate that later lounge opening bolster liquid.
Liquidity, if only Mac could build lounges through.
We have we have been very accurate with our organic marketing events and more flexible pop ups to allow all prospective customers to experience the ocean. Our current U S Ocean <unk> connect with customers in multiple cities and states include.
Including several debuted locations we followed a similar approach in Europe .
The abuse that I mentioned earlier in Sweden and Norway.
In light in light of our strong reservation on order pipeline and the ongoing global market turmoil, we have moderated our marketing spend to certainly focus on remaining 2003, <unk> and I know, it's exciting to see of course, a lot of incredible marketing from us, but it really wouldn't make sense to spend millions of.
Dollars and marketing knowing that we are pretty much sold out for next year. So.
So I would rather spend these millions of dollars on new products and getting them faster to market than early marketing.
In September we announced a partnership with wall box, who will be our global partner for home. He be charging solutions. We are pleased to provide class leading competitively priced charges for physical or owners. I think this is really going to be a easy to use our class leading wall Bucks a ballpark charter.
So advanced sustainability, let's talk a little bit about that because that's one of our brand pillars and our commitment to sustainability is unwavering. We are proud that the ocean will be produced in Mac must carbon neutral <unk> plant in Austria.
And the Ocean will contain over 50 kilos of recycled polymers and biobased materials more than any other vehicle will be no currently on the market.
In August we published already <unk> impact report in advance of the physical Ocean November 2022, <unk>, demonstrating all foundational commitment to the environment and social responsibility and transparency.
We have seen progress and R. E S G rating such as the upgrades.
In the M. S C. I E. S. G score from W. B two triple B rating. This rating is better than many of the larger Williams and our competitors.
Looking ahead.
We are nearing completion of our first draft lifecycle assessment of this vehicle. This measures the carbon footprint from upstream sourcing in an <unk> an outbound.
Logistics manufacturing, the use face and and abuse.
So I'm super optimistic about fiscal future I'm really exciting I can't wait to go to Mexico next week, while we actually have invited journalists and also analyst that would be able to drive our vehicles.
Very excited to see what the outside World think about our vehicle our team have done amazing an amazing effort and incredible short time.
And I'm looking forward to host journalist and analyst next week at Magna under test track and of course get a tour of the plan as well and seeing oceans being built on the assembly line. So.
So for now over to Bukhara, Our Chief Technology Officer, Yep, Thank you and Rick.
Beginning with fiscal Ocean final engineering testing and validation is pogos quite well over the last few months Uhm on October 17th it'd be achieved engineering sign off <unk>.
Effectively transitioning efforts from <unk>, the vehicle to manufacturing and ramping production.
Hendricks mentioned, we remain on track to achieve is whoopi in two weeks.
Be finalized the two major breakthroughs in automotive software functions safety and cyber security you have been following the cyber security <unk> <unk> guideline for secure automotive software development, which has been developed by international standard of organization.
<unk> after the security throughout the entire life cycle of all legal and is currently being tested on ocean with penetration and fuss testing from independence, good parties from component to system <unk> and beckoned.
Furthermore, we are complying with the functional safety integrity levels of ISIL, which have been assessed during ocean architecture and developing face and.
And I have been implemented it's a risk based safety spend that for all automotive electronic and electrical safety related systems maybe.
Maybe have all safety measures defined to control and I'm hardware failures or mitigate the effects.
In the next couple of weeks, we will enable the automation in order to achieve short commissioning times automate and paralyze posted sequences of the <unk> at various closest locations.
These include Assembly inspection Rico specific country duration self to update of control units as well as end of line <unk> to get post is optimized for carefully planned rhythm face in Q1.
From where we sit today Ah supply trains continued to recover and position us for a successful as well P.
<unk> closely with all our partners across the supply chain.
To ensure that planning cycles include of 2023 went above and beyond.
For the past couple of months I, along with several of the other physical technical lead us <unk> working directly with <unk> team.
It's important to be over at <unk> to remove time zones and be there physically to bring everything together to deliver the product.
The performance and the energy of both <unk> teams has been phenomena.
Been great proliferation, and lots of fun and enthusiasm as we work through the home stretch of delivering the product.
Also had the opportunity to give a test drive.
Independent third parties on the ticket smugness style.
The feedback has been great and.
They view of the Ocean is very impressive and unique SUV was excellent driving performance and dynamic specs.
Our team has worked hard to prove student calibration light comfort.
Noise isolation, and poetry and efficiency for more refined driving experience.
As I mentioned on the lost earnings call in August we entered the P. P. T O bid phase, which is done on this year's manufacturing line and it's the final build before to your production.
Using these <unk> bills for final validation testing of complete legal performance comfort and functions.
Using one of the latest <unk> revealed <unk> at the parents Motor show a few weeks ago. We also implemented physical Android petition to create independence and make the U Y <unk> alone.
The oceans class, leading 17.1 inch rotating screen and Hans Sbu's experience and allows the user to enjoy videos gaming and other rich content.
The screen is fully tested and implemented into the vehicle.
<unk> they'll lead the over the systems has been in place and running and <unk>.
Which we have been using to optimise and improve vehicle performance and reliability credit characteristics.
<unk> building, a cloud first data protection and O T a platform.
Physical da platform there'll be capable of reaching every legal and the lowest full fixable update strategy.
Tailored to each week loner in their preferences in the safe secure and compliant minute truly aiming to deliver on the concept of software defined because.
Cisco data collection machine learning based analytics using state of the art open source and manage cloud services to deliver on the promise of predictive maintenance and individualized customer <unk> experience.
The oceans O T. A system will be an efficient way to update or weakness real time, and also polite opportunities for additional close sales revenue by offering certain features to be purchased the customer <unk>.
In addition, fitzco to continue to build on our existing over the update about platforms supported by five G and my faith, six including digital lifecycle management, it's the highest level of security always update it with the newest in our software and technology improvements with all as seamless compute from cloud th the call it becomes.
Smart and even safer over its lifetime.
We are currently in the in the Ocean.
To vacation process.
To confirm all the safety requirements and we continue to progress through the on litigation face.
As an example last month, we completed the U S roof crushed test with production body and performed successfully as we had expected our safety specialist was even able to walk over to the car and opened the door to the roof crush test, which shows the incredible safe structure off the <unk>.
Oh, a team is also running certification tests at <unk> in Spain. This.
This month, we will conduct the U S and European range testing with range results expected next month's.
We expect to complete European.
Vehicle type approval and <unk> home litigation in February .
We had originally planned and earlier the customers of thirties, only for Europe , but we've decided to skip the software dropped to reduce any risk and focus on highest quality reliability and softness to the duty at launch <unk>.
Consequently, we decided to synchronize all finals functional safety irrelevant software releases with the certification process into an update software if all customer cause which we are producing from now until February .
Now to touch on <unk> specifically.
Pat Engineering is continuing to him and his ocean gets closer to S&P. We are transitioning one more resources from the Ocean program to the pet program.
We have finalized the concept.
In the first prototypes face off the architecture.
The pet will have a truly.
<unk> evolution theory, electrical architecture with the many issues in a traditional legal consolidated onto a few central computer even this.
The consolidation of <unk> and the addition of smartphones a gateway computer at tremendous capability, but also lowest mass reduces complexity of divining homeless.
And Lewis the overall bill of material cost.
This development of competence and supply chain partnerships, leveraging advanced silicon and software solution is enabling us.
To execute hopefully next generation electrical architecture for <unk>.
We have built an amazing team in house designer development competence on the entire harm to himself to stick both in the U S in India.
That is focused on meeting our commitments and driving the results that support.
If it's killing of our business.
Thank you I will now turn the call over to Peter Thank you <unk> and welcome everyone in the current volatile market backdrop, we have demonstrated resilience discipline.
Manage complexity and find solutions, whether it's supplier issues solving problems a balance sheet management, but just a couple of weeks sent to SLP. Our number one priority is ensuring a final testing certification and home location timelines remain on track.
We expect to have ocean vehicles on the road by ear and with a small commercial fleet delivery to magna off the team vehicles in December we expect retail customer delivery swelling European <unk> book I'd mentioned in February 2023, providing us the time to bring all suppliers along cause I'm pregnant.
<unk> noted we have seen further improvements and supply chain, including semiconductor then logistics program and supply chain Task force. The next regular reviews critical suppliers onsite off site to confirm tools pack maturity and Graham pettiness impact on supply of some energy and inflation prices.
Shortage. So we can support supplies, but alternative ideas opposite two completely different solutions staying on the supply chain topic commodity pricing aside from lithium has moderated since I last call for example, steel which is more important for the Ocean then aluminum is down 60% year on year with respect to battery specific raw.
T V prices lithium carbonate has continued to rise we don't believe this trend will continue <unk> backseat raw materials like Nickolenko bug.
These have decrees meaningfully from the early 2022 feet and a forecasted to continue declining we're actively working with that battery partner could discuss how we can jointly normalize these prices pricing pressures in China and the Lola any demand should also help ease some of the backseat commodity prices energy pricing has also come.
[noise] off the boil in fact, just last week natural gas prices.
Briefly illustrating the improve supply situation versus a few months ago. In addition, the strong dollar has mitigated and occasionally patience for assault for us as well since many of <unk> contracts that you are denominated the euro depreciated versus the U S dollar and it's currently bouncing around his lowest levels in 20th since 2002 at.
A reminder.
Contracts favorite factor in commodity prices inflation productivity <unk> foreign exchange. Some of these critical elements that will be calculated on a quarterly or annual basis, the ramp up production.
Forecasts, but slower economic growth next year come to fruition, you would expect further commodity and supply chain relief.
As a result, we will have better visibility of the actual impact upon further in 2023 would be that as we've mentioned before 2023 production will be back end loaded reflecting a deliberate early production strategy to ensure we deliver a high quality vehicle to our customers. When we start production on November 17th.
They begin to the same high quality production, maybe they'll have it scared, but at a much lower volume over the next several months, we will welcome its suppliers to ensure we have the same quality at high volumes as the will and the initial low fees. Let me elaborate on our full stage production ramp up plan that'd be have developed from now till the end of 2023.
Stage one.
S O B on November 17th 2022 to March 31, 2023, and is Hendrik mentioned they are targeting over 200300 units. All vehicles will have box of cereal tools comes up dial home line and each two or they'll go to magenta quality loops to achieve the desired intent.
From these tools have to meet the dimensional fit finish and appearance standards box dimensions, amperes I checked and confirmed within the plan to the cubic event like clothing as an aluminum body master with zero tolerance. This process validation at all supply sites number to compete with that thing will be finished during this stage product audits.
Focus on 2500, plus statistics check points and the vehicle intensive task will focus on validation of Vegas functions that 1600 class function checks, including driving dynamics acoustics infotainment and other features.
Supply readiness is integral to hitting our next stage of ramp in queue too and we have assembled a great team of specialists from eschewing material planning to manage the players. This team is responsible for thyroid illness supply of production to a delivery to home line manufacturing equipment and process implementation, including debug and <unk>.
<unk> and testing plan for achieving.
Quality in fact production great meet volume ma'am to mention a few delivered those end of line check bought quality loop and complete quality will be completed and confirmed the manufacturing output or jobs problems will be running full automation and then finally during this first stage, we will establish successful completion of closest notification in the plan.
The plan production readiness there'll be confounding proven over the update testing will be finished at this stage to activate features to upgrade software and for automated commissioning.
Stage two is in Q2 2023, yeah getting an assembly of 200 700 vehicles, a week and as Hendrick mentioned targeting over 8000 units during the quarter at this phase all parts will be off Caesar towards the no deviations there'll be capable of meeting production volumes at the required right though.
Week, and manufacturing process equipment and facility will be running under see these condition or T. A will be fully automated and integrated within the manufacturing process 100 per cent in quality check like what it is dynamic driving vehicle inspection will be done and all the hate goes the suppliers will also be required to perform ironically to meet production volumes.
This process will assist in verifying the production volumes can be met without any deviations and also identify any bottlenecks that have to be addressed stress test the manufacturing supply chain and suppliers will be performed high volume vehicle quality release process will be used <unk> checks validation and confirmation has achieved introduction of.
New variant the sport I try and write and drive there'd be integrated into supply production sites and <unk> vacation process will start for this new content also manufacturing integration validation and confirmation does talk with these new <unk>.
You sure and loops will continue with a known processes and parts stage three and.
In Q3, we will start a steady state of ramp to achieve <unk> 42400 units of production next year for our two real four wheel all the twins right hand drive and it left hand drive the launch an all our lunch markets all towards will be seizures and high volume with all features.
Launched an automated systems manufacturing for high volumes will focus to streamline the production processes, but efficient and effective process improvements fully integrated state of the art clean production system will be stablish by the stage stage.
Stage four.
<unk> above 50000 annual units to meet higher demand in both Europe and potentially U S until the U S. Production solution is established is Hendrik talked about developing new features with O T lunches for the manufacturing efficiency activities to improve output and quality again to recap what we mentioned in two days.
<unk> at quarter, we plan to produce well the 300 units in Q1 2023 will be 8000 units in Q2 2023 15000 units in Q3 2023 and two for the remainder to achieve the total plan or 42400 units to ensure successful is there'll be a fiscal ocean.
November 17th and support production ramp up there after.
Just the I T team implemented several integrated digital platforms and solutions, including product data management system to seamlessly integrate realtime manufacturing needs. The vehicle production intelligence solutions to forecast demand and money supply chain procurement for over 160, <unk> and 2000 parts globally solution to accurate.
At least three nine customer orders to manufacturing orders solutions for track Mika manufacturing and delivery progress and provide real time updates to customers as part of our digital ecosystem to provide seamless and best in class sales and service experience to our customers. We are developing a scalable global digital retail storefront platform for all our customers this black pumps.
Support multilingual multi currency and localization need and it's integrated with a fiscal wrap encourage my a website and a partner ecosystem systems to enable <unk> to our customers.
<unk> there'll be enabled in phases, beginning December 2022, and you will continue to evolve adapt and advance as our customers provide feedback on their preferences. Some of the services that are available the platform to the customer and accept that this crap out as follows scheduled a test drive vehicle delivery pickup and service appointments at <unk>.
<unk> So the center alright, I requested location, including your home real time interaction <unk> sales and service advisors and technicians for follow ups approved recommended repairs signing Payton voices accessing a partner services for roadside assistance pulling can request.
The digital retail platform is also the platform for a retail service advisors and technicians to manage all operations at a retail outlet. Some of them are as follows pre delivery inspections of vehicles sold a service for our customers manage all sales and service work orders coordinate triage of service issues, among engineered and service technicians to find.
Solutions tracking services provided by partners for roadside coalition in providing frequent updates and seamless experience to our customers. We have developed a detailed and two N plan that physicians is pretty successful high volume ramp and I'll post production very excited with the Ocean program progress to date, and we look forward to sharing up.
Progress each quarter against the comprehensive roadmap I just outlined now turning to a Q3 results balance sheet in 2022 outlook Q3 operating expenses of $140 million 128.8 million extra compensation expense was consistent with our internal expectations and fully as pending guidance <unk>.
Capital expenditures at $57.3 million increase slightly from Q2 levels due primarily to the timing of Capex spending.
Recently R&D increased in Q3. This is Q2, primarily due to lump you milestone timing in Q3 increase in <unk> quarter over quarter was you to employ growth in recognizing it'll be milestone base restricted stock awards from an accounting standpoint, which is non-cash unfavorable fox losses in Q3 as though we.
<unk> purchase certain euros earlier this year to take advantage of <unk> combined with the coin cloud a portion of the it'll be restricted stock awards increased at Q3 net loss by $16.8 million a balance sheets remains solid we finished Q3 with over $824 million in cash.
Better than we had expected you to <unk>. This has been spending an opportunistic ATM usage during the quarter. We brought in approximately $116 million from a 350 million at the market equity program, which is part of our 2 billion shelf that'd be filed with S. A C. As demonstrated an approved an ear to date cost ma'am.
<unk>, we remain focus on executing against our plan, while preserving adequate liquidity turning to our outlook as noted in the press release, we expect to be at the lower end of the 20th 22 over on non-GAAP , Opex, plus capex guidance of $750 million to $790 million driven by disk.
<unk> cost management, leveraging India suffer in Engineering Center lower passed Bend attendant mentioned as we've got in house a lot of the development bug in a favorable ethics as a reminder, bulk of vizio spend is launching the ocean the cost of running the business along with minor pay R&D expenses I'm proud of the.
<unk> for all the accomplishments to date and unwavering focus on launching an amazing on that one time vehicle, which will come to fruition in just two weeks, we continue to show agility and resilience and it just whenever we need to stay on track next week very excited to welcome journalists and analysts you see and drive the prescription and also.
<unk> of a production line at Magnetize plant in Austria, when I'm happy to take your questions.
Thank you if you would like to ask a question. Please brushed off by one on your telephone keypad now if you change your mind <unk>.
One French ask a question, please and shortness of prices unlimited locally.
My first question comes from <unk>. Your line is open.
Where that you mentioned would be rolled out through February can you just elaborate on what needs to happen between now and then to to update that would be helpful. And then the <unk>.
Follow up question I had was just on the mechanics of a potential license and credit sale agreement for the ocean in the U S work.
<unk> can you repeat the first part of the question that it cut out over here.
Yeah, No problem I was asking on for Burkhardt, who alluded to ticket Homologation that there was some software updates between now and February that needed to be done it's hard to I didn't want it to better appreciate what specifically the software.
Attributes were for to get that Homologation that we should be watching for and then the second part of the question was just on I think there was reference to potentially licensing the ocean for U S manufacturing facility, which I assume would be.
Capex favorable to you, but I just wanted to understand how the mechanics or something like that would work.
Yeah I'll take the first part about this software update in February .
You're running currently you through their certification process, which is the litigation poses for.
Europe , and the U S and I'll be waiting for the official certificate.
Get the real synchronized software updates with this certificate so it's just.
Date of the day, just software <unk> vitriol synchronized with a certificate.
For the second hardest controller.
What type of software.
No, it's mainly functional safety relevant software, which has to be certified that's potentially break systems. For instance, just has to run through a specific reviews and certification process.
Thank you.
The second part of the curriculum regarding Oh surely.
Licensing a platform and manufacturing so we have been already and and detailed discussions with a couple of groups fix.
Oh, Yeah, I'm just international Carmakers.
About licensing our platform and jointly producing this platform here in the U S. One version would be of the although William that they obviously would design their own chop hat et cetera on it.
And then it would be our version of the Ocean.
Yeah of course that would be favorable to us because it would already be an existing plant.
And.
Obviously, we have great value in the ocean IP that would offset.
Some of these investments that we would normally have to do.
Secondly.
We have.
We have looked at licensing.
The Ocean platform.
Just separately without necessarily tied into manufacturing.
And we are also talking to large Oems about.
The.
Sales of emission credits, so that's something that's ongoing as well.
And then finally.
We are looking at a strategic partner as well for the pair program.
To to kind of.
Introduced appear in some unique markets, though we haven't announced yet so a lot of stops going on but it's I think some of these.
Discussions and negotiations might have been.
A.
Sort of a little bit of a reaction to the inflation production Act where.
We're probably a few companies feel they need to get quicker to the table with an E V made in America.
As everyone knows if you start development of a car from a clean sheet of paper specifically if you're on traditional OEM is does your own processes that normally takes for four years of course, if we license the ocean platform, you could probably get that vehicle to market in 22 months or less.
For you know a much lower price. So I think there is some interest there we have seen and there's something we definitely would like to be opportunistic about and I think there's some good progress and I'm very confident that.
We will have you as manufacturing because of course as you know also manufacturing part lomax level, so talk about potentially sending something up in the U S. But I think we have enough different.
<unk> that we can choose between over the next couple of months to make sure that we get Ah Osha manufactured in the U S.
That's great to hear I appreciate it.
Oh next question comes from <unk>, Obviously capital markets. Your line is open.
Thank you and.
<unk> thanks for <unk>.
Detail on on the production plans I.
Indicating so that I I was curious, though how we should think about delivery times, especially from Austria to to the U S and presumably most of that so I'm on the west coast.
Is it is it.
Two three weeks or because obviously, there's going to be.
I'd be too much produced in some garage and and when the vehicles delivered and recognized.
So so it takes about four four weeks could be four to five weeks to get vehicles from Europe into the U S.
And I think that the.
The advantage we have right now as we can obviously start shipping cars and then they can be slashed once they're over here. So we won't see that initial lack but once you're in production. There is that lack and you obviously the advances in Europe , if we would've had to ship them. The other ways that we are shipping from garage straight into all the European car.
Trees with.
Being able to deliver the.
The next day or a few days later, so it's a give and take there <unk> I just wanted to add that we are looking at 442 here in the U S. Both on the East coast and the West coast and definitely maximize our capability to make use of logistics, both east coast and West coast. Some parts of foster to process and of course.
Thinking exactly what you're thinking when you realize that recognizes those vehicles. So an ideal scenario will be that early in the quarter production will be docked it far North America and the later quarter will clearly recognized in Europe . So we're looking to assign logistics out of the aim would be that as the progress of Ram during the year.
We also get to increase our efficiency between production and deliveries.
Okay, but then I guess, just and I know it sort of just timing.
Timing, but the but.
300 units produced in the first quarter and you're talking about retail deliveries in February I mean, those are going to have to be European deliveries right like it's gonna be it'll still be a bit can before they come to the states.
No because we can ship. So we are producing vehicles starting 17th November this year.
And as soon as we got produced vehicles, we can ship them over to the U S and they can be here for a mid February and we can just flashed. The vehicles now we will still produce a majority of these vehicles. In later on Q1 show a majority of the vehicles will be.
And that Q1 will be is guida just mentioned delivered in Europe , because towards the end of each quarter, we will prefer to deliver vehicles in Europe .
Okay.
And I'm, just going back to Hendricks from your comments on U S manufacturing plant, obviously, the the the game changed a little bit with what the act.
Like you said you know it sounds like you're evaluating some stuff in the near term so much might have some some.
Quicker options for the novice as you mentioned like a new facility would take a couple of years, but it did sound correct me if I'm wrong like that's something you.
Would sort of evaluate and I just wanted to understand effects.
Also with a partner or that would be sort of more of a of a stand alone.
Cooperation is you'd like to.
To take on here.
I would say all of the options. We are looking at now are with partners.
Okay. Thank.
Thank you.
How's the reminder to ask any further questions. Please christoff one of my one on your telephone keypad.
And that's going to change <unk> per line is open.
Hi, guys.
Of the 42000 42400 units what percentage of those vehicles do you have you committed through a binding contract and it and I'm sorry, if I just missed this if you had answered it to Joe's question.
How should we be thinking about in the second half of next year.
You know the split across extreme ultra and sport trim levels in terms of in terms of that production.
Thanks, Yeah.
Yeah, I can take the questions that we have our launch vehicles, which is the ocean one and that's a volume of 5000 units that's already been finding.
Finding committed as we publicly communicated and then head of the I R. A we did take a certain number of binding orders will be I'll spell it out for you S allocation for sporting Ultra.
In the recent few weeks, we've seen an increase in configuration on a configurator for the extreme and that is obviously, our highest trim level and what they're anticipating is as the deliver ocean lines between Q1 and Q2, we must talk to convert in January customers, who want to take the <unk>.
Extreme since we believe that it's a phenomenal value for money. We've done a detailed benchmark study on what's out there on offer in both Europe and U S and we can see any other vehicles that actually completes with what they are offering. So we anticipate that we will get a phenomenal number of.
Reservations 40 extreme in addition to that.
We also think that this is a community of our customers that are not that strongly impacted by rising interest rates and they are looking for a great product. They are looking for an easy and we will be able to convert them. So we suspect that we will have a big bias towards extremes. Once they are out of the ocean loans.
I'm sorry that that's very helpful. <unk> can you just quantify cause that that was gonna be my follow up what it actually is the U S allotment for the sport and ultra trips for next year.
You know we haven't we haven't.
We haven't disclosed that yet at this point in time, obviously as the open up the configurator in queue for and we stopped taking up extreme orders I think you'll get more color on that property and the earning calls and may disclose that quarter on quarter on quarter. As you convert customers I mean, I think just to add to that.
I think you would have seen other manufacturers.
<unk> only the high end model.
And it's my view that we could probably have sold only extremes next year, but we created a smaller.
A sport and ultra simply because we had some very early reservation holders and we thought it would be nice for them to be able to get their vehicle next year.
But it's clear that a vast majority of our sales next year will be <unk>.
Extremes and of course, the ocean one to start with and that also means that our average selling price will be pretty close to $70000 in the first year, which is very.
Very hot.
Yeah Yep.
I know you've kept us as a trade secret so I'll I'll give it a shot to ask.
Can you talk about the size of the battery packs for for the Ultra extreme trends and then the LLP battery in this in the sport.
Could I ask that question why would you like to know that is that more important that you know the range as a customer.
Yeah. It is just curious on the efficiency of the of the power train.
That's where the question comes from.
Yeah, I know, but that's also what our competitors are so we'll be announcing that when we have two and I think it's going to be closer to his home home location. We might might include it in our configure right on the 17th but haven't decided that yet.
But what we know right now is that we have one of the most energy dense battery packs on the market today, but what we have been able to go out and compare with and there'll be also know as we have the by far the longest range of any SUV or crossover in our price range and I think that's really what's appealing to the customers.
Yeah.
Right and appealing to the questions I appreciate it thank you [laughter] alright.
Now now will take a few of the retail investor questions that were submitted online.
Henrika this one's for you.
How do you plan to offset the loss of the 7500 dollar federal incentives for the Ocean.
I think that we were very smart to go out and the offer the opportunity for people to actually close a deal on our vehicles and get that 7500.
And it was quite a lot of people who did that I.
I'm not so worried next year because of the esky dimension already I think the customers who's buying the extreme maybe I I don't think that customer's going for a vehicle just because they get that tax reduction they wouldn't buy a vehicle. They don't like just because of a tax reduction secondly, it's my opinion.
Opinion that I think that Europe , and the U S will come to some agreement.
A transition period for <unk> incentive specific date and the.
I R. A and I I would expect that to be a couple of years and I think that will give.
Another leeway, but in terms of the product we already have an incredible will price product.
So I'm not really worried about that and we also seeing an app.
Kind of a fast growth I would say in Europe on demand.
And can always shift mode events demand to Europe as well.
Thank you Henry next question.
What are your production delivery volume targets 422 and 23.
Any updates on Usp's manufacturing the ocean.
Take that so as I walk to my script I laid out a plan on how we get to 42400 units in 2023, which is based on a detailed <unk> goodbye ramp up in vehicle Assembly plan from November 17 till the end of next year and I O. S. Also mentioned, we are delivering a small fleet.
215 fiscal oceans to Magna in December .
We expect U S N E U obligation in February and then of course retail consumer deliveries to follow thereafter.
Then with respect to youth manufacturing I think I mentioned earlier, we have been approached by several Oems who are interested and excited both in ocean and pay platforms and since Ocean is near term. It's obviously, a very exciting product. So we're looking at what they can do jointly with an OEM N as magna our production partner.
Also publicly announced.
Announced that they are also looking at potential U S production of E. B as in general So they're also looking to work with them I'll hear from them on what the plans up but.
I can imagine in the next couple of years, we will have a plan to have used manufacturing for the prescription.
Gives you the next question.
The information on the mobile App has not changed since February can we expect any content updates and any relevant data to be added in the next month or so yeah, you as I mentioned earlier there'll be a huge update on November 17th both on our website mobile App and we will have our new interactive <unk>.
<unk> I just looked at is amazing so all this will be updated.
On November 17th and then we'll actually continue updating it specifically both the app and the Configurator. There are some real cool new features Luke continue adding to that and obviously once you become an owner of an ocean then you'll be able to use your app and interact with your vehicle as well.
Thank you.
Last question it looks like reservations have slowed down currently the lowest monthly month over month gain in last two years. What other means are you thinking about over the next year to boost reservations or orders. So the <unk>. So I think I mentioned earlier again that we are purposely lowered the spent on marketing I think we're right.
Now in a global turmoil on many different fronts.
I see no point in spending marketing dollars right now when we were sold out for next year.
That'd be really will start spending serious marketing dollars in queue to next year.
And obviously that will make a lot of sense because at that point will have multiple physical allowances. That's open where people can actually go and see the vehicle ordered the vehicle book a test drive it's kind of a waste of money. If you spend too much marketing money right now because people are gonna come and ask where can I test drive the car wreck and I see it and it just.
Doesn't make sense. So I think we are taking a really prudent approach I think it's the right approach to start you know as I mentioned spending serious marketing dollars into two next year.
Thank you Henrik Elliot that's all the time, we have for questions Henry.
Henrik any closing remarks, yeah.
Really super excited to go into maximum here on Saturday flying over she journalists and analysts next week get them in the car there's nothing like banging.
Banging the metal and filling the tires under you when we have been on soon for two years and creating this vehicle.
It's going to be Super exciting, we've got a tremendous vehicle and I'm looking forward to to host the lucky people that are over there. We obviously can't invite everyone, but I'm sure throughout next year other people will get the chance to drive the vehicle as well so again super excited about it. Thank you everyone for joining the call.
It's a nice color has now concluded we'd like to thank you for your participation.
May now disconnect your lines.
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