Q4 2023 Fisker Inc Earnings Call

Okay.

Operator: Good afternoon, and welcome to Fisker, Inc.'s fourth quarter and full year 2023 earnings call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session.

Good afternoon, and welcome to Vista, Inc's fourth quarter and full year 2023 earnings call.

All participants are in a listen only mode. After the speaker's presentation, we will conduct a question and answer session. As a reminder, this conference call is being recorded I would now like to turn the call over to Eric Goldstein head of Investor Relations. Thank you. Please go ahead Sir.

Operator: As a reminder, this conference call is being recorded. I would now like to turn the call over to Eric Goldstein, Head of Investor Relations. Thank you.

Eric Goldstein: Thank you, operator. Hello, everyone, and welcome to Fisker's fourth quarter and full year 2023 earnings call. As the operator mentioned, my name is Eric Goldstein, head of investor relations at Fisker. Joining me today on the call are Henrik Fisker, chief executive officer; David King, chief technology officer; Dr. Geeta Gupta Fisker, chief financial officer and chief operating officer; and Angel Salinas, chief accounting officer. Please note that today's discussion includes forward-looking statements about our expectations. However, actual results in future periods are subject to risks and uncertainties that could cause our results to differ purely from those projected. These risks include those set forth in the press releases we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission.

Thank you operator, Hello, everyone and welcome to <unk> fourth quarter and full year 2023 earnings call.

Operator mentioned my name is Eric Goldstein head of Investor Relations at Fisker. Joining me today on the call are Henrik Fisker, Chief Executive Officer, David King Chief Technology Officer.

Dr. Geeta Gupta, Fisker, Chief Financial Officer, and Chief operating Officer.

And Angel Salinas, Chief Accounting Officer.

Please note.

Today's discussion includes forward looking statements about our expectations.

Actual results in future periods are subject to risks and uncertainties that could cause our results to differ materially from those projected.

These risks include those set forth in the press release, we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.

Eric Goldstein: Today's discussion may also include certain non-GAAP measures, including non-GAAP operating expenses. These financial results discussed today are presented on a preliminary basis. Final data will be included in Fisker's annual report on Form 10-K for the period ended December 31st, 2023. With that, I'm happy to turn the call over to... Thank you, Eric. Good afternoon, everyone.

<unk> discussion May also include certain non-GAAP measures, including non-GAAP operating expenses.

The financial results discussed today are presented on a preliminary basis.

And that the final data will be included in Cisco's annual report on Form 10-K for the period ended December 31st 2023 with that I'm happy to turn the call over to Henry.

Thank you Eric and good afternoon, everyone.

Henrik Fisker: Thank you for joining us today for our fourth quarter and full year 2023 earnings call. I want to start by thanking all our stakeholders, teams, and partners for all the hard work and continued progress we made in 2023. In addition, I'm very excited to introduce Angel Salinas, our Chief Accounting Officer, who joined us in early January. Angel has 28 years of public company accounting experience.

Thank you for joining us today for our fourth quarter and full year 2023 earnings call.

I want to start by thanking all of our stakeholders teams and partners for all the hard work and continued progress we made in 2023.

In addition, I am very excited to introduce Angel Salinas, our Chief Accounting Officer, who joined US in early January Haynesville has 28 years of public company accounting experience. He is here with us in the room as Eric mentioned and we'd be happy trying to questions accounting related questions later on.

Henrik Fisker: He is here with us in the room, as Eric mentions, and would be happy to answer questions, accounting-related questions later on. 2023 was a challenging year for Fisker, but we achieved some important milestones for the full year. Fisker produced 10,193 cars and delivered over 4,900 across 12 countries. We are proud of what we were able to achieve, but acknowledge that these totals were below the guidance we provided during the year, despite what we believe was the swiftest and largest delivery expansion of any EV startup company ever. Supplier delays and other issues unexpectedly hampered our ability to ramp up production and deliveries during the year.

2023 was a challenging year for fiscal <unk>, we achieved some important milestones for the full year physical produced 10193 oceans and delivered over 4900 across 12 countries. We are proud of what we were able to achieve but acknowledge that these totals were below the guidance we.

Provided during the year.

Despite what we believe was the swiftest and largest delivery expansion any EV startup company ever.

Supplier delays and other issues unexpectedly hampered our ability to ramp up production and deliveries during the year, while we made good progress in solidifying our delivery network, we were not able to efficiently accommodate our backlog backlog of the pace, we and our customers desired underserved.

Henrik Fisker: While we made good progress in solidifying our delivery network, we were not able to efficiently accommodate our backlog at the pace we and our customers desired and deserved. This led to the decision that we announced in January of a shift to a dealer partner model. In early January, we announced our dealer partner model in North America and hybrid model in Europe, a big strategic shift for Fisker. We are making significant progress on this rollout, and I'm pleased to report we have already sent our first invoices this week to several dealer groups. We have received over 250 expressions of interest from dealers across North America, Canada, and Europe.

This led to the decision that we announced in January of a shift to a dealer partner model.

In early January we announced our dealer partner model in North America, and hybrid model in Europe, a big strategic shift for Pittsburgh we.

We are making significant progress on this rollout and I am pleased to report we already have sent our first invoices. This week to several dealer groups. We have received over 250 expressions of interest from dealers across North America, Canada and Europe. Just recently, we hosted several of these dealers and at our Manhattan Beach headquarters.

Henrik Fisker: Just recently, we hosted several of these dealers at our Manhattan Beach headquarters for a presentation of the Fisker lineup vehicles. It was an exciting day looking into the strategic future of our company. We are carefully choosing our dealer partners. At the moment, we have signed up dealers who are family owned and some who want to open multiple stores for us as we grow. One example is a dealer who is interested in nine locations in North America. Another example is a European dealer group who is working on taking over the entire country in Europe.

A presentation of the physical lineup vehicles. It was an exciting day looking into the strategic future of our company.

We are carefully choosing our dealer partners at the moment, we have signed up dealers, who are family owned and some who want to open multiple stores for us as we grow. One example is a dealer who is interested in nine locations in North America. Another example is a European dealer group.

He was working on taking the entire country in Europe.

Henrik Fisker: That gives me great confidence that we will be able to set up a comprehensive, wide-reaching dealer network in a very short time. I expect we will keep signing up multiple dealers every week during the next few months and have a comprehensive dealer network with approximately 50 dealer locations in both North America and Europe by the second half of this year. As we recognize the EV market is growing at a slower pace, we want to be prepared. We have already initiated a strategy to make our company even more lean and competitive. Specifically today, we announced a headcount reduction of approximately 15% of our workforce, mainly as a result of this shift from a direct-to-consumer model to a dealer model, as well as streamlining the company in other areas. We recognize that success is not a straight line.

That gives me great confidence that we will be able to set up a comprehensive wide reaching dealer network in a very short time I expect we will keep signing up multiple dealers every week. During the next few months and have a comprehensive dealer work with approximately 50 dealer locations in both North America and Europe by the second half of this year.

Okay.

As we recognize the EV market is growing at a slower pace, we want to be prepared.

We have already initiated a strategy to make our company, even more lean and competitive specifically today, we announced the head count reduction of approximately 15% of our workforce, mainly as a result of this shift from direct to consumer model to a dealer model as well as streamlining the company and other areas we recognize that some.

<unk> is not a straight line, we are bringing to the world the most sustainable electric vehicle.

Henrik Fisker: We are bringing the world the most sustainable electric vehicle. We knew this would be difficult, but we are in this for the long haul and are confident in our direction. We believe the Ocean platform is competitively priced and has several class-leading features, including a best-in-class range of 360 miles. But we also realize that the EV industry is going through a turbulent and unpredictable period. So we want to start this year with a more prudent plan. We currently anticipate delivering approximately 20,000 to 22,000 oceans globally in 2024.

We knew this would be difficult, but we are in this for the long haul and are confident in our direction.

We believe the Ocean platform is competitively priced and has several class leading features including our best in class range of 360 miles.

While we also realize that the EV industry is going through a turbulent and unpredictable period.

So we want to start this year with a more prudent plan.

We currently anticipate delivering approximately 20 to 22000 oceans globally in 2024.

Henrik Fisker: We expect sales momentum to build throughout the year as our dealer footprint expands. We continue to bolster the breadth and depth of our management team with key executive leaders, high key executive leadership hirings of seasoned and experienced executives across departments, including financing, accounting, and marketing. I want to highlight one important development regarding our senior convertible notes. On January 21, Fisker entered into a Second Amendment and waiver agreement with the holder of the 2025 Senior Convertible Note.

We expect sales momentum to build throughout the year as our dealer footprint expands.

We continue to bolster the breadth and depth of our management team with key executives leaders.

Key executive leadership hirings of seasoned and experienced executives across departments, including financing accounting and marketing.

I want to highlight one important development regarding our senior convertible notes.

On January 21st Fisker entered into a second amendment and waiver agreement with the holder of the 2025 senior convertible notes.

Henrik Fisker: Pursuant to this waiver, among other things, the company obtained a release from the note holder relating to certain intellectual property belonging to Fisker upon the company entering into a certain commercial agreement with an automotive original equipment manufacturer, or OEM. The waiver provided us with increased flexibility to pursue strategic collaborations. Geeta will speak further on the convertible notes in her remarks. On the strategic front, Fisker is in negotiations with a large automaker for a potential transaction, which could include an investment in Fisker, joint development of one or more electric vehicle platforms, and North America Manufacturing. The close of any transaction would be subject to the satisfaction of important conditions, including completion of the diligence and negotiations and execution of the appropriate definitive agreement.

Referring to this waiver among other items. The company has obtained obtained a release from the note holder relating to certain intellectual property belongings to fisker upon the company entering into a certain commercial agreement with an automotive original equipment manufacturer OEM.

The wave or provide us with increased flexibility to pursue strategic collaborations data will speak further on the convertible notes in her remarks.

On the strategic front.

<unk> is in negotiations with a large automaker for a potential transaction, which could include an investment and Fisker joint development of one or more electric vehicle platforms.

And North America manufacturing the.

The close of any transaction would be subject to satisfaction of important conditions, including completion of due diligence and negotiations and execution of appropriate definitive agreements.

Henrik Fisker: Turning to the ocean, as mentioned earlier, we are proud to have delivered all over 4,900 Fisker Oceans in 2023, and in the fourth quarter, we produced 4,789 vehicles and delivered 3,818 vehicles, an increase of approximately 250% from Q3 to Q4. In 2023, the Fiskocean won six different European awards in Germany, France, Denmark, and the United Kingdom for Best Electric Vehicle, Best SUV, and Best Product Design. These accomplishments mark an important validation of a world-class product that our incredible, talented team has developed. The Ocean OS 2.0 over-the-air update has already begun, which includes performance and powertrain improvements, enhancements for SolarSky, improved energy management, and other user experience improvements. Additional OTA updates are planned throughout 2024. This shows how advanced and fully connected our Ocean vehicle is compared to most of our competitors. The ocean is simply getting better and better.

Turning to the Ocean as mentioned earlier, we are proud to have delivered over 4900 <unk> Ocean in 2023.

And in the fourth quarter, we produced 4789 vehicles and delivered 3818 vehicles, an increase of approximately 250% from Q3 to Q4.

In 2023, the <unk> six different European Awards in Germany, France, Denmark, and the United Kingdom for Best Electric vehicle Best SUV and best product design. These accomplishments marks an important validation of the world class World class product that our incredible talented team has developed.

The Ocean <unk> as two point over the air update has already begun which includes performance in powertrain improvements enhancements for solar Sky improved energy management and other user experience improvements additional <unk> updates are planned throughout 2024. This shows how advanced and fully connected.

Ocean vehicle is compared to most of our competitors. The ocean is simply getting better and better but I'll have David King Our Chief Technology Officer address our <unk> strategy in more detail later.

Henrik Fisker: But I will have David King, our chief technology officer, address our OTA strategy in more detail later. Now, let's talk about our future products. In 2023, we rolled out our vision for the future of Fisker products with a pair, a radical new segment Boston compact SUV designed to capture a large addressable market, and Alaska, a vehicle in a segment of its own. Now that several OEMs have postponed their EV programs, Alaska will sit in a unique market segment without any direct EV competitors due to its price and features. The Alaska is about the size of a Fort Ranger but with luxuries, unique features, and bed sizes from four and a half to seven and a half.

Yeah.

Let's talk about our future products in 2023, we rolled out our vision for the future of <unk> products with a pair of radical new segment, Boston compact SUV designed to capture large addressable market and Alaska a vehicle in a segment of a zone now that several Oems have postponed their EV programs.

Alaska will sit in a unique market segment without any direct EV competitors due to its price and features the Alaska is about the size of a Ford Ranger, but with luxuries unique features in bed sizes from five to seven five feet.

Henrik Fisker: Expected pricing is at $45,900 and up. This is the next model we are concentrating on right now. We will only continue to invest in these programs if we complete a strategic collaboration or investment with an OEM. Sustainability. Turning to the topic of ESG and sustainability, a foundational pillar for our company. We have made a strategic move to confidently drive toward our goal of creating the most sustainable vehicles across all our programs. Our head of ESG now reports directly to our CTO. This enhances ESG alignment with engineering, design, and procurement, providing more immediate access to support innovation and low-impact materials and technology. Our sustainability team has the full support of these departments and continues to work with our materials engineers and design leaders, who work directly and diligently to use the best quality and lowest impact materials and technology.

We expect that pricing at $45900 and up this is the next model. We're concentrating on right now we will only continue to invest in these programs. If we complete our strategic collaborations or investment with an OEM.

Sustainability, turning to the topic of ESG and sustainability are.

A foundational pillar for our company. We have we have made a strategic move to confidently drive toward our goal of creating the most sustainable vehicles across all our programs our head of ESG now reports directly to our CTO. This enhances ESG alignment with engineering design and procurement.

Riding more immediate access to support innovation and low impact materials and technology. Our sustainability team has the full support of these departments and continues to work with our materials engineers and design leaders that work directly and diligently to use the best quality and lowest impact materials and technology are copper.

Henrik Fisker: Our carbon footprint lifecycle assessment published in 2023 clearly shows our ability to lead the industry in sustainability. We are currently working on a system to incorporate ongoing carbon footprint analytics and target setting for sustainability that will promote verifiable radical advancement. As I look back on 2023 and ahead to the remainder of 2024, while I'm well aware that sentiment on EVs has seen brighter days and our own company has experienced growing pains, my confidence in the future of Fisker remains very strong. Through the hard work of our dedicated team, I know we will continue to grow the Fisker brand and expand in our current North American and European markets and beyond. I appreciate everyone for sticking with us on this journey towards a clean, sustainable mobility future for us all. I would now like to turn the call over to our Chief Technology Officer, David King. Thank you, Henry.

<unk> footprint lifecycle assessment published in 2023, clearly shows our ability to lead the industry in sustainability. We are currently working on our system to incorporate ongoing carbon footprint analytics and target setting for sustainability that will promote verifiable radical advancements.

As I look back on 2023 and ahead to the remainder of 2024, while I'm well aware that sentiment on Evs has seen brighter days and our own company has experienced growing pains my confidence in the future of physical remains very strong.

Through the hard work of our dedicated team I know, we will continue to grow the physical brand and expand in our.

Our current North American and European markets and beyond.

I appreciate everyone for sticking with us on this journey towards a clean sustainable mobility future for us all.

I would now like to turn the call over to our Chief Technology Officer, David King.

Thank you Henrik.

David Jeremy King: The key focus for the Fisker engineering team in the last quarter has been to consolidate the hard work that went into launching the Ocean by optimizing quality and the customer experience, with a particular emphasis on software updates and feature introductions. Our strategy for the Ocean was to launch a global car with class-leading design and features, future-proofed hardware, and a fully-connected, cyber-secure software platform that would allow us to continually improve the user experience, optimize driving performance, and introduce new features throughout the life of the car. The acclaim that the Ocean has received in the U.S. and in Europe for its design, build quality, comfort, roominess, range, and dynamic performance is testament to our successful delivery of the hardware.

A key focus for the <unk> engineering team in the last quarter has been to consolidate the hard work that went into launching the ocean by optimizing quality and the customer experience with a particular emphasis on software updates and feature introductions.

Yes.

Our strategy for the Ocean was to launch a global car with class, leading design and features future proofed hardware and a fully connected cyber secure software platform that would allow us to continually improve the user experience optimized driving performance and introduce new features throughout the life of the car.

The claim that the Ocean has received in the U S and in Europe for its design build quality comfort roominess its range and dynamic performance is testament to our successful delivery of the hardware.

David Jeremy King: And our investment in our over-the-air capability to update software in so many of the vehicle's ECUs means we can respond quickly to early customer feedback and our own data analysis to roll out performance improvements, bug fixes, and some key features that were always planned to follow shortly after the initial start of production. Delivering any new software manually or over the air is a big responsibility, and our testing and approval of components, system level, and vehicle level is accordingly rigorous in order to add additional quality gain. The key process improvement introduced in Q4 is our 3-step OTA rollout that requires confirmation of successful updates in subsets of our internal and customer fleets before going full scale. We have also published a software roadmap to give better visibility of future upgrades, and our intention is to achieve a consistent monthly cadence of OTAs with at least three months' rolling visibility of content. Looking back now on recently deployed updates. During November and December, we rolled out OS 1.10 and 1.11. The former included refinements to the low-speed regen braking performance over bumpy or slippery surfaces, along with 12-volt battery life improvements and bug fixes.

And our investment in our over the air capability to update software and so many of the vehicles ease to use. It means we can respond quickly to early customer feedback and our own data analysis to rollout performance improvements bug fixes and some key features that were always planned to follow on the shortly after the initial start of production.

Delivering any new software manually or over the year is a big responsibility and are testing and approval of component system level and vehicle level is accordingly rigorous.

In order to add additional quality guides.

A key process improvements introduced in quarter four is our three step OTI rollout that requires confirmation of successful updates in subsets of our internal and customer fleets before growing full scale.

We have also published a software roadmap to give better visibility of future upgrades and our intention is to achieve a consistent monthly cadence of otas with at least three months rolling visibility of content.

Okay.

Looking back now on recently deployed updates during November and December we rolled out one one and $1 11.

Former included refinements to the low speed reach on breaking performance over bumpy or slippery surfaces.

Along with 12 volt battery life improvements and bug fixes the.

David Jeremy King: The latter was focused on center screen response improvements, bug fixes, and the introduction of treatment. Meanwhile, we've also been working hard to complete the testing on the much-anticipated OS 2.0 that has commenced customer rollout this week. OS 2.0 is our largest scale OTA package to date, with updates to 12 ECUs to deliver new features such as auto hold, trailer sway mitigation, revised 45-55 front rear torque split, further refinements to regen brake blending, solar sky charging meter, and OTA whilst plugged in, along with performance improvements such as improved cabin heating and defogging, revised audio tune for improved bass response, improved center screen response and bluetooth stability, part one of driver profiles, as well as a range of bug fixes and some enabling changes for future updates.

The latter was focused on center screen response improvements bug fixes and the introduction of trip meters.

Meanwhile, we've also been working hard to complete the testing on the much anticipated <unk> two point in tow.

Commenced customer rollout this week.

<unk> two point in time is our largest scale OTI package to date with updates to <unk> to use to deliver new features such as auto hold trailer sway mitigation revised $45 55 front rear talk split further refinements to reach and break blending subtlest, Scotty charging meter and OTI <unk> plugged.

In along with performance improvements such as improved cabin heating <unk> revised audio tune for improved Bank's response improved center screen response, and Bluetooth stability.

One of driver profiles as well as a range of bug fixes and some enabling changes for future updates.

David Jeremy King: It also includes the eagerly awaited key fob performance improvements and improved 12-volt battery management with a customer-selectable energy-saving mode that reduces overnight state of charge loss to below 1%. Our ability to make this scale of OTA update is currently very rare within the industry, and it places us in a very strong position to not only keep pace with, but to set the pace in, a rapidly changing industry where software increasingly defines the user experience. I've been driving an early release of OS 2.0 in my own Ocean for over a month now, covering more than 1,500 miles in that time, and I am delighted that the sum of all the improvements in this ambitious package is so clearly apparent in the noticeably more sophisticated driving experience and cleaner functionality, as well as fixing some irritations that I know will be much appreciated by our customers.

It also includes the eagerly awaited key for performance improvements and improved 12 volt battery management, where the customer collectible energy saving mode that reduces overnight stays a charge loss to below 1%.

Yeah.

Our ability to make this scale of OTI update is currently very rare within the industry and it places us in a very strong position to not only keep pace, but to set the pace in a rapidly changing industry, where software increasingly defines the user experience.

Okay.

I've been driving an early release of <unk> two point in time and my own ocean for over a month now covering more than 500 miles in that time.

I am delighted.

Some of all the improvements in this ambitious package is so clearly apparent in the noticeably more sophisticated driving experience and cleaner functionality as well as fixing some irritations that I know will be much appreciated by our customers.

David Jeremy King: Looking ahead, we are preparing now to release OS 2.1 in March and OS 2.2 in April, both of which will be smaller in scale than 2.0, while we finalize the next major feature upgrade, OS 3.0, in May. 2.1 will introduce Alexa, scheduled OTA, and further center screen enhancement. Meanwhile, OS 2.2 will add memory seats, some general calibration refinements, and a UK time zone.

Looking ahead, we are preparing now to release our $2. One in March and I was two two in April both of which will be smaller in scale than two point in time, while we finalize the next major feature upgrades almost three point in time in May.

$2, one we'll introduce Alexa schedule to OTI in further center screen enhancements, while I was $2 two will add memory seats. Some general calibration refinements under U K Timezone fix.

David Jeremy King: OS 3.0 is our next major OTA package, and we are in the late stages of testing and sign-off now. Feature content includes torque vectoring, one-pedal drive, further ESP refinements, hill descent control, new exterior sounds, and a suite of ADAS performance improvements and features, including active cruise control. Our vehicle engineering team is just back from a comprehensive winter test and sign-off trip in Sweden earlier this month with excellent results on the ice lake, where even the front-wheel drive entry-level sport version gave an excellent account of itself. Away from ocean optimization, the Fisker team continues to work hard on the Alaska project. This exciting mid-sized EV pickup will be packed with innovative features and will be uniquely placed in a segment of its own.

<unk> three point in time as our next major OTI package and when you are in the late stages of testing and sign off now.

Feature content includes torque Vectoring, one pedal drive further ESP refinements Hilda scent control, new exterior sounds and a suite of <unk> performance improvements and features including active cruise control.

Our vehicle engineering team is just back from a comprehensive winter test and sign of trip in Sweden earlier. This month with excellent results on the ice lake, but even the front wheel drive entry level sport fashion.

Excellent account of itself.

Okay.

Away from Ocean optimization, the fiscal team continues to work hard on the Alaska project. This exciting mid size EV pickup will be packed with innovative features and will be uniquely placed in a segment of its own.

David Jeremy King: All our learning and experience from the OCEAN program is being embedded in the specifications and the engineering data to ensure a rapid and robust development phase. I'm very proud of what our team has accomplished thus far and excited for our customers to experience the features and upgrades we have in store for them. With that, I'll turn the call over to Geeta.

All our learning and experience from the Ocean program as being embedded in the specifications in the engineering data to ensure rapid and robust development phase.

I am very proud of what our team has accomplished thus far and excited for our customers to experience. The features and upgrades we have in store for them.

With that I'll turn the call over to Keith.

Geeta Gupta: Thank you, David. I would like to begin by expressing my gratitude to the entire Fisker team, our suppliers, customers, and our shareholders who have supported us during a tough year. As Henrik has already said, 2023 was a much more challenging year than we anticipated. However, I can assure you that everyone at Fisker is working extremely hard around the clock.

Thank you David I would like to begin by expressing my gratitude to the entire <unk> team, our suppliers customers and shareholders, who have supported us during a tough year as Henrik as already said 2023 with a much more challenging year than we anticipated. However, I can assure you that everyone. At this guy is looking extremely.

Around the clock.

Geeta Gupta: We have a highly differentiated product that truly deserves a higher level of customer awareness. As we roll out our dealer partnership strategy, we expect our sales to grow as consumers become more aware of our brand and have the ability to test drive and kick the tires. I will now review our preliminary fourth quarter results fully resolved.

A highly differentiated product that truly deserves a higher level of customer awareness as we rollout at dealer partnership strategy, we expect our sales to grow as consumers become more aware of our brand and have the ability to test drive and kick the tires.

I'll now review, our preliminary fourth quarter full year results.

Geeta Gupta: Our fourth-quarter revenue was $200.1 million, which was an increase of approximately $128 million from the third quarter. Higher revenues were driven by a significant increase in deliveries in the quarter to 3,818 units compared to 1,097 units in the third quarter of 2023. Our top line in the fourth quarter was reduced by $44.6 million that was allocated to deferred revenue accounts on our balance sheet.

Our fourth quarter revenue was $200 1 million, which was an increase of approximately $128 million from the third quarter.

Higher revenues were driven by a significant increase in deliveries in <unk>.

Quarter in the quarter to 3818 units compared to 1097 units in third quarter 2023.

Our top line in the fourth quarter was reduced by $44 $6 million that is allocated to deferred revenue accounts on our balance sheet.

Geeta Gupta: This relates to revenue we expect to realize in the future when additional services tied to certain option packages are performed, specifically related to ADAS, as well as certain vehicle features and functions that are updated over the air. A significant amount of this deferred revenue was also tied to a special package from Fisker Ocean One owners that was announced in October. That package included free vehicle infotainment upgrades, lifetime wireless connectivity, a warranty extension, free tire replacement, and a 1,000 ChargePoint gift card, among other things.

This relates to revenue, we expect to realize in the future when additional services tied to certain option packages outperformed specifically related to Adas as well as certain vehicle features and functions that are updated over the air.

Significant amount of deferred revenue was also tied to a special package and fiscal Ocean wind owners that was announced in October.

That package included three vehicle infotainment upgrades lifetime wireless connectivity a warranty extension.

Pre tire replacement and a 1000 charging points gift card amongst other items.

Geeta Gupta: If we were to include the deferred revenue, our reported revenue would have been approximately $244.7 million, and our average selling price would have been more in line with analysts' expectations. Our gross margin was negative 35% in the quarter. However, there were some non-recurring items in the cost of goods sold that negatively impacted margins, including an inventory valuation charge and a supplier capacity expense. On an adjusted basis, adding back the deferred revenue and removing the inventory charge and supplier capacity expense, our growth margin would have been positive. We reported a loss from operations in the quarter of $103 million. SG&A of $79.4 million increased sequentially, largely due to a rise in headcount during the quarter and higher professional fees.

If we were to include the deferred revenue our reported revenue would have been approximately $244 7 million.

And our average selling price would have been more in line with analysts' expectations.

Our gross margin was negative 35% in the quarter.

There were some nonrecurring items in the cost of goods sold that negatively impacted margins, which includes an inventory valuation charge and the supplier capacity expense.

On an adjusted basis, adding back the deferred revenue and removing the inventory charge and setback capacity expense, our gross margin would have been positive.

We reported a loss from operations in the quarter of $103 million.

SG&A of $79 4 million increased sequentially largely due to a rise in head count during the quarter and higher professional fees.

Geeta Gupta: We quickly recognized that we needed to pivot from direct sales to the dealer partnership model for the reasons that Henrik has already described. At the end of the fourth quarter, with this pivot, we also needed to streamline company-wide operations. As a result, we expect to have a significant reduction in costs with respect to our real estate expenses and payroll through work post reductions and related SG&A expenses. Furthermore, we expect to have additional reductions in R&D as the ocean development is largely complete, and any new vehicle program spending will be tied to a strategic automaker collaboration. I will now address a couple of other items in the English statement. Other expense in the quarter was minus $10.5 million, largely due to a write-off for a loan we had previously made to a trouble supplier.

Quickly recognized we needed to pivot from direct sales to the dealer partnership model for the reasons that Henrik as already described at the end of the fourth quarter.

With this pivot we also needed to streamline companywide operations.

As a result, we expect to have a significant reduction in costs with respect to our real estate expenses and payroll through workforce reductions and related SG&A expenses.

Furthermore, we expect to have additional reductions in R&D as the Ocean development is largely complete and any new vehicle program spending will be tied to our strategic automaker collaboration.

I will now address a couple of other items in the income statement.

Other expense in the quarter was minus $10 5 million largely due to a write off for a loan we had previously made to the troubled supplier.

Geeta Gupta: We had a negative $328.5 million adjustment to the fair value of our 2025 convertible nodes in the fourth quarter. The primary driver of this was the result of a conversion feature, which became available to the holder of the notes due to late filing of our Form 10-Q for the period ended September 30, 2023. Fisker amended the agreement with the note holder to remove this conversion feature when we file a 10-K with the SEC. As of February 29, approximately 237 million of the 2025 notes have been converted to equity, which has reduced the principal amount of 225 notes outstanding to 273 million from the initial aggregate principal amount of 510 million. After our annual 10K is filed with the SEC, this conversion feature will cease to be available to the note holder, and the fair value of the notes will be reduced. Our net loss for the fourth quarter was $463.6 million, or $1.23 per share.

We had negative $328 5 million adjustment to it.

The fair value of our 2025 convertible notes in the fourth quarter.

The primary driver of this was the result of a conversion feature which became available to the holder of the note due to late filing of our Form 10-Q for.

For the period ended September 32023.

<unk> amended the agreement with the note holder to remove this conversion feature when we file our 10-K with the SEC.

As of February 29, approximately $237 million of between 25 notes have been converted to equity which has reduced the principal amount of 225 notes outstanding to $273 million from the initial aggregate principal amount.

Of $510 million.

After our annual 10-K as filed with the SEC. This conversion feature will cease to be available to the note holder and the fair value of the notes will be reduced.

Our net loss for the fourth quarter was $463 6 million or one.

$1 23 per share.

Geeta Gupta: For the full year 2023, we reported revenue of $272.9 million, which excludes the aforementioned $44.6 million of deferred revenue. Our reported gross profit was minus $102.9 million, or minus 38 percent. Our net loss for the year was $762 million, or minus $2.22 per share.

For the full year 2023, we reported revenue of $272 9 million.

Which excludes the aforementioned $44 6 million of deferred revenue.

Our reported gross profit was minus $102 9 million or minus 38%.

Our net loss for the year was $762 million or minus two point Q.

Q2 dollars per share.

Geeta Gupta: We ended 2023 with $325.5 million in cash-in-cash equivalents and $70.5 million in restricted cash. Our cash position fluctuates based on a variety of factors. Since December 31, 2023, there has been a further reduction in our cash due to ongoing operations. Before we move on to our outlook for 2024, I'd like to address our liquidity situation and 10k status. We expect our capital expenditures and working capital requirements to decrease in 2024 and beyond as we enter the second year of ocean production. However, our business plan is highly dependent on the successful transition and execution from selling direct to customers to a new dealer partner model. Furthermore, to the extent our current resources are insufficient to satisfy our financial requirements over the next 12 months, we may need to seek additional equity or debt financing, and there can be no assurance that we will be successful in these efforts. If the financing is not available or if the terms of financing are less desirable than we are expecting, we may be forced to decrease our planned level of investment in product development.

We ended 2023 with $325 5 million in cash and cash equivalents and $70 5 million in restricted cash.

Our cash position fluctuate based on a variety of factors. Since December 31, 2023 that has been a reduction further reduction in our cash due to ongoing operations.

Before we move on to our outlook between 24, I'd like to address our liquidity situation and turnkey status.

We expect our capital expenditures and working capital requirements to decrease in 2024 and beyond as we enter the second year of Ocean production. However, our business plan is highly dependent on the successful transition and execution from selling direct to customers to our new dealer partner model.

Furthermore to the extent, our current resources that insufficient to satisfy our financial requirements over the next 12 months, we may need to seek additional equity or debt financing and they can be no assurance that we will be successful in these efforts if the financing is not available or if the terms of financing.

A less desirable than we are expecting we may be forced to decrease our planned level of investment in product development.

Geeta Gupta: We may have to scale back our operations, including headcount and production of the Ocean, which could have an adverse impact on our business and financial prospects. As a result, we expect to conclude there is substantial doubt about our ability to continue as a going concern when we file our 10K with the SEC. To address potential liquidity issues, Fisker is already taking action.

Have to scale back our operations, including head count and production of the Ocean, which could have an adverse impact on our business and financial prospects. As a result, we expect to conclude there is substantial doubt about our ability to continue as a going concern when we file our 10-K with the SEC.

Address potential liquidity issues <unk> already taking action. We are currently in discussion with an existing note holder about potentially making an additional investment in the company.

Geeta Gupta: We are currently in discussions with an existing note holder about potentially making an additional investment in the company. The use of proceeds if a transaction is consummated is expected to be for general corporate purposes, vehicle production, and the ongoing transition to a dealer-focused sales model, in addition, as previously noted, Fisker intends to reduce this workforce by approximately 15%.

Use of proceeds if a transaction is consummated.

Expect it to be for general corporate purposes vehicle production and the ongoing transition to a dealer focused sales model.

In addition, as previously noted.

<unk> intends to reduce this purpose by approximately 15% head count reductions are predominantly related to change in sales strategy from direct to consumer and to a dealer partner model. In addition, we are streamlining operations, including reducing our physical footprint and overall expenses.

Geeta Gupta: Headcount reductions are predominantly related to a change in sales strategy from direct-to-consumer and to a dealer-partner model. In addition, we are streamlining operations, including reducing our physical footprint and overall expense. Regarding our 10-K, Fisker is currently unable to file its annual report on Form 10-K for the year ended December 31, 2023, the 2023 Form 10-K, within the time period prescribed.

Our 10-K fiscal is currently unable to file its annual report on Form 10-K for the year ended December 31, 2023, the 2023 Form 10-K within the time period prescribed fiscal needs additional time to finalize its consolidated financial statements and evaluation of the disclosure controls and procedures.

Geeta Gupta: Fisker needs additional time to finalize its consolidated financial statements and evaluation of disclosure controls and procedures. We currently expect to file the 2023 Form 10-K within the 15-day extension period provided under Rule 12B25. Turning to our 2024 outlook, as Henrik stated, we expect to sell between 20,000 and 22,000 units in 2024, with the rollout of our dealer network underway, enhanced by the improvements and optimizations made to our outbound logistics operations. We believe we have a strategy to make this happen in the most efficient and financially prudent way. Importantly, the carrying value of completed vehicles in our inventory and prepaid raw materials at year-end was approximately $530 million.

We currently expect to file the 2023 Form 10-K that into 15 day extension period provided under rule <unk> 25.

Turning to our 2020 outlook as Sandra stated, we expect to sell between 20020 2000 units in 2024 with the rollout of our dealer network under the enhanced by the improvements and optimizations made to our outbound logistics operation. We believe we have a strategy to <unk>.

Make this happen in the most efficient and financially prudent way.

Potently the carrying value of completed vehicles.

Inventory and prepaid raw materials at year end was approximately $530 million during.

During the first half of 2024, we expect to generate cash from the sale of existing train train three production vehicles that are largely paid for supporting monetization of our balance sheet. In addition, we expect a higher than usual cash contribution from the oceans produced and subsequently.

Geeta Gupta: During the first half of 2024, we expect to generate cash from the sale of existing 2023 production vehicles that are largely paid for, supporting monetization of our balance sheet. In addition, we expect a higher than usual cash contribution from the oceans produced and subsequently sold in the first half of 2024 as the company consumes raw materials that are already on its balance sheet, meaning they're already paid for. On a non-GAAP basis, spending for SG&A, R&D, and CAPEX for 2024 is expected to be in the range of $320 to $390 million. Of this, SG&A is estimated to be $200 to $230 million, which is lower than our annualized fourth-quarter run rate.

<unk> sold in the first half of 2024 asset company consumes raw materials that are already on its balance sheet, meaning they are already paid for.

On a non-GAAP basis spending for SG&A R&D and Capex between 2004 is expected to be in the range of $320 million to $390 million of this SG&A is estimated to be $200 million to $230 million, which is lower than the annualized fourth quarter run rate.

R&D is estimated to be in the $60 million to $80 million range and Capex is also estimated to be in the $60 million to $80 million range.

This guidance strikes a balance between our asset light model, a prudent investment plans and streamlining the company's operations further to achieve goals between 'twenty four.

Our estimated average selling price per vehicle will be in the range of 56 to 62000 after taking into account import duties and dealer commissions.

Geeta Gupta: R&D is estimated to be in the 60 to 80 million range, and CAPEX is also estimated to be in the 60 to 80 million range. Together, this guidance strikes a balance between our asset-light model, our prudent investment plans, and streamlining the company's operations further to achieve our goals for 2024. Our estimated average selling price per vehicle will be in the range of $56,000 to $62,000 after taking into account import duties and dealer commission. Reflecting the recent conversions of a portion of 2025 senior convertible notes to equity and stock-based compensation, 456,780,116 shares of the company's Class A common stock are outstanding as of February 26, 2024. In addition, there are 132,354,128 shares of Class B common stock outstanding for a combined total of 589,134,244 shares.

Reflecting the recent conversation conversions of a portion of 2025 senior convertible notes to equity and stock based compensation $456 million 780116 shares of the company's class a common stock outstanding as of February 2000.

Six $2 24 in.

In addition, there are 132.354 million 128 shares of class B common stock outstanding for a combined total shares outstanding of $589 million 134244 shares were.

We're now happy to answer your questions.

Okay. Thanks, Thanks, Peter we're going to take.

Great questions that we received from retail and then we'll jump into Q&A from the analysts that are on the line. So the first retail question is.

Given the recent decline in the stock price what is Cisco's next move to improve shareholder value and how many new dealers. This fiscal I think its going to gain with dealer partner model.

Henrik Fisker: We are now happy to answer your questions. Okay, thanks. Thanks, Geeta.

Well first fiscal year as intently focused on the transition from a direct to consumer sales model to a dealer partner model that I already talked about.

Henrik Fisker: We're going to take three questions that we received from retail, and then we'll jump into Q&A from the analysts that are on the line. So the first retail question is, Given the recent decline in the stock price, what is Fisker's next move to improve shareholder value, and how many new dealers does Fisker think it is going to gain with the dealer-partner models? Well, first, Fisker is intently focused on the transition from a direct-to-consumer sales model to a dealer-partner model that I already talked about. Also, we have over 250 interested dealers, both in North America and Europe. And obviously, we are going to convert a lot of those as fast as we can into signed up dealers. We right now have 17 dealer locations already signed up between the US and Europe.

Also we have over 250.

Interested dealers.

Between North America, and Europe, and obviously, we're going to convert a lot of those as fast as we can into signed up dealers.

We right now have.

17 dealer locations already signed up between U S and Europe, and we have already started.

Invoices from dealers and actually start to ship the first cars to dealers today.

And I expect by the end of this quarter, we will have 50 dealer locations between in U S and in Europe, and I expect by the end of the year, we will have at least 100 dealer locations here in the U S.

Henrik Fisker: And we have already started taking invoices from dealers and will actually start to ship the first cars to dealers today. And I expect by the end of this quarter, we will have 50 dealer locations in the US and in Europe. And I expect by the end of the year, we will have at least 100 dealer locations here in the US and in Europe, probably about 60 dealer locations, 50 to 60. Thanks, Henrik.

And in Europe, probably about 60 dealer locations 50 to 60 <unk> et.

Alright second question, we're going to be pretty limited in terms of what we're allowed to say, but the question was have there been any serious merger discussions with large automakers.

Yes, we've already had many discussions with large OEM partners or potential partners, but one have progressed quite far and we are now in the middle of negotiations with one large automaker for a potential transaction, which could include an investment in Fisker joint development of one or more electric vehicle platforms and north.

Henrik Fisker: All right, second question. We're going to be pretty limited in terms of what we're allowed to say, but the question was, have there been any serious merger discussions with large automakers? Yes, we've already had many discussions with large OEM partners or potential partners, but one has progressed quite far. And we are now in the middle of negotiations with one large automaker for a potential transaction, which could include an investment in Fisker, joint development of one or more electric vehicle platforms, and North American manufacturing. The close of any transaction would be subject to the satisfaction of important conditions, including completion of the diligence and negotiation and execution of appropriate defensive agreements. Okay, and last question from retail: Fisker has missed its guidance and targets, and the recent 10-Q miss from the third quarter set off a cascading event with the 2025 notes.

American manufacturing the closer of any transaction would be subject to satisfaction of important conditions, including completion of due diligence and negotiation and execution of appropriate definitive agreements.

Okay and last question from retail.

Fisker has missed its guidance and targets in the recent 10-Q missing from the third quarter.

Net author cascading event with the 2025 notes.

And now we have an out of compliance letter with the New York Stock exchange.

What concrete steps are being taken to rebuild trust and to hit targets.

We recognize that our 2023 was a challenging year for the company our guidance and targets reflected our best estimate at the time, but as discussed a number of unexpected challenges arose we continue to bolster the breadth and depth of our management team with key executive leadership hirings, such as Angel here today.

Henrik Fisker: And now we have an out-of-compliance letter with the New York Stock Exchange. What concrete steps are being taken to rebuild trust and to hit targets? We recognize that 2023 was a challenging year for the company. Our guidance and targets reflected our best estimate at the time, but, as discussed, a number of unexpected challenges arose.

And we will continue to hire people that we need and that will help the team here we are.

Anticipate that a strategic partnership would help.

With a growth strategy and also.

Henrik Fisker: We continue to bolster the breadth and depth of our management team with key executive leadership hires such as Angel, who is here today. And we will continue to hire people that we need and that will help the team. We anticipate that a strategic partnership would help with growth strategy and also, you know, local manufacturing. Our dealer partner model is progressing well, and I expect that this is going to help accelerate our deliveries this year. In fact, starting already next month.

Local manufacturing.

Our dealer partner model is progressing well and I expect that this is going to help accelerate our deliveries. This year in fact, starting already next month.

And also we are reducing our workforce by approximately 15%, which is of course part of pivoting to the new dealer model that we don't need to have.

Internal salespeople et cetera.

We are also means that we will reduce our <unk>.

We are also means that we will reduce our <unk>.

Henrik Fisker: And also, we are reducing our workforce by approximately 15 percent, which is, of course, part of pivoting to the new dealer model where we don't need to have our internal salespeople, et cetera. But it also means that we will reduce our physical spaces that we have that we are engaged with both in the US and Europe. In fact, in Europe, we have some large dealer groups that are taking over some of our physical spaces, including the personnel. So that will help reduce costs. And then finally, we continue to be transparent and have already increased our updates and press releases. Okay, thanks, Henrik. Operator, we can open the line for questions. The floor is now open to your questions. To ask a question at this time, simply press star followed by the number one on your telephone keypad.

Physical spaces that we have.

We are engaged with both in U S and Europe in fact in Europe, we have some large dealer groups that are taking over some of our physical spaces, including the personnel. So that will help reduce cost.

And then finally, we continue to be transparent and have already increased our updates and press releases.

Hey, Thanks, Henrik operator, we can open the line for questions.

Okay.

The floor is now open for your questions to ask a question at this time simply press star followed by the number one on your telephone keypad.

We ask that you please limit yourself to one question will.

We will now take a moment to compile a roster.

Our first question comes from James Picariello with BNP Paribas. Please go ahead.

Operator: We ask that you please limit yourself to one question. We'll now take a moment to compile our raw, and our first question comes from James Picariello, who is from BNP Paribas. Please go ahead. Hey guys, this is Jake on for James.

Hey, guys. This is Jake on for James.

First just as you guys build out the dealer partnership model, how should investors think about the cadence for production deliveries through the year.

As you scale this up and I'll try to convert some of the <unk>.

Henrik Fisker: First, just as you guys build out this dealer partnership model, how should investors think about the cadence for production deliveries through the year? You know, as you scale this up and try to convert some of the, you know, 5,000 vehicles in your inventory. Yeah, I can take that, Henrik.

5000, some vehicles in inventory into cash.

Yes, I can say that this Henry Thank you for the question first of all we don't have 5000 vehicles in inventory because we have already sold vehicles. Obviously this year.

Lee.

Have a very unique setup will because we are having contract manufacturing so <unk>.

Henrik Fisker: Thank you for the question. First of all, we don't have 5000 vehicles in inventory because we have already sold vehicles this year. Secondly, we have a very unique setup because we are having contract manufacturing. So, versus maybe other startups, we don't have an issue producing cars; we can go and get even more cars produced if we want to. So we wanted to start out with a, I would say rather conservative prediction of actual deliveries and sales this year of $20,000 to $22,000. Should it turn out that we are doing much better, we can easily increase our production. That's not the point.

<unk>, maybe other startups, we don't have an issue producing cars, we can go and get even more cars produce if we want it. So we wanted to start out with a <unk>.

I would say rather conservative.

Prediction of actual deliveries in sales this year of 2000 22000.

Should it turn out that way.

We are doing much better we can easily increase our production that's not the issue.

So I expect that with the dealer sort of what we are starting now with this rollout with the dealers that will accelerate fairly quickly often sales, but we do need to sign on dealers and we do have to go through diligence with each dealer in best case scenario is it takes about a week to <unk>.

Henrik Fisker: So I expect that with the dealer, sort of what we are starting now with this rollout with the dealers, that will accelerate fairly quickly in sales, but we do need to sign on dealers, and we do have to go through due diligence with each dealer. In best case scenarios, it takes about a week to sign up a dealer from the time they get out their application until they're fully signed on and have ordered the first car. We have done a few a little quicker, like in three days. So it can actually go fairly quick. We do have to get licenses in certain areas, but, for example, we already have our licenses in California.

Other dealer from we get out their application to they are fully signed on have ordered the first car. We have done a few a little quicker like in three days.

So it can actually go fairly quick we do have to get licenses in certain areas. But for example, we already have got our license in California. We also have the license in Florida just give two examples those are two of our biggest markets.

And we already are.

I'll have signed up.

Dealers in across different other states.

California, I expect will be signed up with dealers pretty much all around California, starting next week.

Obviously, the biggest market and also starting next week, Florida as well.

Henrik Fisker: We also have the license in Florida and California, just to give two examples. Those are two of our biggest markets, and we have already signed up dealers in across different other states. I expect to be signed up with dealers pretty much all around California starting next week. And that's probably the biggest market, and also, starting next week, Florida as well. So I see a fairly quick sign-up here in the US. Canada as well; we're in discussions already and have our re-identified dealers there or dealer groups. And in Europe,

So I see a fairly quick sign up here in the U S.

Canada as well we are in discussions already and have already identified dealers there are dealer groups and in Europe.

As I mentioned earlier, we actually have.

Dealers, who wants to take dealer groups, who wants to take entire countries, which means theyre going to move very fast.

And also as I mentioned earlier, we do have our own facilities in each of the European countries and some of these facilities for example, where dealer takes the entire country. They will actually take over the facility so that again reduces cost.

Henrik Fisker: As I mentioned earlier, we actually have dealers who want to take over entire countries, which means they're going to move very fast. And also, as I mentioned earlier, we do have our own facilities in each of the European countries. And some of these facilities, for example, where a dealer takes the entire country, they will actually take over the facility. So that again reduces costs, but it also means they immediately have facilities. One point I want to make as well, which is very important, is a lot of dealers have access to existing real estate. Some because they built nice real estate during COVID for used cars, and used car sales are not as hot as they used to be.

But it also means they immediately have facilities, one point I want to make as well, which is very important is a lot of dealers.

Have access to existing real estate, some because they built a nice real estate during COVID-19 for used cars.

Those used car sales or not as hot as it used to be so we're able to move into them and meet.

Others is because they have less certain brands and they therefore have fantastic local dealerships already that we can move into immediately so the dealers. We are signing up right. Now we are moving vehicles straight into the showrooms, putting up a new sign and open for business.

Henrik Fisker: So we're able to move into them immediately. Others are because they have left certain brands, and they therefore have fantastic looking dealerships ready that we can move into immediately. So the dealers we are signing up right now, we are moving vehicles straight into the showrooms, putting up a new sign, and opening for business. Our next question comes from the line of Pavel Molchanov with Raymond James. Please go ahead.

Okay.

Our next question comes from the line of Pavel <unk> with Raymond James. Please go ahead.

Yes, thanks for taking the question given the new distribution model as well as the new volume expectations.

Geeta Gupta: Yeah, thanks for taking the question. Given the new distribution model, as well as the new volume expectations, what kind of gross margin profile are you thinking for the sales mix right? Yeah, Pavel, hi, it's Geeta. I'll take the question.

What kind of gross margin profile are you thinking for the sales mix right now.

Yeah Pavel.

It's Keith I'll take the question. So we're not providing any gross margin guidance specifically for 2024.

Geeta Gupta: So we're not providing any gross margin guidance specifically for 2024, but we do expect to achieve single-digit margins on a non-gap basis, and we expect to go from mid to high single digits over time once the dealer model is fully rolled out. And we expect that a large part of the dealer margins will be offset by DTC costs that we incur today. Our next question comes from Dan Levy with Barclays. Please go ahead.

But we do expect to achieve on a non-GAAP basis.

<unk> digit margins and.

We expect the go from mid to high single digits over time once the deal model is fully rolled out.

And we expect that a.

A large part of the dealer margins will be offset by DTC costs that we incur today.

Our next question comes from the line of Dan Levy with Barclays. Please go ahead.

Henrik Fisker: Hi, thank you for taking the question. Maybe you can just talk about future product development. I think that you said right now that you're working on some strategic developments or some strategic agreements with OEMs, but maybe you could just comment. I know you mentioned Alaska. Where does Paris stand? And then maybe I could also squeeze one in as well.

Hi, Thank you for.

Taking the question.

Maybe you can.

Just talk to.

Future product development I think that you said.

Right now.

You are working on some strategic developments, our strategic agreements with Oems, but maybe you could just comment I know you mentioned, Alaska awareness Paris, Dan and then maybe taken also squeeze one in as well.

Henrik Fisker: I know the distribution model is changing, but maybe you can comment on if there's a backlog or just any indications of underlying demand. So, as we say clearly in there, Dan, thanks for the question, we are not planning to start external expenditure on our next projects until or unless we have a strategic OEM partnership in place. However, as we see in the market, we see that the biggest opportunity for growth and, I think, profitability and getting speed to market is with Alaska. So the internal team is now focused on Alaska. And so that would be, at this moment, I see our next vehicle. But pair would obviously be important as well because a very, you know, affordable vehicle. But we do have to prioritize.

I know that.

The distribution model change, but maybe you can comment on if theres backlog or just any indications of underlying demand. Thank you.

So as we say clearly in there then thanks for the question.

We are.

Not planning to start.

External expenditure on.

Our next projects until or we have a strategic dealer absorb strategic OEM partnership in place.

However, as we see in the market, we see that the biggest opportunity.

For growth and I think profitability and.

And getting speed to market is with the Alaska, So the internal team.

Our focused on Alaska and so.

So that would be in at this moment Ics our next vehicle.

Pair, obviously would also be important as well because of the very.

Affordable vehicle, but we do have to prioritize so that's how I would answer that.

Henrik Fisker: So that's how I would answer that. The second part of the question: can you just mention that again? Just any indications on the order book or demand. Yeah, so I think that we have to go with a very cautious prediction because we do see, you know, an EV sort of negative sentiment, whether it's in the media or generally talked about, and maybe for some companies. I would say that what we have seen with our dealers is the opposite. We have actually seen them being super excited.

The second part of the question can you just mentioned that again.

Just any indications on order book or.

Oh and demand yes.

Yes, so so I think that we have to go out with a very cautious.

Reduction because we do see.

E.

Sort of negative sentiment, whether its in media or generally talked about and maybe for some companies I would say that what we have seen with our dealers is the opposite we have actually seen them being super excited.

Henrik Fisker: I think part of it is that the dealers have been sitting looking over the fence for the last 15 years of startups selling direct. They have never really been able to participate in that sort of growth that's happened in the EV segment. They've only read about it.

Part of it is that the dealers have been sitting looking over the fence for the last 15 years.

Start up selling direct to have never really been able to participate in that sort of growth thats happened in the EV segment, they're only read about it and now for the first time.

Henrik Fisker: Now, for the first time, dealers in the US, specifically, are able to get an American independent automaker's car into the dealership. And that gives them a whole new competitive edge they have never had before, but they can actually go out and start competing against the best selling EV at the moment. And that obviously comes from an independent EV maker. So they're extremely excited to have our vehicle. Like I said, we already have dealers ordering the vehicles, and you know, dealers don't order one vehicle at a time. It's, you know, can be 50, 100 or more, depending on how many locations they have. The advantage, I think for us, is that they're ordering multiple vehicles now, and they're going to sell them in areas where we are not present.

In the U S. Specifically are able to get an American independent automakers car into the dealership and that gives them a whole new competitive edge, they've never had before but they actually can go out and start competing against the best selling EV at the moment and that obviously.

It comes from an independent EV maker. So they are extremely excited to have our vehicles like I said, we already up dealers ordering of vehicles and dealer don't order one vehicle at the time, it's can be 500 or more depending on how many locations they have.

The advances I think for US is that they are ordering multiple vehicles now and theyre going to sell them in areas, where we have not been present, so I actually forecast a pretty good demand specifically here in the U S. Because of this whole new thing Thats happened where for the first time. These dealer groups was by the way have multiple brands.

Henrik Fisker: So I actually forecast pretty good demand, specifically here in the US because of this whole new thing that's happened. Well, for the first time, these dealer groups, by the way, have multiple brands, but they have never had a product like ours before, and they're super excited about it. Our next question comes from the line of Jeff Osborne, with T.V. Cowan.

But they have never had a product like ours before and they are super excited about it.

Okay.

Our next question comes from the line of Jeff Osborne with TV Cowen. Please go ahead.

Henrik Fisker: Please go ahead. Thank you, Henrik. Two-part question. I was wondering if you could just give us a sense of how long you expect the due diligence process to last with the OEM, and then, in the event that that doesn't come together, if Geeta could quantify what the OPEX and CAPEX commitment is in 2024 to prioritize Alaska, I'd assume if an OEM partner doesn't pan out, you would look to curtail that. So if you could get a sense of, you know, what might be the next steps in the unfortunate event if the partner doesn't manifest itself.

Thank you Henrik two part question I was wondering if you could just give us a sense of how long you expect the due diligence process to last with the OEM and then in the event that that doesn't come together, if guida could quantify what the Opex and Capex commitment is in 2020 forward to prioritize the Alaska I'd assume if an OEM partner.

It doesn't pan out that you would look to curtail that so if you could give us.

A sense of what might be the next steps.

In the unfortunate event as the partner doesn't manifest itself.

Henrik Fisker: So, first of all, we have been in diligence for many months; that's all I can say about that. And, you know, we are obviously wanting to close the deal as soon as we can, but I can only give the information we have already set about that at this point in time. I did say many, many months ago, I think five or six months ago, that we were in talks with multiple OEMs. And I think today we're really saying that we are now in the middle of negotiating with just one OEM, but obviously, it's not like that started yesterday. I think your second question is, if that doesn't happen, then what do we do with Alaska?

So first of all we have been in diligence for many months.

That's all I can say to that.

We are looking to obviously wanting to close a deal as soon as we can but I can only give the information we have already said about that at this point in time I did say many many months ago I think five or six months ago that we were in talk with multiple Oems and I think today, we are really saying that where we are now in the middle of negotiating with just one OEM, but.

Obviously, it's not like that started yesterday.

I think the second question is if that doesn't happen then what do we do with Alaska. So at this point in time.

Henrik Fisker: So, at this point in time, the guidance we have given is ocean only. And as I mentioned in my script, any programs which are beyond the ocean would only incur expenses if there was a strategic collaboration. So, we would not be incurring any expenses on any vehicle programs in the absence of an OEM collaboration. Our next question comes from a line from Chris Pierce with Needham, please go ahead.

The guidance, we have given is ocean only and as I mentioned in my script that.

Any programs, which are beyond the ocean would only incur expenses if there's a strategic collaboration so we would not be incurring any expenses on any vehicle programs and the absence of an OEM collaboration.

Our next question comes from the line of Chris peers with Needham. Please go ahead.

Geeta Gupta: On the dealer side of the world, are there any minimum volumes that dealers have to kind of commit to to join the program? And does that inform the $20,000 to $22,000 unit delivery guidance? Or is that guidance informed by signing up more dealers? And then is there marketing that you guys have to do in those regions where those dealerships are? Or is it on the dealer to market and sell the cars kind of on their own? Thank you for asking the question. I'll take that.

On the dealer side of the World are there any minimum volume that our dealers have to kind of commit you to join the program and does that inform the 20 to $22000 unit delivery guidance or is that guidance informed by signing up more dealers and then is there a marketing that you guys have to do in those regions, where those dealerships.

Or is it on the dealer to market and sell the cars kind of on their own.

Thank you for asking the question I'll take that so we do have.

Geeta Gupta: So we do have on our public investor deck, we have shared with our investors what a dealer partner model looks like. And, of course, in Europe, we have a hybrid model. We don't have a franchise model like we have in the US or in Canada. Instead, we are following very typical guidelines that sort of the NADA framework suggests. We are obviously looking at a certain minimum inventory, and typically, those are 30 to 45 days because you want to make sure that you're supplying our dealer partners with enough inventory. Given the fact that we've had limited exposure to our product, we expect that we will be able to get multiple points, and we will be able to supply inventory, again, for 30 to sort of 45 days.

On a public investor deck, we have shared with our board a dealer partner model looks like.

And of course in Europe, we have a hybrid model, we don't have a franchise model like we have in the U S.

In Canada.

We are following very typical guidelines that sort of has been not ethane look suggests.

We are obviously looking at a certain minimum inventory and typically those are 30 to 45 days because you want to make sure that you are supplying our dealer partners with enough inventory.

Given the fact that we've had limited exposure of our product.

We expect that we will be able to get multiple points and we will be able to supply inventory again for Tony to sort of 45 days, that's typically again something standard in the industry nothing.

Geeta Gupta: That's typically, again, something standard in the industry, nothing unique in our model. And then to the marketing point, obviously, the dealers do a lot of their own local marketing. We do have a co-op program where we will support them, but they have to spend money on marketing.

Unique in our model and then so the marketing point, obviously the dealers they do a lot of their own local marketing.

Do have a co op program, where we will support them, but they have to spend money on marketing.

Geeta Gupta: And obviously, some of these dealers are in very prominent locations, and they, for example, will go to the local malls and display the vehicles or do events. We have a dealer right now in Atlanta that's actually doing an event this weekend already, and we are helping out there with him, but he's obviously selling the vehicles there. So, I would say, I think getting out dealers in almost every state in America, I mean, sometimes we forget how big America is, but it's huge. And for now, we have been able to sell thousands of cars out of literally two locations where people could see the vehicle, New York and Los Angeles. So, the fact we already have another 17 locations between the US and Europe is already, like, three times as much in the US alone of what we used to have.

And obviously some of these dealers are in very prominent locations.

And they for example will go to the local mall some display the vehicles or two events, we have a dealer right now in Atlanta, that's actually doing an event this weekend already.

And we are helping out.

There with him, but he is willing.

Obviously selling the vehicles there.

So I would say I think getting out.

<unk> almost in every state in America.

Somebody forget how big Americas, but it's huge.

But now we have been able to sell thousands of cars are literally two locations where people can see the vehicle New York and Los Angeles. So the fact, we already have another 17 locations in.

The U S and Europe.

Already we have.

Mike.

Three times as much in the U S alone of what we used to have so IC.

Henrik Fisker: So, I see that just being able to go down to local dealerships, see the vehicle, and try it out. And I also want to say the dealer groups that we pick, we are not picking people who've never sold a car. We are concentrating around fairly large family-owned dealerships. I mean, there's not everyone that's like that, but that's sort of what we're seeing at the moment.

That just being able to go down to local dealership see the vehicle and try it out and I also want to say the dealer groups that we pick we are not picking people who has never sold a car we are concentrating around.

Early large family owned dealerships I mean, theres not everyone is like that but that's sort of where we are seeing at the moment. So for example mills auto that we signed up I believe it is around 30 dealer dealerships and I think he has around 10 brands. So in a lot of these dealers have multiple brands in the same locations. So when you go down in <unk>.

Henrik Fisker: So, for example, Mills Auto, which we signed up, I believe has around 30 dealerships, and I think he has around 10 brands. So, and a lot of these dealers have multiple brands in the same location. So, when you go down and buy or look at a certain brand, you would go down, and you would see the Fisker there as well. And that's the same in Europe.

Or look at a certain brands you would go down you will see the fiscal there as well and that's the same in Europe. When you go down as maybe five or six brands right. They're owned by the same dealer. So we get automatic exposure that we had never had before I mean, there is still a large amount of the population probably the majority both in U S and Europe has never even heard about <unk>.

Henrik Fisker: When you go down, there's maybe five or six brands right there owned by the same dealer. So, we get automatic exposure that we've never had before. I mean, there is still a large amount of the population, probably the majority, both in the US and Europe, that have never even heard of Fisker.

Henrik Fisker: So, building the brand is something the dealer is going to be part of, and that's something which I think is going to accelerate with appointing these dealers. Our next question comes from the line of Mark Delaney with Goldman Sachs. Please go ahead. Good afternoon.

So building the brand is something that <unk> is going to be part of and that's something which I think is going to accelerate with appointing these dealers.

Our next question comes from the line of Mark Delaney with Goldman Sachs. Please go ahead.

Yes, good afternoon, and thank you for taking my question could you provide more color on your expectation for free cash flow. This year based on the financial scenario outlined of 'twenty to 'twenty 2000 deliveries and how cash flow might vary in the first half relative to the second half of the year given the focus you mentioned about working capital.

Geeta Gupta: Thank you for taking my question. Could you provide more color on your expectation for free cash flow this year based on the financial scenario outlined of $20,000 to $22,000 deliveries and how cash flow might vary in the first half relative to the second half of the year given the focus you mentioned on working capital? Yeah, so I think, you know, just in terms of working capital. As we outlined, we have a very rich balance sheet with respect to finished goods and also prepaid materials. Our expectation is that we expect to free up significant cash flow from selling the finished goods. And as I mentioned earlier in my script, we are also using this prepaid inventory. So for every vehicle we build and we sell, we have a higher than usual cash contribution from vehicles that are sold in the first half of 2024. So in terms of the guidance that I mentioned earlier, which is sort of 320 to 390 million, what we expect the first half to contribute towards our working capital needs to support the goals of the business. Our next question comes from Shreyas Patil with Wolf Research. Please go ahead.

Yeah, So I think.

Just in terms of working capital.

I mean, we as.

We outlined a have a very rich balance sheet with respect to finished goods and also prepaid materials. Our expectation is that we expect to free up significant cash flow from selling the finished goods.

As I mentioned earlier in my script that we are also using this prepaid inventory. So for every vehicle, we build and we sell we have a higher than usual cash contribution from vehicles that are sold in the first half of 2024. So in terms of the guidance that I mentioned earlier.

Which is sort of $320 million to $390 million, what we expect as the first half to contribute towards our working capital needs to support the goals of the business.

Our next question comes from the line of <unk> <unk> with Wolfe Research. Please go ahead.

Henrik Fisker: Hey, thanks a lot for taking my question. So I just wanted to better understand where your relationship is now with Foxconn, if the case is now that you're... essentially deferring development on the PEER program. Does that have any impact as far as your agreement with them is concerned? And then also, why aren't they investing in Fisker or helping to contribute since you already have an existing relationship? Why do you feel the need to have to go to another?

Hey, Thanks, a lot for taking my question. So just wanted to better understand.

Where your relationship is now with Fox tonne.

The cases now that you're.

Essentially define development on the on the peer program.

Does that have any impact as far as your agreement with them and then also.

Why are they investing in fiscal or helping to contribute since you already have an existing relationship with them.

Why do you feel the need to have to go to another.

OEM. Thank you.

Henrik Fisker: Thank you for the question. I would not really consider Foxconn an OEM, first of all. Secondly, as we are in the middle of negotiations with a large OEM, I think that we as a company can really only concentrate on and only want to concentrate on one strategic partner. And we obviously have to look at who offers the best deal, who is the best for us. And that's the group we're negotiating with right now. I just want to add to that, Shris, that in August, when we had product vision day, the goal of product vision day was to showcase the capabilities in terms of our platforms and in terms of the fact that OCEAN has the ability to create a very exciting product portfolio, with Alaska and BEAR being very exciting, high-volume products.

Thank you for the question.

I would not really consider Fox con on OEM first of all.

Secondly.

As we are in the Midland negotiation with a large OEM.

I think that we as a company can really only concentrate on only want to concentrate on one strategic partner and we obviously have to look at who offers the best deal was the best for Us and Thats. The group right now we are negotiating with.

I just wanted to add to that Chris that in August when we had a product vision dae.

Golub product vision date was to showcase the capabilities in terms of our platforms and in terms of the fact that.

Ocean has the ability to create a very exciting product portfolio.

Oscar and third being a very exciting high volume product and as a result of that publicly said that we were talking to various automakers for sharing platforms.

Henrik Fisker: And as a result of that, we publicly said that we were talking to various automakers about sharing platforms. And the reason for that is that there is a large number of automakers who are probably behind or who don't have that focus in terms of the focus we've had on EV development. It saves time, saves costs, and what we've been focusing on in talking to automakers is really to share the technology, the investments we've made to reduce time to market, to have a joint product portfolio based on the Ocean platform. And that's the differentiator where Henrik said Foxconn is obviously not an automaker; they're a contract manufacturer.

And.

The reason for that is that there is a large number of automakers.

Probably behind or they don't have that focus in terms of the focus we've had.

For EV development, it saves time saves cost and where we've been focusing on in talking to automakers is really to share the technology. The investments we've made to reduce time to market.

You have a joint product portfolio based on the Ocean platform and.

That's the differentiator Henrik said Foxconn is obviously not an automaker.

Contract manufacturer.

Henrik Fisker: There are no further questions at this time. I would now like to turn the call over to Henrik Fisker for closing remarks. Thank you very much. I would like to thank everyone for joining the call. And I would also like to thank all our supporters. Believe me, we are working hard to actually make great progress at Fisker. And I think with this pivot we have made to the dealer model, we'll see results fairly quickly. I'm really confident in the future of Fisker, and we'll be back.

There are no further questions at this time I would.

I'd now like to turn the call over to Henrik Fisker for closing remarks.

Thank you very much I would like to thank everyone for joining the call and I would also like to thank all our supporters believe.

Believe me, we are working hard to.

<unk> actually made great progress at <unk> and I think with this pivot we have done to the dealer model. We will see results fairly quickly I'm really confident in the future of Fisker and we'll be back. Thank you.

Operator: Thank you. This concludes today's call. You may now disconnect. This concludes today's call. You may now disconnect.

This.

<unk> today's call you may now disconnect.

Yeah.

Okay.

Today's call you may now disconnect.