Arcimoto, Inc. (FUV) on Q3 2021 Results - Earnings Call Transcript
Mark Frohnmayer: Good afternoon, everybody. Can everyone wait for a minute or so for folks to log in? Trying a new format this time, so bear with us. All right. Wait for another minute or so we’ll kick it off. All right. Appreciate everybody joining today. Welcome to Arcimoto’s 2021 Quarter Three Stakeholder Update. In the past, we’ve done these in conjunction with the filings of -- our SEC filings at the end of the quarter. But that takes weeks to get through all the numbers and audits. And we’ve had a number of our stakeholders’ request more timely update about what happened in the quarter besides the financial numbers. So we’re doing -- this is going to be, I think, a regular occurrence at the end of each quarter. Once we know how many vehicles we build, what we did, all that, we will get that information out to our stakeholders as quickly as possible. And then do more of the typical analyst discussion in conjunction with the filings of our financial reports. So the way this one’s going to go is, I’m going to run through, play our latest vision to action video, dive into some key highlights from the quarter that a lot of folks have been asking about, talk about our upcoming launch of the Ride of the Arcinauts. And then instead of Q&A, I actually did a -- about an hour long Q&A with an upcoming -- up and coming YouTube channel on Saturday. And they’re going to drop that video at the conclusion of this call and it’s not going to be part of this, but it will be something that we’ll link to on social media. And with that, we’ll get started. Greetings, I’m Mark Frohnmayer, CEO and Founder of Arcimoto. Arcimoto is an Oregon C-Corp founded in 2007 with the mission to build products that catalyze the shift to a sustainable transportation system. I’m going to start this presentation with an overview video, followed by a short financial and business model snapshot and then dive into Arcimoto’s big overarching goals for the road ahead. You can sign up for investor updates and find supplementary information including our earnings press releases, financial filings, presentation materials and webinar replays on our Investor Relations page at arcimoto.com/ir. To start I want to call your attention to our Safe Harbor disclaimer regarding forward-looking statements. This note identifies risk factors that may cause our actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our Form 10-Q and other SEC filings. Now on to the goods. At Arcimoto we build light electric ultra-efficient rides that are outrageously fun to drive for a reason. Our vision is a city that doesn’t suck anymore. Today’s city is dominated by the car. We pave over nearly half our urban land for these giant multi-ton extractive machines that we mostly drive alone or with just one other person and leave parked rusting for 95% of their life. That’s nuts. We believe that by right sizing, electrifying and better utilizing our rides, we can reclaim our space, clean our air and make our cities much more livable for everyone. We’ve built a new human scale vehicle platform and a family of products (ph) for a wide range of everyday trips, the Fun Utility Vehicle for daily driving, rentals and rideshare, the Deliverator for last mile delivery of essential food and goods, the Rapid Responder for emergency services and security, the Flatbed for general fleet utility and the Roadster, a fun machine that drives like nothing else on the road. Every Arcimoto is pure electric with range for everyday driving, have RockStar parking as a standard feature and accelerate from zero to fun instantly. Our experienced model is rental first, with operations open in multiple destination markets and more on the way to give potential adopters the taste of the ride. “I’ve been driving it everywhere. Just like a 16 year old. I don’t even care where I go or why I go there. I go out and I get in, and I just drive around.” “That’s an awesome. Awesome machine right there. It’s quiet. It’s got plenty of power. All the power you need and it’s just comfortable.” “Everybody wants it when they see it and they haven’t even driven it yet. The real joy is when you get to drive it and then you just get the feeling of what it’s all about.” “I’d also like to give a big shout out to the Arcimoto team, your workmanship and design is awesome.” The full future Arcimoto vision adds driverless technology to make shared rides much more convenient. Imagine a city where your personal transportation is available at the touch of a button on your phone. Enjoy the experience of driving again and when you reach your destination, you just hop out and the Arcimoto is available for its next driver. We’re in production now. Every Arcimoto is built here in the AMP, where we transform raw material through cutting, forming, welding, machining and final assembly all under one roof. To take the venture to scale, we purchased a new much larger facility and teamed with Sandy Munro & Associates with the goal of kicking off mass production late next year. Finally, we acquired Tilting Motor Works, developers of the TRIO accessory that can turn two wheeled motorcycles into amazing tilting three wheelers. Together, we’re building a new ultra-light micro mobility solution for the rapidly growing global electric bike and scooter marketplace. With our overarching focus on scale, this year we plan to demonstrate the full breadth of Arcimoto solutions for sustainable mobility and expand our market presence as we prepare for the next decade of the ventures growth. Arcimoto is a public company. We’ve been powered since our inception by a community of stakeholders with whom we share a mission to catalyze sustainable transportation. I hope you’ll join us. The name Arcimoto means literally Archetype I Drive or I Drive the Future, and is the brand identity for the next generation of drivers. Arcimoto’s mission directly inspires the company’s values. Values we believe are fundamental to its achievement. We put people first, our customers, our team and the stakeholders who propel us along the way. We are lean by design, continuously improving what we build and how we build it. Our impact on the world is always front and center, and if we’re not having fun, it’ll show up in what we offer. And we are and continue to attract A team players who have the hustle, grit and collaborative instinct to get the job done right. By the financial metrics that we see as most important to the achievement of Arcimoto’s mission, we ended quarter two in the strongest position in the company’s 14-year history. We continue to maintain a disciplined approach to resource expenditure as we make rapid forward progress on critical fronts for the company’s growth. In Q2, we submitted a first draft of and are presently refining our application to the Department of Energy for a loan to fund the substantial portion of our planned expenditures for next stage production. And further, the ATM facility we have in place allows us to continue to fortify our position at current market prices and times we believe are in the best interest of our stakeholders. Arcimoto is a new transportation endeavor, unencumbered by the legacy of 20th century automotive business models. We generate awareness and sell online and have teamed with DHL for the direct distribution of our products to customers, rather than franchise dealerships or company test drive outlets, both of which carry ongoing overhead. We focused our in market experience on rentals and eventually vehicle sharing as a service. We have rental outlets open in Key West, San Diego and Eugene, as well as through GoCars in San Francisco with more destinations coming soon. Arcimoto’s small light-footprint platform makes it ideal for mobile service, where most customers’ issues can be handled on site and for long-term ongoing maintenance, the electric drivetrains robustness and simplicity means that most wear items should be serviceable by existing lightweight automotive service companies. The company’s big top level goals are; first, to design and implement the pattern for mass production of Arcimoto vehicles, such that we can rapidly produce vehicles for the global marketplace. Second, to deploy the intersection of future transportation technologies for shared ultra-efficient vehicles with a business model that wins, as we demonstrate the full product portfolio of solutions for sustainable mobility, including a multitude of variants on our core platform. And finally, to deliver a new family of solutions for true micro mobility. Arcimoto is presently producing vehicles in low volume for early customers, providing us a critical early market presence and depth of knowledge of the performance of the platform on the road. To scale to mass production, we’ve acquired a new facility with more than 200,000 square feet of production space under roof on more than 10 acres. We’ve teamed with Lean Design and automotive production experts to plan for volume manufacture, targeting a maximum output of 50,000 units per year. Engineering and production planning are now moving ahead full steam and construction on the new site is expected to start in Q4. The planned output of this effort is not just a production facility, but the complete set of plans to scale Arcimoto’s output here and around the world, meaning significant effort to standardize all processes and documentation to more easily replicate these 50,000 unit production cores in other locales, sharing a single robust global supply chain. Since its inception, Arcimoto’s vision has included the integration of driverless technologies to more conveniently share vehicles and drive up utilization. And for the first time, we’ve demonstrated driverless technology in the real world. This summer at our showcase, Arcimoto and partners demonstrated a remotely controllable Fun Utility Vehicle, including the foundational technology layers necessary for autonomy. While we see merit in the long-term aspiration of the perfect robotaxi that lets you focus on Twitter instead of the road Arcimoto’s Robo-Valet initiative is focused squarely on near-term shippable intermediaries that reduce the cost of the vehicle sharing business model. One element that separates Arcimoto from every other EV venture we’ve seen is the true flexibility of the Arcimoto platform for a wide range of everyday driving uses. Each of our products is largely the same, sharing the same battery, drivetrain, chassis, wheels, braking system and so on, which are ultimately additive to our economy of scale. For the consumer market, we produce the Fun Utility Vehicle and the Roadster with a planned commuter vehicle down the road. We offer the FUV, Deliverator and now the flexible Flatbed for the fleet market. And the platform has uses even in very specialized niche applications, such as the Cameo, we built for on road filming. All of the work we’re doing now to demonstrate the flexibility and applicability of the platform is feeding back into the design process for mass production, ensuring that what we build continues to be ever more adaptable for a wide range of everyday uses. As we look down the road, our first platform is just the beginning. We aim to continually lighten the footprint of mobility. To that end, last year we began the skunkworks development of the mean, lean machine targeted squarely at the rapidly growing e-bike marketplace. This vehicle will be chockful of new electric vehicle technology. We are actually reinventing the wheel this time. We believe it will perfectly complement our go-to-market strategy of rentals and rideshare, and will set a new bar for efficiency, utility and affordability for a wide range of transportation tasks. We acquired Tilting Motor Works at the beginning of this year to accelerate development of that program. But I want to take a moment to talk about what else we got in that deal, an existing product line for motorcycle riders who don’t want to fall over anymore. Our TRIO accessory transforms a motorcycle into an amazing three-wheeled tilting machine and we see giant market potential for this product. In the U.S. alone, there are more than 12 million motorcycles in use and the TRIO is already adapted to the leading big bikes, Indians, Goldwings and Harley’s of which 180,000 were sold last year worldwide. In summary, Arcimoto is shipping and continuing to further develop kickass, ultra-efficient electric three wheelers and advanced vehicle technologies alongside a world class team with whom we share a mission to right size mobility as we grow our market presence in preparation for volume production. For the challenges ahead, we will continue to improve the experience for the Arcinauts, our early customers and riders, their vehicles, the first time user experience, and sales, service and communication processes. We will continue to cultivate our leadership skills as our team and demands expand, and this means continued emphasis on process, culture and our core values. We will maintain our focus on the health and safety of our team during an ongoing pandemic and the planet’s not waiting around. The IPCC’s Code Red is our call to action. We must continue to step up our production pace amidst the churn in order to make the contribution for which we are called. So, in terms of production and delivery, Q3 was, in terms of sales, our best quarter ever. We sold 64 vehicles to customers. It was almost our best production quarter ever. We hit -- we actually produced, completed 78 vehicles during the quarter, 11 more were one part away or two parts away from being finished. And I think that’s a -- the key point there is just that we are continuing to deal with a lot -- as almost every vehicle producer on the planet is dealing with, a truly topsy turvy supply chain as we’ve cautioned in, I think, probably the last four stakeholder updates that this is going to be a feature for at least the near-term foreseeable future. We had -- our materials team has moved mountains to make sure that the production line is queued up with parts. Our production teams have been dealing with the Delta wave of the pandemic, all kinds of shifts in protocol and still we had the best quarter that we have had in Q3. As I talked about early on in the year, we are expecting a relatively shallow growth ramp in unit output in the near-term, with the potential for lots of chop. That guidance will continue. We’re not changing now our guidance for end of year production. But that is something that we will certainly have an update on later in the quarter when we do our earnings call. And I should say also, these are unaudited numbers. So the final minted production numbers will come out when I’m -- when we do our Q3 filing. We are having to balance, getting customer vehicles in the hands of our early adopters and units that we build for our rental and rideshare model, as well as for pilot programs that we’re doing to demo to larger fleets. So that’s going to be -- continue to be a factor as we move forward throughout the end of this year and then into next year. Update on ATVM and what we are calling Project Prism, which is our 1.X development program. We are still finalizing our application to the ATVM. They have -- the department has asked for more detail in terms of the market analysis, more detail in terms of our go-to-production plans at scale. So we’re buttoning all that up so that it’s in a very easy to grow arc laid out form that we hope can move through their process quickly on the other side. Project Prism is all of the programs across the whole vehicle architecture for mass production. And that is a look at the suspension, the chassis, the battery system, the electronics, the motors, and then all of the different variants for last mile solution products across the product family. Those are all happening in parallel. A lot of the work is being done at Arcimoto. We also have a fantastic team of partners in the form of Munro & Associates and their whole constellation of teams that they work with, as well as supplier partners and we’re going to have just a lot of very exciting stuff to share on each of those programs a little bit down the road. I’m incredibly pleased with how fast a bunch of those different key programs are moving. We have now -- in our -- towards the end of this, I’m going to play a video that we shot last Saturday, which was our Fall FUV Rally. It was kind of the preview for the launch of the Ride of the Arcinauts. We also had a chance to go through, drive through our new facility and we are just super, super, super stoked about that facility and the plan is still to get vehicles in production towards the end of next year in the ramp. I want to take just a moment again to talk about rentals and rideshare. We in quarter three was really when we did our first Arcimoto owned rental stores. We open Eugene. We open San Diego. It was really like right at the end of Q2, but this is our -- Q3 was our first full quarter. We are still very much dialing in the systems for our own shops, but we think they -- those shops have great promise in terms of for us, really, I mean, ultimately reducing the cost of end user vehicle experience. We think it is actually quite possible that we will end up with a profitable in-market experience for customers. So that is that rather than that vehicle experience portion of the business being a perpetual cost sink is it would be if we had franchise dealerships or if we had company-owned rental -- company-owned stores that we had to that were there in order to give test drives, that the rental outlet lets our customers have half a day or a day with the vehicle really get to experience the joy and the Fun Utility Vehicle and at the same time provide us a very efficient way of getting those vehicles into their hands. And what you’ll see in this next quarter is that we are -- we’ve got some very interesting stuff coming together, not just on the rental side, but also the model of rideshare. So if you think about the cost points of the rideshare model, it is the cost of the vehicle and then the cost of conveniently getting that vehicle to where a customer can use it. We have -- we are pushing to build the most affordable, most efficient, everyday capable electric vehicles and then we’ve got some really interesting programs we’re working on to reduce the cost of that other piece, which is how do you get vehicles to customers in a very, very efficient way. That ultimately leads to the Robo-Valet initiative. But we think that there’s some very interesting pieces we can do along the way to getting there that again just reduce the cost points of the rideshare business models. Another goal that we had set out for Q3 was to get the doors into the hands of first customers. Matt Sayre, one of our very early Arcimoto customers got his doors on his vehicle right at the end of the quarter. This was a big effort across multiple teams at Arcimoto and so very happy that we got our first set of doors out. We’re going to be getting in touch with evergreen customers. We owe doors to a number of folks and then new customers will also be able to order doors as part of the configuration process for the vehicle. Another thing that I think is very -- has been very exciting for me is the Flatbed vehicle prototypes pilots that we put on the road. We teamed up with a local company here that just makes super cool accessories for much larger trucks. And they built just a really amazing Flatbed vehicle concept. We now have a couple of those units in the field in pilot. Freedom who is quoted here on the slide, says it, really like the only problem with it is, you can’t get any work done, because people keep asking him about the vehicle. He has been saying, hey, I’m going to get- you got to give me business cards I can hand out. This thing is just getting a ton of heat. And this is from people who are using much larger work vehicles to do their jobs. So we think that the Flatbed has tremendous potential as a general fleet utility vehicle. And with that, I’m going to kick into the -- this is a -- we did a ride this last weekend. The -- our fall annual -- second annual Fall FUV Rally. I went through our new facility. So I’m going to roll this tape, talk a little bit about the upcoming Ride of the Arcinauts and then sign off. “So it was our first view of the factory. We got to cruise through all the buildings and see the machines that had been put into place and the stuff they’re moving out.” “We are now in building A of the ramp. This will be the first recondition facility to come online. We drove through C and D, those are already basically done. The goal is to as efficiently possible bring this up to sort of Arcimoto standards for production facilities and then get to work.” “We got out around town where everybody could see us zipping by.” “We’re going to go from here to the top of Ya-Po-Ah also known as Skinner View.” “We went up Skinner View and got the most awesome view of the whole city of Eugene, just fabulous. And then to another park I’ve never been to before.” “Hendrix Park.” “Hendrix Park. Absolutely beautiful. And then all the way back to the campus, which was just great if you’re . “This is also the sort of the pre-launch ride for the Ride of the Arcinauts, fun program that we’re going to launch a week from today to bring the Arcimoto story to the world.” And on that note, so this is a -- we’re launching this program. We’re calling the Ride of the Arcinauts. The way that vehicle roadshows have typically been done is a little crazy and we’ve been doing this for a long time. You load up the truck with vehicles, you truck them 1000 miles away, people jump on planes, stay in hotels, for vehicles that are parked inside of buildings and not moving. That -- as we’ve looked at that that’s a super, super inefficient way of getting vehicles out there in the world. So the idea of the Ride of the Arcinauts is the beginning of our infinite roadshow. At where we will bring collections of vehicles and people city by city by city and stay in campgrounds, where we can meet some of our other customers. So we -- the Arcimoto vehicles are fantastic tow behind vehicles for motorhomes and so we’re going to go be out there meeting our customers in campgrounds showing off vehicles there and then going into cities, doing drive events and then bugging out for the next camping spot. We’re kicking that off on Saturday. Our first stop is the roborace at Thunder Hill in California and then we’ll be making our way down the Coast and then ultimately heading inland in order to open up Nevada, open up Arizona for sales, at the same time that we open Hawaii and then New York is the next one on the list after that. So big road trip ahead, and ultimately, what we’re doing here is sort of like the prototype of the Ride of the Arcinauts. By the time we get to next spring and summer, we want to have pods of these vehicles traversing the whole country so that we can get as many of you in the driver’s seat as possible in the most efficient way we possibly can. So, with that, just wanted to say thanks everybody for tuning in. There is, again, I did a Q&A with some upstarts on YouTube on Saturday and they’re going to drop that video, I think, right about now. So if you want to hear an involved Q&A, we spent more than an hour chatting about lots of pieces of the company and even played the first line of how many roads must a man FUV down. So feel free to tune into that one and I really look forward to seeing you all out on the road. Take care.
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