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Arcimoto, Inc. (FUV) Q2 2021 Earnings Name Transcript

Picture supply: The Motley Idiot. Arcimoto, Inc. (NASDAQ:FUV)Q2 2021 Earnings NameAug 16, 2021, 5:00 p.m. ET Contents: Ready Remarks Questions and Solutions…

By Staff , in Car Rentals , at August 17, 2021

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Picture supply: The Motley Idiot.

Arcimoto, Inc. (NASDAQ:FUV)
Q2 2021 Earnings Name
Aug 16, 2021, 5:00 p.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Contributors

Ready Remarks:

Mark Frohnmayer

Good afternoon, I am Mark Frohnmayer, CEO and founding father of Arcimoto, and I would wish to welcome you all to Arcimoto’s Q2 2021 stakeholder webinar. Arcimoto is an Oregon C-Corp based in 2007 with the mission to construct merchandise that catalyze the shift to a sustainable transportation system. These quarterly webinars held in tandem with our filings with the SEC are supposed to present our stakeholders a transparent and present image of the corporate’s progress as seen by Arcimoto’s management. I’ll run by means of a presentation, beginning with our newest firm video, talk about the context, the quarter, latest updates, and aim progress, in addition to a little bit of the highway forward, after which I will be joined by members of the chief group to take stakeholder and analyst questions from Say.

You’ll find supplementary data, together with our earnings press launch, monetary filings, presentation supplies, transcript, and a replay of this webinar that shall be posted in a while our investor relations web page at arcimoto.com/ir. You may also join investor updates at that hyperlink. Earlier than we start, I need to name your consideration to our protected harbor disclaimer relating to forward-looking statements. This be aware identifies threat elements which will trigger our precise outcomes to vary materially from the content material of our forward-looking statements for the explanations that we cite in our Kind 10-Q and different SEC filings.

That mentioned, let’s dive in.[Commercial break]

To set the body, the IPCC simply issued a code crimson for humanity, and we’re in the course of a worldwide pandemic. Extra infectious and dangerous variants of COVID-19 are circling the globe. Each group we work together with, all of the folks, are underneath important stress because the fragility of the worldwide provide chain has been laid naked and as our patterns of habits are exhibiting an ever extra clear perilous toll on our dwelling. On the finish of the day, sustainability is a social networking train.

The rightsizing of our relationship with our planet goes to take all of us working collectively to perform. We’re heartened that leaders across the globe are advancing targets for carbon discount, together with the Biden administration, our Oregon congressional delegation, and state and native leaders across the nation. Extra particularly, a lot of what I’ll discuss right now within the context of Arcimoto’s quickly accelerating tempo of innovation towards its mission is reflective of a shared dedication to take care of a livable planet. However first, the numbers.

The second quarter wasn’t all roses. As I’ve cautioned in a number of prior updates and as anybody who’s following the automotive business already is aware of, we’re topic to a topsy-turvy provide chain in an rising discipline. Two outstanding examples. Throughout Q2, one in all our vital provide elements had each manufacturing and transportation setbacks that may have resulted in an prolonged manufacturing shutdown beginning mid-August on our earlier deliberate path.

And one other key elements replace exhibited a software program error that prompted a supply pause for a number of weeks as a multi-organization Tiger group dissected root trigger and options. Consequently, we adjusted our construct charge and have revised our deliberate mainline goal of manufacturing output to 425 FUV platform automobiles in 2021. It will — within the context that our deliberate advertising and marketing efforts I am going to talk about shortly, this may impression complete deliberate buyer deliveries in 2021 as properly. That mentioned, by the monetary metrics that we see as most necessary to the achievement of Arcimoto’s mission, Q2 was far and away the corporate’s finest quarter to this point.

Our steadiness sheet is the strongest within the firm’s 14-year historical past. We proceed to take care of a disciplined method to useful resource expenditure, and we have made substantial ahead progress on vital fronts for the corporate’s development. In Q2, we submitted a primary draft of and are presently refining our software to the Division of Power for a mortgage to fund the substantial portion of our deliberate expenditures for subsequent stage manufacturing. And additional, the ATM facility we put in place this 12 months in partnership with Canaccord Genuity, permits us to proceed to fortify our place at present market costs and instances we imagine are in the perfect curiosity of our stakeholders.

Contemporaneously, as our steadiness sheet has strengthened, we now have seen a significant rise within the variety of market bets towards the corporate. You’ll be able to refer again to our final two webinars if you need extra coloration on a few of the knock-on ecosystem results of such actions. However to offer some perspective on relative dimension, the time of the final NASDAQ report, brief sellers of our inventory collectively had brief positions that totaled nearly double the quantity of funding the corporate is presently considering requesting in its subsequent ATVM mortgage software revision. Shifting on.

We now have three broad top-level targets for 2021, the primary we laid out one 12 months in the past throughout 2020’s Q2 report back to get to mass manufacturing in a brand new facility beginning by the top of subsequent 12 months with a focused capability as soon as at full output of fifty,000 automobiles per 12 months, that gives additional a sample for but greater scale replication. Second, proceed to construct the marketplace for Arcimoto’s merchandise to help that degree of manufacturing and in the end, method past. And eventually, showcase the total presently contemplated vary of Arcimoto options for sustainable mobility. I am going to go into the progress to this point on all three fronts.

The push to quantity manufacturing is our most necessary overarching goal, bar none. We imagine reaching scale will permit us to cut back car value, to the purpose the place the Arcimoto is inexpensive to nearly everybody whereas offering the optimistic money flows essential to maintain the enterprise long run. And I am happy to report that within the second quarter by means of current, we have made important headway towards this major aim. We closed on the acquisition of a brand new facility, greater than 200,000 sq. toes underneath roof on 10 acres of land.

We landed our new plastic thermoforming cell in a brand new facility and are aiming to have it operational earlier than the top of this 12 months. We now have accomplished the primary part of building planning, and that constructing will start when the prior proprietor completes transfer out, focused on the finish of this month. With our companions at Munro & Associates, we now have accomplished architectural down collection of all main car subsystems, primarily the supplies and manufacturing technique alternative for the elements of the car for quantity. And engineering and meeting planning are actually transferring forward full steam.

And as I discussed earlier, in Q2, we submitted our first draft to the U.S. Division of Power for a car manufacturing mortgage and are actually in common dialog with their group, anticipating to submit a refined draft imminently that takes under consideration their suggestions and necessities, in addition to our ongoing engineering refinement efforts. In abstract, on aim 1, important progress, mountain of labor forward. On the advertising and marketing entrance, one factor is evident.

The extra folks get an opportunity to drive an Arcimoto car and expertise their one-of-a-kind electrical efficiency, the extra our market grows. As well as, to check drive and media occasions throughout the West Coast, we have additionally held large-scale take a look at drive occasion on the Portland Worldwide Raceway in July and proceed to obtain optimistic product opinions from top-tier EV press, together with a assessment on Forbes.com final week, which acknowledged: “The FUV made extra folks smile than every other car I’ve ever reviewed.” We have additionally grown our rental operations in key markets, opening our first two company-owned shops in Eugene and San Diego. We can even be delivering extra rental automobiles to GoCar Excursions in each San Francisco and San Diego. We proceed buyer deliveries in Oregon, Washington, Florida, and our dwelling state of Oregon and are getting ready to open gross sales and rental in Hawaii, Arizona, and Nevada, the place we anticipate to start taking reservations from our preorder prospects within the coming months.

We now have lately relaunched the FUV configurator device on our web site to be able to additional streamline the ordering course of, the primary of a number of main deliberate upgrades to the preliminary person expertise for potential prospects. We’re actively working with each metropolis and state officers with the aim to impress authorities fleets. Town of Encinitas in California is testing Arcimoto automobiles to be used by Encinitas Lifeguards and Infrastructure and Sustainability Departments, persevering with Mayor Catherine Blakespear’s efforts to cut back carbon air pollution and advance sustainable transportation in Encinitas. This week, we’ll start our statewide pilot program within the state of Tennessee, introducing Arcimotos in Memphis, Knoxville, Chattanooga, and Nashville, with take a look at drive occasions this month.

Along with retail gross sales and leases, we imagine a key path for Arcimoto automobiles is in shared mobility and have engaged with a number of potential companions to start rolling out car share packages. Because the inhabitants in cities continues to develop and as car possession in city areas declines, the necessity for right-sized, shared, sustainable fleets turns into ever better, and our automobiles supply clear environmental effectivity and financial benefits over present automotive share choices. We proceed to work with state governments throughout the nation to enhance entry to Arcimoto automobiles, most lately, efficiently advocating the elimination of particular bike endorsement necessities in Florida, Hawaii, and Louisiana. So the purchasers there can function an Arcimoto with a typical driver’s license, thereby modernizing legacy three-wheeled laws with a commonsense answer.

And as we glance globally, we have begun creating a measured technique to enter the world market, beginning with nations that totally settle for the US Federal Automobile Motor Automobile Security Requirements. In abstract, on aim 2, important progress and a mountain of labor forward. Lastly, Arcimoto has continued to quickly speed up its tempo of innovation to be able to show the total vary of our options for sustainable mobility. At our summer time occasion only a few weeks in the past, we launched our first manufacturing Roadster, confirmed the long-awaited half-door equipment, and showcased with companions a few of the actually thrilling applied sciences now in growth.

Torque vectoring to dramatically enhance low-speed steering, in addition to car dealing with; driverless functionality; [inaudible] heated storage Deliverators for meals; and eventually, battery recycling, in keeping with our long-standing aim to create true cradle-to-cradle merchandise. By the way in which, it is not misplaced on us that the highest three best-selling vehicles within the U.S. final 12 months have been pickup vehicles. I am going to clarify all the joy round Cybertruck, Rivian, Ford’s Lightning F-150, and others.

Effectively, now Arcimoto has a pickup truck. We confirmed the primary prototypes of the Arcimoto Flatbed, and it is superior. Similar-base, scalable Arcimoto platform, unimaginable configurability, and volumetric carrying capability in a small footprint. We goal to start piloting the Flatbed later this 12 months.

I need to emphasize once more the significance of partnership and collaboration. Munro & Associates, Stoffel Methods, SherpTek, Redivivus, BIB Applied sciences, and so many others have pitched of their sensible minds and arduous work towards our shared goal. On that be aware of partnership, simply shy of a 12 months in the past, I reached out to Bob Mighell, founding father of Tilting Motor Works, about an thought for a brand new micro-mobility product line that may leverage their experience in tilting trikes with Arcimoto’s electrical car capabilities, and I am extremely excited to report that the primary prototype from that collaboration is now on the highway. We’re not prepared to point out the product but, however I’ll inform you, I received to write down it for the primary time on Thursday, and on that first experience, I leaned it method farther than I’ve ever leaned a bicycle.

It was straightforward, clean, and secure, and I can not wait to point out it to you in product type. This imply, lean machine is chockful of latest electrical car expertise. We are literally reinventing the wheel this time, and it is focused squarely on the quickly rising e-bike and e-scooter market. We imagine it would completely complement our go-to-market technique of leases and rideshare and can set a brand new bar for effectivity, utility, and affordability for a variety of transportation duties.

We acquired Tilting Motor Works in the beginning of this 12 months to speed up growth of that program. However I need to take a second to speak about what else we received within the deal, an present product line for bike riders who do not need to fall over anymore. Our Trio accent transforms a bike into a tremendous three-wheeled tilting machine, and we see large market potential for this product. Within the U.S.

alone, there are greater than 12 million bikes in use, and the Trio is already tailored to the main large bikes, Harleys of which 180,000 have been bought final 12 months worldwide; Indians; Gold Wings; and most lately, the Lightning electrical superbike, which we intend to — with which we intend to compete for a land velocity tilting three-wheel document at Bonneville subsequent 12 months. In abstract, Arcimoto is transport and persevering with to additional develop, kickass, ultra-efficient three-wheelers alongside a world-class group with whom we share a mission to rightsize mobility as we develop our market presence in preparation for quantity manufacturing. We should proceed to enhance the expertise for the Arcinauts, our early prospects and riders, their automobiles, the first-time person expertise, and gross sales, service, and communication processes. This implies listening intently to suggestions we obtain from prospects and pilot companions to enhance our choices for scale.

We should proceed to domesticate our management expertise as our group and calls for develop. Arcimoto is greater than 200 folks proper now, about double the place we have been one 12 months in the past. And this implies continued emphasis on course of, tradition, and our core values of steady enchancment, environmental effectivity, and enjoyable. We should preserve our concentrate on the well being and security of our group throughout an ongoing pandemic, encouraging good life selections and bolstering our resilience to the highway forward.

The plan will not be ready round. The IPCC’s code crimson is our name to motion. We should proceed to step up our manufacturing tempo amid the churn to be able to make the contribution for which we’re known as. And with that, let’s carry on the remainder of the C-team, besides Terry, who’s on his method again to Eugene, and dive into Q&A. All proper.

Guys, you should flip your mics and cameras on.

Unknown speaker

I can not flip my digicam on, Mark.

Mark Frohnmayer

Mics are on. You might have to allow a digicam choice for panels. OK. Effectively —

Unknown speaker

And if not, you may simply take heed to our disembodied voices.

Mark Frohnmayer

Excellent. Excellent. Let’s begin there. OK.

So, I simply need to give a bit little bit of background right here. We’re — that is our quarterly stakeholder webinar. We do quarterly webinars in tandem with our filings with the SEC. There may be type of the modern-day alternative for the convention name, dial-in and operator, and stuff like that.

We’re aiming to modernize that method to be able to give our stakeholders a clearer image of the corporate. So, we’re nonetheless persevering with to experiment with the format. And naturally, if stakeholders and analysts have any suggestions on the format, be happy to ship it in to the corporate, and we’ll modify accordingly. And with that, let’s take our first query from Say. 

Eric FritzChief Advertising and marketing Officer

All proper. Regarding the ATVM mortgage, what timeframe does Arcimoto imagine they may get entry to funding. Additionally, what p.c of the Arcimoto mission you imagine shall be lined by the ATVM mortgage?

Mark Frohnmayer

So, superb query. We’re anticipating submitting our subsequent draft revision of that software, with — imminently, inside the subsequent week or two. And we anticipate that it will seemingly be someplace within the neighborhood of a four- to 10-month course of from there, ought to the division determine that Arcimoto is worthy of that mortgage. By way of what share of the mission it will cowl, as I discussed earlier, we’re in the perfect steadiness sheet place we have ever been in.

We now have loads of money readily available to maneuver ahead. In the end, we’re — I feel we’ll find yourself asking for the ATVM to cowl one thing like 80% or a bit bit much less of the general complete mission value for scale manufacturing, which is what we’re now calling 1.X.

Eric FritzChief Advertising and marketing Officer

Nice. As soon as Arcimoto’s second facility goes into manufacturing, will the present AMP facility be transformed right into a manufacturing line for Platform 2 automobiles? 

Mark Frohnmayer

We — no. On our present plan, we now have — our present facility will nonetheless be doing manufacturing focused at Platform 1. So it’s — we’ll be enjoying a bit little bit of musical chairs as we transfer ahead over the following 18 months or so. I assume lower than that.

Subsequent — properly, sure. Subsequent 12 months and alter is that we’ll be transferring sure elements which can be presently within the AMP into the ramp, and that can make house for some new growth packages which can be going to return on-line to help the size manufacturing model within the AMP. We have not but chosen a facility for the producer of our Platform 2 product. 

Eric FritzChief Advertising and marketing Officer

When does Arcimoto imagine that we will implement Faction’s remote-controlled methods into a sort of shared car community? And associated query from chat from Ed Hurley. Curious if that expertise shall be accessible as an improve for present automobiles to permit present homeowners to make use of a rideshare service or will it’s restricted to company-owned automobiles?

Mark Frohnmayer

So the — and is that — is the query actually round will — so round shared use, one thing we have talked about for a very long time, is the potential for Arcimoto prospects to share out their automobiles to others, principally set rental charges and let their neighbors go get groceries with their Arcimotos. That’s nonetheless in — actually within the long-term plan. And by way of actually extra the driverless element expertise that Faction demonstrated utilizing the Arcimoto platform, by way of when that’s going to be meaningfully deployed in — even in type of like on-road pilot type, that has but to be decided and definitely but to be introduced. So keep tuned on that entrance.

We’re very heartened. I imply that is — Faction was capable of take an Arcimoto, provisioned with our middleman torque vectoring and driverless layer, and get these automobiles up and working within about 4 weeks. So these guys have been — are transferring quick and definitely very motivated, as we’re, to get rideshare working in an precise helpful method out on the planet that leverages that tech. And what that actually does, we expect, is it would make it extra handy for car sharing prospects to get automobiles, having a car type of delivered to you with out paying for someone to really drive you when you’re in it.

And we expect that that may be a very compelling future mannequin for car sharing that we’re pursuing aggressively. 

Eric FritzChief Advertising and marketing Officer

I see a follow-up query for Med relating to the cellphone app and once we can anticipate to see that come on-line. 

Mark Frohnmayer

It’s in growth. We now have mapped out the type of preliminary levels of type of the Section 1 necessities. It is in growth now, and will probably be prepared once we launch it. So we do not have a set timeline that we now have introduced but.

However we — it is a vital piece of the puzzle. So one thing that’s — we’re undoubtedly pushing on. 

Eric FritzChief Advertising and marketing Officer

When will the FUV get over-the-air updates? And the way a lot do you anticipate this may find yourself saving Arcimoto in service prices?

Mark Frohnmayer

It’s going to save — I’ve not run the numbers on what it’ll save us, but it surely’s simply such an apparent win. By way of when that is going to occur, we’re balancing that with quite a lot of completely different priorities. And so once more, we do not — we now have not introduced a timeline on that as one in all our top-level targets, but it surely’s one thing we’re pushing ahead on. 

Eric FritzChief Advertising and marketing Officer

When will homeowners get a personalised Arcimoto portal account to trace service and referrals? And can it present knowledge like battery well being and mileage? 

Mark Frohnmayer

My aim is that the — so we have talked about this a bit bit by way of the FUV.life portal, that is each an proprietor portal for getting extra particulars on automobiles, monitoring service updates. It is one of many vital items of buyer communication that we need to carry on-line. My aim is to have the primary incarnation of that on-line this fall sooner or later. And this could be — that is going to be a fairly rudimentary first step into each the type of proprietor portal, in addition to a few of the, I might name it, virality items of the puzzle.

So, as any proprietor of an FUV is aware of, you’re continuously bombarded with questions concerning the car everytime you park and it simply attracts a ton of consideration and a ton of questions. And what we actually need to allow on that aspect is to have our homeowners as ambassadors be capable to level somebody to a QR code on the aspect of the car that type of tracks them on a excessive scoreboard and lets us all take part within the sharing of the Arcimoto product household thought.

Eric FritzChief Advertising and marketing Officer

How has your partnership with Munro & Associates had an impact on the FUV product and your potential to shortly scale mass manufacturing? 

Mark Frohnmayer

Effectively, we’re — it has been a considerable impression. Having the Munro group actually bounce in with each toes to assist push the Arcimoto to scale has been an enormous shot within the arm for Arcimoto. They create a complete completely different lens of experience targeted on mass manufacturing of huge cars and the applied sciences and supplies and capacities for pulling that off in an expedited reasoned method. And so we’re working with them hand-in-hand, week in, week out to push this mission ahead.

We’re nonetheless concentrating on having the ramp open and transport automobiles on the finish of subsequent 12 months. Will probably be clearly a continued ramp-up by way of car output at that time to realize most capability. We’re planning a number of methods that can come on-line and packages that can come on-line over the following years to be able to proceed to drive down value and in the end, present a basis for true international scale. Sure, they have been pivotal assist to the corporate.

Eric FritzChief Advertising and marketing Officer

What’s the standing of the doorways and their impact on the ATVM mortgage software and approval course of? 

Mark Frohnmayer

So some astute people on the market have seen that the ATVM requires what they name totally closed compartment car. And so the car that we’re making use of for funding and the manufacturing facility that we’re making use of for funding for is to ship squarely on that requirement. By way of the half doorways that we demonstrated the manufacturing model of only a few weeks in the past and plan to ship to first prospects this quarter, that’s — it is a piece of the puzzle by way of understanding closures, however the full-scale model will — and it is a product that we have not really proven but. It is — when you recall from our final earnings name, we type of ballparked about 75% completion by way of showcasing new merchandise on the Arcimoto platform household.

That is one in all them. There’s one other one which we additionally haven’t but proven, and we’re aiming to at the least show the place we’re going by the top of this 12 months. 

Eric FritzChief Advertising and marketing Officer

Does Arcimoto have plans to export or construct a plant in Europe? That would appear like a wonderful market. After which form of perpendicularly associated, from Jeffrey Campbell in chat, are you able to level out a rustic or two that may meet the requirement to be receptive to U.S. requirements? 

Mark Frohnmayer

Certain factor. And truly, hey, we have Dilip Sundaram on the road, our chief worldwide enterprise officer. And Dilip, would you want to present a bit little bit of coloration on to that query?

Dilip SundaramChief Worldwide Enterprise Officer

Yeah, completely. Thanks, Mark. So, sure, thanks for the query. As talked about earlier, I feel Mark had talked about earlier, we’re creating a really potent and a complete technique to enter international markets.

Our first precedence, in fact, shall be to concentrate on nations that totally settle for the U.S. Federal Motor Automobile Security Requirements. And to reply the second a part of the query is principally, it’s nations like Mexico, Belize, Barbados, Bahamas, Honduras, Guatemala and there is a host of others. Now this FMVSS market itself represents an enormous market.

Now this shall be adopted with the homologation of our merchandise to satisfy EU requirements and that can make it potential both to export, which is certainly, once more, with — Europe is a big market, so which might be extra fairly seemingly export. In any other case, it’s fairly seemingly additionally that we’d discover a associate to fabricate in Europe.

Mark Frohnmayer

And so as to add a bit bit on that, we additionally see Europe and really your entire international market as being very ripe for our Platform 2 efforts. So once more, Platform 2 is aiming at one thing but once more, an order of magnitude, extra environment friendly and cheaper than the Platform 1 product household. And so we see true international applicability for that product as properly. 

Eric FritzChief Advertising and marketing Officer

Tesla is opening up the Supercharger community to different EVs. How and when will the FUV be capable to benefit from this? What are you doing proper now to make the platform lengthy trip-capable? 

Mark Frohnmayer

Nice questions. We now have not talked in particular element about product options of what is coming off of the 1.X growth effort. However what I would like to see is simply that prospects get the selection of what cost port they need and may have choices for issues like greater capability charging. I imply that is type of a no brainer and it’s actually on the highway map.

However to me, it will simply make — we have a bunch of consumers who’re additionally Tesla drivers, and so having the identical cost port, the identical capabilities to us, simply makes lots of sense. Tesla has accomplished a fully improbable job constructing out a worldwide charging community for electrical automobiles, and we’re tremendous thrilled that they’re now seeking to open that community to makers of different automobiles. 

Eric FritzChief Advertising and marketing Officer

Have there been any discussions with massive meals retail chain operators concerning the Deliverator and risk of a fleet acquisition?

Mark Frohnmayer

We now have dialogue — sure, is the brief reply to that query. No particulars that I am keen to speak about now aside from we did have a pilot at a franchise right here in Eugene and simply received phenomenal suggestions from that operation for the Deliverator as a meals supply car. And when you take a look at what BIB Applied sciences has accomplished with the platform, they’ve taken what we’re calling Undertaking Hotbox. They’ve constructed a Deliverator that may be a — serves up piping sizzling meals.

So it is — we’re undoubtedly trying on this type of — within the early pilot part, at getting as a lot suggestions from potential prospects to actually fine-tune these choices for the mass manufacturing variations of the car platforms.

Eric FritzChief Advertising and marketing Officer

Manufacturing is gradual. Can we concentrate on manufacturing and getting automobiles in prospects’ driveways? When will we see at the least 100 every week being produced and delivered? After which there’s a number of form of associated questions in chat, simply associated to the earnings outcomes. Possibly you may present a bit coloration on income projections versus precise. I do know you talked about a few of the struggles within the presentation, however maybe a bit bit extra on plans for delivering income projections and the quantity of stock on our steadiness sheet.

Mark Frohnmayer

Certain. In order we — once more, and I did contact on this at some size in the beginning of the presentation, we’re undoubtedly nonetheless inside the COVID-19 pandemic. That’s nonetheless having substantial results on our provide chain, and that does impression manufacturing. We predict we now have received readability for the top of this 12 months by way of our deliberate manufacturing output of 425 automobiles.

A portion of these will go to prospects. The place we see — notably within the stage that we’re at proper now, we expect it is vitally necessary to get as many type of demonstration and rental automobiles into the market as properly. We now have had, in Eugene right here, simply our native rental store of Arcimotos, we have had totally subscribed automobiles on many days. A few quarter of the times that we have had the Eugene rental store up, and we have had all of our rental automobiles totally subscribed and utilized.

And that is — what we’re actually going to finish up having to steadiness is supply to early prospects versus constructing — seeding {the marketplace} for scale utilizing rideshare pilots and leases. I am anticipating a considerable enhance in output in 2022, past what we’re constructing in 2021, and we’re nonetheless fine-tuning these numbers. So I might anticipate that on our subsequent quarterly stakeholder replace that we’ll have extra steering about what 2022 appears to be like like. However that is nonetheless — once more — and that is prematurely of our push to mass manufacturing, which is the place we’d begin to see numbers like 100 automobiles a day.

Eric FritzChief Advertising and marketing Officer

What are a few of the present largest dangers that may delay begin of manufacturing of the brand new facility? And the way is the Arcimoto group taking steps to make sure the schedule stays on monitor?

Mark Frohnmayer

So the most important dangers that I see are type of pointless couplings between car methods and price discount efforts. And so we have taken nice pains over the past couple of months to actually determine — and that is what the 1.X program is all about is figuring out what the long-lag objects are and ensuring that we decouple these from the size enchancment and price discount packages that we are able to execute sooner. And there are any variety of potential dangers, whether or not you are speaking about building slowdowns to compliance testing that may all the time take longer than you suppose. Now, I feel the benefit that Arcimoto has is that we now have already gone by means of that with our first platform car.

We’re very acquainted with that terrain, and so I feel that may be a threat reducer for us. However as of now, we’re nonetheless concentrating on finish of subsequent 12 months for first automobiles rising from the ramp.

Eric FritzChief Advertising and marketing Officer

We talked about ATVM earlier, however I am undecided this query was addressed, what precise stage is the mortgage in.

Mark Frohnmayer

So we’re within the pushing towards the considerably full software part. That is what we’re aiming this subsequent piece to perform. After which there are, in fact, a number of gates past that by way of conditional dedication after which in the end funding of the mortgage.

Eric FritzChief Advertising and marketing Officer

A supply car must function in all climate circumstances, are there plans to completely enclose the Deliverator and make it viable for four-season use? And a associated query in chat is questioning concerning the full-sized full doorways and what the timeline may be on that?

Mark Frohnmayer

Completely. Effectively, I imply, the idea that — I imply, I assume, a query on the essential assumption since there are many deliveries being accomplished on bicycles and bikes and so forth. However to the purpose for a full all-world, all-season car, sure, you want full closure. And so similar factor with — type of the reply a bit bit again on the ATVM mortgage relating to shut compartment, that is a part of that program, and people doorways that can apply to the enjoyable utility car can even work on the Deliverator.

We have designed them to work for each.

Eric FritzChief Advertising and marketing Officer

Can manufacturing and revenue be elevated by eliminating the choices to the shopper when ordering and construct the identical design time and again?

Mark Frohnmayer

In idea, there are a number of ways in which revenue might be elevated, however really choices are the place we see an actual alternative for greater revenue margins. So — and in the end, we see the Enjoyable Utility Automobile as having that optionality is a giant a part of the promoting options of it, notably once we even have our full accent household launched. So, as we have regarded out at different automobiles, I imply, I feel we have — it is arduous to seek out, besides maybe just like the Mannequin T product household that has — the place optionality was issued and never part of the revenue story. I do suppose that one of many issues that we’re actually targeted on is streamlining that technique of choice choice, simply to make it simpler to get by means of that entire piece of the puzzle.

Eric FritzChief Advertising and marketing Officer

What alternatives do you see in last-mile transportation, particularly with e-scooters and e-bikes that FUVs platform, too, shall be uniquely enabled to deal with?

Mark Frohnmayer

We’ll speak extra about it once we really present the product.

Eric FritzChief Advertising and marketing Officer

All proper. Is there something particular that you simply hope to be taught within the upcoming Tennessee pilots that may be completely different than pilots in Florida and California? Or are you in search of patterns of repetition in all three efforts?

Mark Frohnmayer

I feel most likely a bit little bit of each. We anticipate that there is largely individuals who get within the FUV and Arcimoto platform automobiles, there’s lots of the identical suggestions, notably relating to the enjoyment of the experience and the type of that distinctive FUV expertise. However each pilot that we have accomplished has supplied particular choice — type of particular enhancement requests associated to how they use automobiles. And I might anticipate that the effective people that we speak to in Tennessee may have a lot of good concepts about how we are able to make Arcimotos higher for them.

Eric FritzChief Advertising and marketing Officer

Are CAFE credit being utilized in future value calculations as a credit score when estimating a discount of retail worth? Is that this a big portion of the tactic to cut back shopper costs?

Mark Frohnmayer

No. So the — by way of like card credit, there’s now a dialogue about bringing bikes into that regime, however that is going to take a while, and we now have not modeled it as a part of our as a part of our type of profitability story. We do see a near-term alternative by way of end-user tax credit on the federal degree. We predict that the substantial pronouncements that the Biden administration has made, in addition to congressional leaders, help a a lot greater tax credit score for Arcimoto-type automobiles.

We predict there’s a very robust argument that inexpensive automobiles which can be tremendous, super-efficient and do not take up lots of house ought to profit from the identical tax credit at a lot bigger, far more costly full-size vehicles get. So, that is an space of advocacy that we’re persevering with to push on with companions and with others within the discipline. And if you concentrate on it, I imply, that might have a very dramatic impression, notably within the close to time period, on the affordability of Arcimoto’s merchandise for the extensive market.

Eric FritzChief Advertising and marketing Officer

Any plans to vary battery chemistry or format since loads has modified for the reason that first FUV introduction? What order would you write your battery priorities, diminished weight, diminished prices, or elevated vary?

Mark Frohnmayer

Effectively, I ought to say that we now have some very attention-grabbing battery developments within the works, one thing we shall be speaking about on future earnings calls and stakeholder webinars. However versus — a precedence for me at this level can be a discount of value and enchancment of vary. The battery is definitely in a very great spot within the car. We — and we’ll seemingly see — as power density continues to incrementally enhance, we’ll see batteries which can be primarily the identical weight that go farther, have greater volumetric power density.

And we’re additionally seeing continued push down the associated fee curve of battery cells. So we received lots of good things approaching that entrance. I might say, from the shopper perspective, it truly is about simply incremental modifications over time for the foreseeable future.

Eric FritzChief Advertising and marketing Officer

Has Arcimoto been testing with every other firm’s software program for autonomous car arrival?

Mark Frohnmayer

None that we have talked about publicly but.

Eric FritzChief Advertising and marketing Officer

All proper. Going — shifting over to talk. I form of touched on this already. Are you able to touch upon why retail gross sales have been solely 30 items final quarter? The variety of shopper spend, loads of folks drove Arcimotos this quarter, climate is ideal at springtime, why did not you promote extra?

Mark Frohnmayer

It is — once more, we are actually ready the place we’re constrained on the manufacturing of Arcimoto automobiles. And as we checked out our choices and what we have to do to execute the expansion of our market plan, we allotted a big variety of our automobiles to issues like our open rental shops in Eugene and San Diego. I additionally talked about that there was a supply pause for a number of weeks on account of a software program glitch. That did impression these gross sales numbers as properly as a result of we really rely the sale once we ship the car.

And once more, I feel what we’ll see by way of end-user gross sales is that Arcimoto has to steadiness the expansion of our market development plan with the gross sales to present preorder prospects and new prospects who need our automobiles.

Eric FritzChief Advertising and marketing Officer

As a stakeholder, it’s important to know in better particulars points associated to the availability chain, can we hear how exactly Arcimoto plans to leap manufacturing in Q3 from 75 items to 150 items?

Mark Frohnmayer

So, whereas we — it’s trying like we’re in fine condition right now for Quarter 3 and Quarter 4 by way of hitting that focus on of 425 automobiles produced this 12 months. There are some challenges that Arcimoto has which can be unavoidable within the provide chain at our scale. We now have elements which can be single-supplier sourced. We’re producing at a low sufficient quantity that, in lots of circumstances, we now have solely a single provider who provides a specific element for the car.

As we glance to greater scale, clearly, these are components that we’re going to handle and make far more sturdy, however — and once more, that is warning that I put out, I imagine, over at the least the final couple of quarterly stakeholder webinars is that we anticipate a comparatively flat development curve quarter over quarter with the potential for many choppiness as a result of provide chain. I imply, simply as one instance, we had what was a — I imply, not fairly a port shutdown that one in all our suppliers makes use of, like an eight-week delay. We have had multiweek delays on the port down in Los Angeles. After which suppliers, in addition to us face all the time the questions across the motion of the pandemic and now increasingly more associated to excessive climate occasions and issues like — belongings you would not even usually anticipate, just like the Texas Freeze that shut down petrochemical vegetation in Texas, really had an impression on our gearbox and the seals that we use.

So, it is — we’re going to proceed to make use of completely finest efforts to make it possible for interruptions are as least problematic as potential whereas executing our market development plan persevering with to ship automobiles to prospects, opening up rental areas, however it’s — we’re nonetheless amid uneven seas in a worldwide pandemic.

Eric FritzChief Advertising and marketing Officer

When will we —

Mark Frohnmayer

Another factor, really, Fritz. Sure, simply as a method to have a look at this, notably on condition that Arcimoto is — we’re one in all a dozen nascent EV firms right here within the U.S. which can be concentrating on — bringing clear transportation options to the world. One of many actual benefits that Arcimoto has in constructing towards that mission is that we’re already in market.

We’re in market right now. We now have automobiles out for demonstration. The constraints that we now have on manufacturing at very low quantity actually affect near-term measures of the corporate’s progress. However our actually next-stage targets are to step as much as a lot greater manufacturing and quantity and to take action in a time window once we’ve received much more readability on issues like the worldwide chip scarcity, battery provide chain constraints, and all the remaining.

I feel that actually positions Arcimoto properly, actually versus others who’re trying to launch scale manufacturing of car packages towards the top of this 12 months. So, we have already received automobiles on the highway. We’re undoubtedly doing our best possible to take care of the availability challenges within the close to time period. However our — once more, our overarching focus proper now could be the push to scale, the planning for scale, constructing resilient provider relationships for the size manufacturing model of the product household.

And so every thing that we’re doing within the close to time period actually must be balanced by means of that lens.

Eric FritzChief Advertising and marketing Officer

When will Hawaii get a rental facility? And which Island in Hawaii?

Mark Frohnmayer

Which island singular? I feel there are a number of islands in Hawaii that actually that Arcimoto group members have volunteered to go spearhead. By way of timing, we’re ready on the acceptance of our car manufacturing license for Hawaii in order that Arcimotos might be simply registered on the highway there. However we see vacationer season and type of the winter vacationer season as being a very good time to get first leases getting in Hawaii. And so we’re — that is — we — I am not — I haven’t got a set timeline for you right now, however we’re pushing arduous.

I wish to have at the least a type of services opened up proper across the finish of the 12 months, the start of subsequent. And by way of what islands, we see alternative on — in Honolulu, on Maui. Actually, I feel the Arcimoto platform automobiles are simply going to be phenomenal automobiles for that market, each for individuals who dwell there and for people who find themselves visiting. 

Eric FritzChief Advertising and marketing Officer

Arcimoto expressed help for Black Lives Matter final 12 months. What has been accomplished to extend African American employment on the firm? The nationwide common is roughly 15%. 

Mark Frohnmayer

So, what we have accomplished put in place on the Board degree is an actual push for getting variety packages in place. I wish to report that we have made extra progress on this entrance than we now have, however it’s nonetheless actually a key piece by way of — Arcimoto at its root is all about transportation, clear transportation, and in the end, transportation fairness. And so ensuring that we, as a corporation, take that critically by way of our personal composition is basically necessary.

Eric FritzChief Advertising and marketing Officer

Are you able to touch upon the standing of buyer preorders? Is the backlog rising, holding, or declining?

Mark Frohnmayer

We really noticed a significant rise by way of indications of curiosity in Quarter 2. And I would refer you again to our 10-Q. If you wish to take a look at that precise breakdown of numbers — Doug, do you may have that proper in entrance of you?

Doug CampoliChief Monetary Officer

It was roughly 700 car — or 700 preorder enhance.

Mark Frohnmayer

Sure. And once more, only a be aware about preorders, we take a look at preorders as robust indications of curiosity within the product. They’re both refundable, nominal deposits or they’re issues like letters of intent from business prospects and so forth. However we undoubtedly do see them as a significant indicator of future market traction for our merchandise.

So seeing a giant substantial step-up will not be a nasty factor.

Eric FritzChief Advertising and marketing Officer

After which what appears to be like to be the final query to talk right here, any alternative for alternate controls of the car?

Mark Frohnmayer

Effectively — and is there any indication there about what —

Eric FritzChief Advertising and marketing Officer

There appears to be some trepidation towards the handlebar controls, particularly. However I might say that there was a number of questions on alter-enabled people and different alternatives for an alternate management system. 

Mark Frohnmayer

One of many issues we have heard from alter-abled people is that really, the handlebars are an actual benefit there. And it’ll — for folk who’ve restricted decrease physique mobility that may require sure particular {hardware} to be added for, for instance, for the hydraulic brakes to have the ability to transfer them to the handlebars. I used to be — the one factor that was actually cool that we noticed on the summer time showcase was the work that Stoffel Methods has been doing on torque vectoring. And what that — the implication of that for the FUV is it is only a a lot smoother expertise on the handlebars, notably at low velocity.

However for anybody whose trepidation is about driving the Arcimoto, I imply actually, it takes a really brief time to get the cling of it. Should you’ve ever ridden a bicycle, it is a piece of cake. And what you find yourself in the end feeling is just like the — type of just like the car turns into an extension of your will to maneuver. We’re going to proceed to refine that person expertise, notably by means of the software program controls work that we’re doing with Stoffel, however we now have no current plans to vary to one thing like a steering wheel.

In actual fact, it was the swap from a steering wheel that actually unlocked the true win of the Arcimoto platform by way of having the ability to carry an terrible lot on a small footprint car, and the transfer to handlebars was really a giant piece of that.

Eric FritzChief Advertising and marketing Officer

All proper. A pair extra rolled in. How are we doing at time? 

Mark Frohnmayer

I feel we received time for another, after which I am going to wrap it up.

Eric FritzChief Advertising and marketing Officer

Have you ever thought-about making an electrical alter-enabled car just like the Tesla Cyberquad? How about that one to finish it off? 

Mark Frohnmayer

Brief reply on that one is sure, we now have thought-about making quite a lot of several types of automobiles. For the second, we’re very targeted on bringing our present product choices to scale and focusing closely on the day by day driving downside, in addition to automobiles that type of slot in that very same go-to-market method. So one of many issues I actually like about Platform 2, once more, is that it — we expect these automobiles are going to do very properly in our rental outlets. We predict they are going to do very properly by way of the rideshare conversations that we’re having.

And so the place you get that overlap of enterprise mannequin, it turns into simpler to maneuver a number of merchandise by means of it. Once I take a look at off-road, I feel the platform has actual alternative there, notably at the least constituent components of that platform. Nevertheless it has a complete completely different go-to-market method and lots of extra engineering work to make it occur. So we need to preserve Arcimoto as targeted as potential, notably proper now in getting our present product strains refined, getting our new manufacturing facility up and working, and actually pushing to scale to ship on the mission. 

Eric FritzChief Advertising and marketing Officer

All proper. Another since we have a query couched in a praise. Arcimoto is the second-largest pure EV maker in manufacturing within the U.S. behind Tesla, with extraordinarily low money burn in comparison with different EV makers.

Are you able to clarify how you’ve got managed this success?

Mark Frohnmayer

Wow, that’s — thanks for the query. I do suppose that one of many issues we satisfaction ourselves on is targeted on a significant answer that’s easy, light-weight, ultra-efficient, and we simply abhor waste. And I feel that has stored us — we — Arcimoto was a — for our first seven years, I used to be the primary funder, I would put within the first couple of million. And I type of handled each extra investor greenback getting in as if it have been my very own by way of actually attempting to get probably the most bang for the buck.

I imply, that meant that we principally received into manufacturing with, I feel, a complete spend, over our first 12 years, of about $42 million. So zero, serviette sketch to first manufacturing car on $42 million for a next-generation EV firm is pretty spectacular. So I additionally — we now have an Oregon ethos of constructing start-up firms into extra mature firms, and that has additionally been — the Oregon has a — it is very collaborative, but additionally use — to be very capital environment friendly. So — and only one instance, I imply you concentrate on constructing out advertising and marketing and gross sales, we have actually targeted, notably within the early years and as much as manufacturing launch on the car, on getting the product actually dialed on getting one thing that we expect goes to promote itself as soon as we are able to actually get it to scale on the proper worth.

And so that’s — that is one other ingredient of it, I feel, is simply focus. We could wrap it up? We’re a bit bit over time. I needed to thanks guys all for attending. This formally concludes our 2021 Quarter 2 Arcimoto Stakeholder Webinar.

I might add that I received a bit one thing particular for you. Should you all might have been there at our summer time showcase, you’ll have seen some actually spectacular issues. Tilting — toric vector, driverless automobiles, tilting joyrides, and a neighborhood of friends rising collectively towards a brighter future. You additionally may need caught Uncle John and the From Right here band serenading the gang with one other fine-tune.

Now, John could not make it again down for the decision right now, however in honor of him, Sandy and all of the effective companions, who joined us on our quest, Emily Jensen, founding father of — and CEO of Pondering Tree, yours actually, and Wealthy Lomas, the perfect stand-in — standup man I solely simply met, performed once more the tune we penned for the showcase. After all, for anybody of the opinion that good enjoyable tunes don’t have any place in a stakeholder webinar, now could be your queue to hit the sign off button.[Commercial break]

Length: 57 minutes

Name members:

Mark Frohnmayer

Unknown speaker

Eric FritzChief Advertising and marketing Officer

Dilip SundaramChief Worldwide Enterprise Officer

Doug CampoliChief Monetary Officer

Extra FUV evaluation

All earnings name transcripts

This text represents the opinion of the author, who might disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one in all our personal — helps us all suppose critically about investing and make choices that assist us develop into smarter, happier, and richer.





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