Exclusive Interview REE Automotive: The Future Of E-Mobility | Benzinga Electric Vehicles Conference

Good, good. Justin, how are you, mate?

That is correct.

Yeah, absolutely. So what we've developed is a concept called the corner. We understood that when you build a platform, which is the basis of a vehicle today, it's very complicated, it's very costly. It costs about one to three billion dollars, takes about eight to ten years to develop. And then after you've done this, you understand that the market wants it a little bit different. Then what do you do? You either go back and spend another billion or so in another eight years, or you try to convince the market that whatever you've got, that's the way it is and they have to go with it. Up until what, ten years ago, that has been the case. OEMs used to build vehicles the way they decided to, and all of us had to conform. But we see a major shift now towards what the industry calls a more modular approach, a custom design requirement, a mission-specific vehicle, if you'd like. So how do you cope with something like that? How are you able to build so many different permutations? We understood that the basic limitation of that is that you put everything on the chassis. Right? You've got a thing like when you pop up the hood of the car, there's so much stuff cramped into that. And this is what makes the car go, right? They drive through the suspension, the steering, the brake, and the motors. And if you look at an ICE compared to electric, right, the conventional versus electric, just the motor is different. They've taken the ICE engine and replaced it with an electric motor, but everything remains the same. So every time you try to shift it, there's a major change. There's a ripple effect. You change the wheelbase by 10 inches, you have to change the drivetrain and the half shaft and the center of gravity and so on and so forth. It's a nightmare. So we said, okay, let's take them out. Let's take all those components off the chassis. Right? Okay, so where do you put them? First thing is you put them in the wheel. Not a good idea. You put them in the wheel, you mess around with handling, with safety, you mess around with durability. Not good. So we put it back, said no, no good. Let's find somewhere else to put it. There is literally nowhere else. It's just chassis and a wheel. And then we came up about ten years ago with a funny idea: let's put it in between the chassis and the wheel. Okay? And the guys said, like, okay, where? It's like over there, right? Between the chassis and the wheel, like you see behind me. And they said, like, how do you call that? I said, I don't know, it's in the corner. And ever since we call them corners. And those things have everything you need in order to make the car go. It has the suspension, the drive, the understeer, and the brake. And why is it so important? It allows us to be completely agnostic to three major trends. It allows us to be completely agnostic to dimensional change. We can now take out the corners and change the platform as we want, both in terms of length, width, height, weight, anything you want, from under one ton, subclass one categories, all the way to class seven and up. Right? It allows us to be completely agnostic to battery technology. So we can adapt to whatever the battery technology takes us to. And because we control them by wire, there are no mechanical connections between those corners. Right? We're agnostic to the driver. It can be a person driving or an AI. And that allows us to put vehicles on the road in two years as opposed to eight to ten, and at a fraction of the cost.

Yeah, see, Justin, in order to become a market standard in the industry, in order to have a really main effect, honestly, you can't do it alone. I mean, you have to raise, I don't know, a few tens of billions of dollars and spend, I don't know, ten, fifteen years and hoping you're going to be at the right trajectory, right? Or you collaborate with people. And we took a model that is very known to everybody, which usually people call it the 'Intel Inside' model. Right? Intel works with Dell and Lenovo and HP and all these guys, and each one of them can build whatever computer they want. Whatever, let's say, laptop you want to buy, you want to build one with a large screen or a business stream or whatever, but it has that Intel Inside sticker. So regardless of whoever wins in the market, Intel wins, right? Same with us. We're providing that platform. We're providing a very modular approach based on the REE Corner design, powered by REE. And we're not competing with other OEMs or the newcomers to the market and the new mobility players. We're actually supporting them. We're completing their offering because we're not building full vehicles. So they can take our platform, similarly to how Dell takes the Intel chips and builds whatever product they want on top, whatever service they want on top, which is custom-designed to what they need. And they can play with the dimensions and requirements as they see fit. And by doing that, we're powering and enabling them to move faster to the market at a fraction of the cost. So if you're an OEM, like our partnership with Toyota through Hino, Toyota's truck arm, Hino presented back in 2019 a single platform for their future of mobility called the platform, which is powered by REE. And guess what? It's completely flat and fully modular. And earlier this year, a couple of months ago, we announced an upgrade to that relationship where we signed a strategic alliance, a business alliance agreement between us to take this to production. And that's major. We also are doing business now with, which is public now, Magna, that we're signing a collaboration agreement where we're going to do the platforms and Magna is going to complete the top hat on that. And yeah, you know, most of the new players are coming to Magna all the time, and they're an amazing partner to have. And the last, the recent one that we announced, I think a month ago, with a collaboration with the J.B. Poindexter Group, which is more than 50% of the North American walking vans, right? So more than half of every UPS, FedEx, Amazon food truck you see, all that is the bodies built by the Poindexter Group, Morgan Olson, Morgan, etc. And so you see major players coming into this technology with us, adopting it, and moving faster to the market.

No, not yet. We're going to start manufacturing by 2023. We are currently testing our prototypes with our partners, and there's quite a lot of footage out there of us playing with the toys and the platform running around and testing durability and safety. The model that we're providing is basically a three-layer stack. We like to look at ourselves as a one-stop shop. So if you're the Toyotas of the world or you're a large OEM, you can go out and just buy those corners, and you'll do your own chassis and you'll do your own body because you're more than capable of doing so, right? We're not going to compete on chassis with Toyota, it doesn't make sense. But if you're, I don't know, Morgan Olson or somebody like that, or anybody who's used to buy a chassis from one and building the top hat on that, then we'll give you a full running chassis with batteries, with thermal management, so forth. And if you just want to buy a vehicle and you say, guys, I'm in the vehicle business, I want to run a service, I want to run an autonomous shuttle, I want to run a delivery, etc., we're also able to give you a full vehicle together with our partners such as Magna.

Yeah, so first of all, yes, absolutely. Our ability to complete and not to compete, to partner, is key. Instead of wasting time, energy, and resources fighting with everybody else and competing out there, we're completing. We're moving faster. We're bringing everybody together with us and moving faster. And it's a major, major differentiator, I think, for us and for everybody else. Because I mean, think about what we can accomplish with the likes of Toyota and Magna and Poindexter and Navya, which is the largest autonomous shuttle in the world, and so on and so forth. I mean, it's endless, and the numbers are just growing. And yes, we did see a slight slowdown due to the pandemic, but I think that also there is the silicon shortage that we are all aware of. But I think everything is going to be bouncing back by the end of 2022, beginning of 2023, which is surprisingly exactly when we're going to start mass producing.

I agree. And unfortunately, we're still in it. And every time I think we're seeing the end of it, there's yet another wave. I lost count of those. And you know, God bless everybody, but we are going to come out of it, I hope so. And we're getting ready to push forward on that.

So naturally, we want to sign more agreements and more collaborations and more revenue projections out there. Second, I think it's very important for us to start nominating suppliers for specific programs. The way automotive works is that you have a VVN, vetted vendor network, so it's a pool of amazing suppliers that we've been working together on great technology. And if you think about it, it's like a basketball team. So you've got a whole basketball team of tons of talent, right? Then you've got a match, you've got a program, you've got a vehicle to build, and then you need to decide out of that amazing pool of talent who you bring out to the court to play, right? And this is your team for that program, and that's called nomination. And we are, I think, very close to announcing nomination of our first programs, which means that these programs are moving from the development side to the production side, and that's an important milestone for people to watch for. And I think the third one we want to be looking out for is private road tests at customers. I mean, we're running private road tests at our facilities in multiple facilities now, and it's great, but I think it's a different ballgame when you do it at the customer, with the customer, and they're literally being able to experience the technology, the product. And I think this is something everybody should be looking forward to as well.

I think there are two factors for that. One, if you're looking for fleets, it's TCO, right? Total cost of ownership, which is a formula that takes into account purchasing price, residual value, operating costs, etc., etc. It allows us to compare apples to apples, right? On the operating side, and today already we're able to show a significantly lower TCO than not only ICE but also other on the market and soon to be on the market EVs. And that's a major factor when you look at adaptation rates of new technology, especially with fleet owners and those kind of places. Second, not less important, is the ability to scale. When you want to bet on the technology, you want to make sure that it's sustainable, not only on the durability side but also on the scale side, that we're here to stay, that we're able to produce, we're able to go further. And I think our partnership with our amazing suppliers, that at the end of the day are manufacturing the sub-components for us, guys like American Axle and Musashi and others, is key for that success because they're building vehicles for decades now, right? And they're doing that day in and day out at the highest quality. And they're working on a very special and exclusive basis with us to ensure that whatever they produce and we assemble is at the highest quality, at the highest scale, and able to meet the customer's requirements. I think those two are the main factors for adaptation, and we have clear line of sight on both.

Yeah, I mean, the US is a huge market for us, and it's our primary market. We are very active in the US. So we've decided recently, and we've announced that we're going to open our North American headquarters as well as our first assembly line, our first integration center in Austin, Texas. It's going to be up and running by next year and going to be ready for production by 2023. And that's super exciting for us because not only that, it gives us, and you know, we've been active in the US for a while now, we've had boots on the ground there for a while now, but having a proper North American headquarters and our first large-scale integration center is very exciting for us.

Yeah, you know, my seven-year-old daughter asked me a couple weeks ago a similar question. She said that we watched a clip about global warming and stuff. She said, 'Daddy, what are you doing about that?' So I said, 'Well, we're building electric vehicles and got zero pollution.' She said, 'Yeah, but why would they buy?' And you look at the seven-year-old and go, like, oh wow, that's... you know, where's mommy? Maybe you go there. She was not, I had to answer. And the answer was, you know, I said we're better. We're better, we're faster. Meaning, I'll give you just two examples. Our volumetric efficiency is second to none. So think about it, we can give guys like UPS, FedEx, Amazon, all these guys, 30, sometimes 36 percent more volume on the same vehicle. So we can make every delivery far more efficient. You can deliver more on the same capex requirements, same driver time, same footprint of a vehicle. You make things more efficient. Now why is it important? Yes, it's greener, yes, it's better for the planet, for our children, that is true. But it also improves significantly by 30 percent your top line, right? And it improves your bottom line because there's no added capex required to that because we're aiming to be at the same price as ICE. And with that, I mean, that's key, right? That gives you the incentive to do this today and not wait for tomorrow.

Well, I've seen Spencer with us, so I believe that our time has come to look at him. Spencer sees me off stage, but thank you for spending the time with me, Justin. I very much appreciate it.