REE Automotive (REE) Q2 Earnings call transcript Sep 26, 2024
1min read In REE Automotive's latest earnings call, the company highlighted a significant milestone with the strategic partnership with Motherson Group, signaling a transformational development for REE's future prospects. The collaboration is expected to bolster REE's commitment to delivering software-defined electric vehicles reliably, efficiently, and at scale.
Financial Highlights
The second quarter of 2024 brought a narrowed net loss of 57% quarter-over-quarter and 59% year-over-year, with free cash flow burn reducing by 19% quarter-over-quarter. The liquidity position stood at $60.5 million, demonstrating a strong financial position. REE anticipates that the partnership with Motherson will enable faster and more stable production scale-up, leading to significant working capital benefits.
Strategic Collaboration with Motherson
The strategic agreement with Motherson Group is expected to be transformational, as it allows REE to grow faster while lowering production challenges. Motherson's manufacturing expertise and supply chain management will contribute to a dominant new force in the electrified commercial vehicle market globally. This partnership is expected to significantly improve unit costs, accelerating the road to meaningful free cash flow generation.
Strong Demand and Order Book
REE's order book has grown by 15% quarter-over-quarter, reflecting strong demand for the company's technology, even amidst broader challenges in the EV market. The company is in discussions with three OEMs for the potential to expand their offering from full vehicles to software licensing, opening up opportunities in various classes and segments.
Expansion Plans and Future Outlook
REE is working on securing production slots for customers, with a production plan update expected to benefit their ability to address larger orders from fleets and OEMs. The company expects to start deliveries in 2025, with a clear production plan for 2025 in place. REE's focus on software-defined electric vehicles is in line with the growing demand for electric trucks that provide improved operational efficiencies and low total cost of ownership.
Conclusion
REE Automotive's earnings call underscored a transformational partnership with Motherson Group, signaling a promising future for the company in the electrified commercial vehicle market. With a strong financial position and a clear production plan for 2025, REE is well-positioned to capitalize on the growing demand for software-defined electric vehicles and meet the needs of fleet owners and OEMs.