All right. Hello, hello everyone. Welcome to Arcimoto's Analyst and Investor Day. This is our forward-looking statement. Naturally, anything short of historical data, is a forward-looking statement and based on us achieving our goals that we'll lay out in this presentation. Today, you'll hear from me, Chris Dawson, CEO, Jesse Fittipaldi, our President, who's really been the mortar in that foundation as we transition through this caterpillar, through the cocoon, and into the next chapter phase. You'll also hear from Dwayne Lum, our COO, who's really been a cornerstone of that foundation, that's really gonna build out that launchpad by which this rocket ship's ready to take off.
For those of you who don't know me, I got my start initially in the Navy as a nuclear chemist aboard submarines, and though I learned a lot during that time, the number one piece that has been the most valuable throughout my career is really learning, how do I still achieve the mission, though I don't have the tools, the resources, or the bandwidth that I think I need? After the Navy, I was given an opportunity to become a CNC engineer for DMG MORI Seiki, at that time, the largest CNC machine tool manufacturer in the world. This gave me access to some of the world's most advanced technology in aerospace, military, and automotive spaces. One of those customers was Tesla Motor Vehicles. I began commissioning and servicing equipment for them in 2012.
Did so consistently through to 2014, that led to being recruited, I did a five-year term there at Tesla. Some of the big projects that you would be familiar with that I was a part of was the 100-kW battery. Initially, no one had shoved that much energy density into a vehicle, that was a really big task for us to overcome. The three big takeaways from that is, like, how do I even produce this thing? How do I produce it at scale? How do I produce it at scale and profitable, then get it into the product? The next project at Tesla was the next big hurdle, was Model X. Tesla decided to roll Model X in parallel onto the Model S line. This caused all kinds of issues. We had varying content, varying engineering requirements.
The one thing that kills all automation is variability. We just induced a ton of variability onto the line. This was the sales pitch for me to take that role. They said, "Hey, the last six guys got fired. You want to give it a shot?" Naturally, I was dumb enough to say yes. Moved down there. The other aspect of this is that at that time, morale on that particular team was really bad. It was bleeding out. It was a 50-person organization, was down to about 26, losing a couple of people every week. I was able to stop the bleeding, get it turned around, give them the tools that they need, take a very pragmatic approach to the line, simplifying it and getting it back on track.
Once we did that, it was time to break ground on Model 3, and I was tasked with building the entire organization that would support that from a sustaining engineering perspective. We needed 100 people in nine months, not just on staff, but trained and ready to go. As soon as we hit the go button, we can make the 1,000 cars a day that Elon promised. We were able to achieve that. We brought all 100 people on, got them trained up, and we were ready to go. As many of you know, Model 3 went a bit sideways in the beginning, and it was a random Thursday night at 7:00 P.M., I'm packing my desk, thought I was going home.
I was ushered into a conference room, where they indicated tomorrow, Friday, I'm taking a small team of engineers to address all the bottlenecks on Model 3 for automation and robotics, and I was to hand over my whole organization overnight to my second in command, and then we were on Model 3. Took the same pragmatic approach to automation. At this stage, they had nine months to have developed whatever technology they were applying on Model 3. If in nine months it wasn't working, we started cutting those pieces. We only kept the automation that made sense and removed the automation that didn't. What this gave me is a rare opportunity that I think no one in the world's been able to really see, is I know exactly what too much automation looks like. I had to deal with it.
I know exactly when you should shift from manual build to automation. I really started coining this term, earning the right to innovate, earning the right to automate, that was the key takeaway from that Model 3 experience. During that time, I was an initial investor in Atlis Motor Vehicles, they're a heavy-duty EV truck manufacturer out of Mesa, Arizona. After Tesla, I came on to run their engineering for a year, to where we were developing our proprietary, from the ground up, prismatic tube cell into our proprietary pack, into our proprietary electrified modular platform, into our own top hat that would go onto that modular platform called the XT Truck, which would be the EV equivalent of an F-3, F-350 Ram 3500 diesel application.
In that, I was exposed to different military interests as we started to solve things on a larger scale. I spun up my own engineering firm to support the transition for the military into electrification, hybridization, and microgrid solutions. During that time, I was exposed to Arcimoto's technology and that leadership. After a few long conversations, it was clear at that time that Arcimoto was struggling and needed some assistance, and it made sense for me to join the board in August of 2022. At the same time, another board member, Dan Creed, also joined, 20-plus years of BMW experience. You got two car guys on the board, what do we do? We lift up the hood and start looking at the health of this. We say, okay.
We met with the leadership team and said, "Let's build the plan, how we survive 2022." That was in question at the time. We built out that plan. The leadership at that time really bit the bullet, got it done, pulled it across, and not only set us up to get into 2023, but started building out that foundation, how then we drive and thrive in 2023. Next phase for Dan and I on the board, was to help the team build out that thrive plan into 2023. Here it is. June's literally around the corner. We were wondering whether or not we're gonna make it through 2022. Here we are, halfway through the year into 2023. What you'll see today is this clear path of how we continue to move on and thrive.
A few months ago, I came in, boots on the ground, really trying to get a good sense of everything. I'm frankly, very tactile, and so working with a different team, talking to different folks, start building out that team. Jesse, Dwayne, and I really built this amazing working relationship, so much so that the board asked me to then step in as the CEO and galvanize this plan and drive us towards profitability. We'll show you exactly today how we're gonna do that. From a high level, we're refocusing on our core products. We've done that by reducing key initiatives. We're driving toward products that are profitable now, or a product that will be profitable in the near future. In doing that's allowed us to reduce our overall burn while maintaining the same manufacturing capability.
What we'll also show you today is our path to profitability and how we're gonna deliver on those commitments. Today, we have 122 employees, down from 324. This is the first big lever that we had to pull on. As we reduced and refocused the organization, it was clear that not only did we have a right-sized product, but we needed a right-sized organization to drive that right-sized product forward into profitability. This is the biggest piece that allowed us to do that. You see here, we reduced down to four SKUs from the original seven, and the litmus test here is: what's profitable, it stays. What can be profitable this year, it stays. Everything else goes on the shelf, and we'll earn the right to innovate and bring those products forward once we prove profitability on all products.
We had 12 capital-intensive programs that I've put on the shelf that absolutely are coming forward, and they absolutely will change the market and have a positive global impact. We'll earn the right to innovate once we show profitability on our core products. With this new intense focus on flagship products, we've seen three quarters of sales growth simply by focusing. We've reduced incident failure rate by 50% from Q2 through to Q4, which has given us a 50% reduction in warranty claims. We've done all of that with direct customer feedback, driving inputs for features and improvements, which allowed us to streamline the configuration to better serve those customers, which then also had an increase in average sales price. We're adding more value to the customer, and they're willing to pay more for the product.
At the same time, we were able to decrease material costs and stabilize our manufacturing overhead. This was all done by a realigned leadership team and a refocused organization. You'll hear from the three of us today, but also this refocused team includes John Dorbin, our Legal Counsel, Melissa Ward, our Chief People Officer, and our newest addition, Chris Cook, our CFO, who's only been with the company for a few short weeks, has had massive impact and great input onto the future plan, driving us to profitability. This is our current customer distribution. Most people don't realize how many FUVs are operating out in the field today, and it's over 600. We've been building these things for the better part of two years, and they're all throughout the United States, exposed to various climates and various applications, both individual and business.
Cumulatively, they've driven over 1 million mi. What this means is not only is there a demand, and not only is this product solving problems for customers, it's also road-tested and clearly being driven each and every day to solve those problems. How are we really gonna get to profitability? Well, with some of the key initiatives, refocusing and right-sizing the business, we've been able to reduce our burn by 66%, and it's holding. We're on track to hit margin on material this fall of this year, 2024. 2023, rather. I'm time traveling. Once we hit that, we can then leverage through volume to drive us to gross margin, which we'll show you later how exactly we do that. Here at Arcimoto, the mission is to galvanize a transition to sustainable transportation.
One of the biggest things that we can do as an organization to really skip level and push that forward is to electrify business fleets. With an application that has a low acquisition cost and a ridiculously low operational cost as compared to other urban mobility solutions, this is clearly the right tool for the job. We've all heard that statement, and it was beaten to my head 1,000 times as a kid. "Use the right tool on the right job." Previously, businesses didn't even have the right tool to accomplish this job. All the tools that they've been using are, frankly, Swiss Army knives that aren't particularly good at one thing. What is likely even more important than electrifying these fleets is right-sizing them. It doesn't make sense that I take a 6,000-lbs SUV to go get my latte.
I'm certainly guilty of that, and I'm sure many of you are as well. It's also equally ridiculous that a large diesel box truck delivers you your toothbrush. Again, it's this right tool for the right job. All of these drawbacks, with this also in a heavy urban area such as this, using a large diesel box truck to solve solutions here in New York City, it's gonna be ridiculously difficult to drive and maneuver, find places to park. It's generally gonna sit there and idle, right? Burning up valuable resources and having a negative environmental impact. None of those drawbacks do we have with the Arcimoto utility vehicle family. With the low acquisition cost and low operational cost, is the right tool for the job.
Currently, we're converting 2.5% on our direct-to-consumer sales model. We're actively chasing dealer opportunities in Texas and in California. We support delivery of these vehicles to the customer through Arcimoto Fleet. We leverage DHL for full national coverage, and then Arcimoto Service supports the customers, and when we break into new regions, we support with Midas service and EV Garage. Today, the average drive, 90% of all drives, contain one or two people with minimal amount of cargo. Each trip is only 3 mi each, and total distance average per day travel is 35 mi. It's clear with this pattern of driving for 90% of all the drives in the United States, that the Arcimoto Utility Vehicle family is the right tool for the job of everyday driving, as well as business fleets.
We've built the entire business to this point, almost solely on these retail sales. I'd like to reintroduce to you the refocused Arcimoto utility family. You'll see the Deliverator, the FUV, and the Rapid Responder, and our newest addition, the Modular Utility Vehicle, or what we have coined the MOVE. This is designed to be modular and provide multiple implement solutions for different business applications. The first two implements that we've integrated is a flatbed and a modular load space. As we see articles and interviews, and what's abundantly clear at this stage, is that if we want any kind of electrification adoption, we need to be below the $30,000 mark.
Every single unit that we currently are selling in this refocused product set and our four distinct SKUs is below $30,000, and the lowest MSRP for an FUV is at $19,900, below $20,000. If we truly want to drive any kind of electrification adoption, this is the path and the right tool. Every vehicle in the utility vehicle family will have a 19.2 lithium-ion battery, a 75 mi an hour top speed, a 173.7 mi per gallon equivalent, and a 102-mi range, clearly able to solve the 35 total mile, 3-mi trip solution. For daily drive, the FUV solves those 90% of one or two people, minimal cargo, 3 by 35 trip.
With the positive feedback that we've got from our rental fleets, as well as the application of this in coastal towns and in and around the hills of Oregon, it's ridiculously fun to drive. Not only is it gonna solve these problems, but you're gonna enjoy doing it. The Deliverator, with that low acquisition cost and low operational cost, provides a direct impact to the bottom line, both on a single unit, on a gig-level application, as well as an entire fleet. With the new modular load space, providing a large cubic area, squared-off space, continuing to add more capability with the same acquisition cost and the same operational cost as the Deliverator, providing more options. Now with the modular back end, you can utilize one unit to facilitate multiple applications within one fleet.
A Rapid Responder, which not only provides a quick response time for security forces forward deployed or first responders, but also now allows you to operate on the highway, on side streets, and get in anywhere a golf cart could or where a large-sized vehicle couldn't. This now allows one piece of capital equipment to address multiple campus, multiple sites, and be spread across a larger area, thereby driving considerable value, as well as low acquisition and low operational cost. For the last two years, Arcimoto and Faction have worked hand-in-hand to develop a driverless Arcimoto electrified platform. Utilizing Faction's DriveLink and TeleAssist technologies, allow a modular, electrified Arcimoto unit to seamlessly integrate into driverless solutions such as this.
This would be a version of vehicle on demand that you see here, as well as remote human TeleAssist, which you'll see here, that allows us to pipe in and manage an asset as needed. Arcimoto and Faction have identified key customer fleets to target with this technology. We've actually been successful in bringing in some of those targets, which we'll be very excited to announce later this year. The integration of Faction's technology on Arcimoto's electrified utility platform allows us a solution that can quickly be adapted to the ever-increasing need for driverless solutions. Recently, we announced a more official relationship between Faction and Arcimoto. Faction owns a piece of Arcimoto, and Arcimoto owns a piece of Faction. We're very excited because Arcimoto has the option to purchase up to 10% of Faction.
Why we think that's particularly powerful is currently not just micromobility and three-wheel electric vehicles are starting to close their doors or going back to the drawing board, which is allowing us to gain more and more market share, more and more momentum. The same thing is happening in the driverless side. Many companies are going back to the drawing board or just closing their doors altogether. While this is occurring in the market, we're out here actually doing it. Like, there's not anything for us to figure out here. It's actually just targeting the customers and then closing them, which we have been and will announce later this year. Not only is Arcimoto a rocket ship ready to take off, so is Faction, and we're tied at the hip.
I'm sure all of you are tired of hearing from me. Dwayne Lum, our COO, will take it from here.
Thanks, Chris. I'm gonna talk a little bit about changing dynamic, and changing dynamics in the landscape. There's a lot of categories that have been tracked in the industry. Our category is a new one that's being tracked now. It's called minimobility. You've seen micromobility. This is two-wheel scooters, it's golf cars, it is bicycles or mopeds, those kinds of things. In between that and the big trucks is this new emerging category, three- and four-wheel vehicles, often defined by their size, by their weight, by the type of cargo or passengers that they can carry. This is an emerging space. It's actually kind of been under the radar for quite a while, and now it is starting to be tracked. More recently, large, consulting companies put out some published news about this.
We'll give you some references to that in a little bit. As far as these products go, they all have varying in speed. You might see them limited to 25 mi an hour, but based on regulations, based on local authorities and things like that, you can get these products going all the way up to the speed classifications that Arcimoto offers. In this space, is very interesting because the diversity of the products is coming to be more and more viewable by the consumer. What we see now is a growing trend in how people will use these products. Think about your SUV that you drive today. Chris mentioned it before. It kind of doesn't make a lot of sense to take a 7,000 lbs SUV to Starbucks to go grab a cup of coffee.
You can see the Arcimoto as an alternative to that. It's not your fully replacement vehicle. It's your secondary vehicle. It's priced at a point or at a level where your price point makes sense to acquire it for your daily commuting activities. One of the things that's really important about that, though, when we talk about those larger vehicles and why these smaller category vehicles make a lot of sense, is the resources used to make these products. Chris mentioned earlier, talking about standing up the Model 3 line. Last year at our 2022 event, we talked about the new Hummer, and we talked about the Model 3s. For the same material content that goes into producing two Model 3s, eight Arcimotos can be built.
This is super important because we're using a lot less material to create a product that's right for the application space. The other thing that's really important when you look at how those drive cycles are happening, whether it's a delivery cycle for delivering food or packages to your home, or whether it's for your daily commute, that drive cycle really doesn't need to be, you know, a 100 kW battery, right? We offer a 19.2 kW battery, and that's perfect for getting around for your daily commute. In fact, oftentimes, when I drive my vehicle around, I'm only charging once a week. I'm charging at an opportunity base if I need to, but very, very, very rarely.
I think the other thing that's really good about these kinds of products compared to, let's say, the bikes or the scooters, is that they're highly visible when they're on the street, right? You'll notice, even in this setup here, the turn signals, the reflex reflectors, the tail lights, the height of the vehicle, 61 in tall. You know, this is a normal-sized vehicle when you see it on the road. You're not gonna get missed. I live in Texas. We see oftentimes a lot of motorcycle markers, bicycle markers on the side of the road where people have been hit because big vehicles aren't recognizing these smaller things on the road. An Arcimoto vehicle is easily seen by everybody. They also move at the same speed, whether you're on a road or whether you're on a freeway.
That's important, too, because you're moving with the speed of traffic. You're not slowing down. You know, if you were limited, like in an LSV class at 25 mi per hour, you know you're getting honked at and you're getting flip the bird a lot, right? That happens. If the interest in this space continues to grow, this could be a fair, fairly sizable market. If you look at China, Europe, North America, by 2030, estimates are showing this to be almost a $100 billion market, right? It's really, really growing. All too often, as Chris mentioned, you'll see the ICE vehicles driving down the road, come down some of the crowded city streets here, sitting, blocking traffic, idling in space, right? We decided to work on a product that was gonna be right-sized for that kind of application.
It doesn't make sense for packages, for mail, lightweight items to be delivered in these big, gigantic trucks. When UPS truck pulls up in front of my house, I often see what he's coming out. He's bringing four different little Amazon envelopes, you know, up to the front door of the house. It doesn't make a lot of sense to be driving those big vehicles. What it's really doing is it's costing those companies that are operating these vehicles huge amounts of profit and time. Oftentimes, if you're stuck in gridlock here, you can't maneuver your way out, or if you're the one who's creating the gridlock, you're becoming a problem, and that's getting customer complaints. The FUV or the new MUV, as we are just showing here, is a good solution to that problem. You can park it easily.
It navigates many places, roads, freeways, backlots, anywhere where you need to kinda operate the vehicle, it will go. We developed it in concert with direct customer input. When you see this modular load space in the back, whether it's a flatbed, that you just saw at the start, pickup bed here, or the MUV with the cargo box on the back, you'll take a look, and you'll see, why would we do something like that? Why do we not create, you know, defined product for each application? The customers that we spoke to said they have different needs and they have different requirements, and sometimes those change by the day.
We made this system fully modular in that you can take it from one to the next, to the next, all in 10 minutes or less, and you can convert it on the fly to go backwards as well. Depending on the use case and depending on the application, you're able to change this product out. This is great for fleets because in the meantime, you could be opportunity charging the vehicle, getting ready for it to go out on its very next run. Additionally, you'll see a growing suite of accessories and things like that coming. As we continue to work and get voice of customer inputs on the products, you'll see different load space configurations in that cargo box, whether it's shelving, temperature control for, you know, items that need to be temperature controlled, hot or cold.
You'll see other things coming for tools and racks and things like that, allowing the vehicle to operate in a lot of different places and support a lot of different applications. When COVID hit, one of the things that was really, you know, prominent was food delivery, right? Restaurants were growing their delivery services by huge gains, and they were paying Uber Eats and Grubhub up to 30% in commissions for delivering that good. We've seen now smaller operators getting to drive a vehicle like this and controlling back, taking back the customer, and taking back that profit by operating a vehicle like the Deliverator or to get ASAP delivery from restaurant out to the home. Over the past year, we've also done a couple of things. We've been focusing on costing down the product.
Right now, at under 1,000 units, we're working towards getting our cost down about 22% from its position where it was last year. Then as we move forward into the higher volume rates, that cost down is going to increase by about 37%. This was done in concert with a number of our teams, design engineers, manufacturing engineers, our product supply chain team, our product integrity team, all working together to focus on the items that were going to have the most dramatic impact. This year we've already cut in some minor mechanical changes, and we're already starting to see that cost down. Those changes not only reflect the reduced cost, but they're also improving the product as we're going along. You heard Chris mention that we have reduced our warranty claims by 50% over the past few quarters.
That continues to drive down. We've also added features that make the product more usable for the end user. As we move forward with these types of initiatives, we intend to do more. We have a huge electrical system update that we'll be rolling out for our model year 2024 products. As we do that, we're trying to address a wide variety of applications. What we've seen is, with the right size platform, with the right feature sets, with the right target price, and the right acquisition model for our customers, we're starting to see a lot of growing use cases for the product. I won't name them all here because you can see them and you can re-read back to this material, but we're seeing applications in all of these areas.
With that, I think I'm gonna get ready to pass it over to Jesse in a second. Last thing I'm gonna comment on is a couple of key trends that are happening out in the market space. You can see right now, the market timing for us is really good in the delivery space. Last- mile delivery, our MUV adds to our product lineup, with the Deliverator also still remaining. That allows us to go after this micro- and- nano warehousing. There was a recent article published by a partner of ours called Gently. They're operating in nano distribution and reverse logistics systems right now. It is a new business model that has huge potential and growth, and we see ourselves playing very well in this, in this space.
Over the past year or so, we've really started to look at the top OEM products, working with leading partners in the field to bring a better suite of components into our product line. That's going to help us improve reliability, durability for the customers. We're engaging with those same customers to take all this feedback in and be able to weave it right in dynamically into our product portfolio as we're going on. In fact, a couple of them, as you'll see downstairs when we're done here, products are downstairs, outside. You'll see a number of changes that we've made already over the past year into the product to date. Innovations. We'll continue to work on our platform, three-wheel platform.
You may see some additional features coming from us for other types of products in the same category that I mentioned earlier in the micromobility space, or minimobility space. At the same time, you're gonna see a number of new characteristics coming that will address application types for our products. All of this is coming together and helping to get us onto that pathway of profitability. With that, I'm gonna pass it over to Jesse and let him talk about some of the things that are happening out in the world.
Thank you, Dwayne. Hi, everyone. First off, I love working with Chris and Dwayne. Just wanna point that out to everybody. I'm gonna touch on market research. You know, how big is this opportunity? You guys already know this. That's why companies like us go after it. It's a giant market, we wanted to focus it down, explain what we're gonna do for the next couple of years. This is, you know, third-party analysis of the three main sectors that we're gonna go for. As Dwayne discussed, we have the minimobility. That is, you know, your second vehicle. It's the vehicle that you use 'cause you have a big family, and you need just a vehicle to go get some milk. You don't need the minivan every day. It's more fun.
The third-party market analysis is indicating that that is actually a giant market opportunity for us. Annual projected revenue of $80 billion a year. All these markets, we're targeting 10% of that market, right? We're gonna activate it, we're gonna go after them, and then we're gonna capture 5% of that market. That's how we're getting these numbers. Powersports is the fun market. Everyone can understand that. It's been around for a long time. It's the ATV, it's the motorcycle, it's the have- fun market in the United States. This is a big opportunity for us as well. Then you have the last- mile, which came out of the pandemic.
It's a $186 million opportunity for us. Any one of those markets for the next two years satisfies Arcimoto's business plan. That's why we're excited about this. This is our sales funnel. You saw the slide that Chris presented. It had 600 vehicles delivered around the United States. Those vehicles were sold basically using this process, okay? This is the foundation for Arcimoto sales going forward for the next year or two. We spend $8 on a lead. We get the customer's information. We can contact them, send them newsletters, sign them up for test drives. We're converting 2.5% of those leads to a customer who's configuring a vehicle, puts a $500 deposit down, is expecting a delivery.
If you do the math on this is a reasonable marketing expense to capture vehicle sales in the state that this company's in right now. We have about 10% drop-off between the configured vehicle and the vehicles that are delivered. What we're gonna see, you know, this is the pre-organic growth phase that you saw Tesla getting when, you know, Tesla started showing up in people's cul-de-sac. I have one. I'm gonna give a test drive to my neighbor. My neighbor buys it. This is the phase just before that. To be able to build to that organic growth phase from here is a great opportunity for us. You're all familiar with our factory.
This has been the primary spend for Arcimoto over the last couple of years, is getting this facility in place. We've got the areas indicated here for. That's all, you know, in production. What we've determined recently is that this factory will produce about 7,500 vehicles a year with minimal CapEx addition, and that is a key production number for us as a company. It was, you know, what can we do with the money that we've spent? What can this company do? What have we built? We've built a factory that can produce 7,500 vehicles a year. We have a product that people are loving. We have a product that's distributed throughout the U.S. We have a team that understands what they have to do in the future to make this company successful.
Now it's time to scale. I'd like to say on this slide as well, we had some folks visiting from outside of the country come and see the factory, and it's something that, you know, people just, they have to see it to understand what we're doing. When they left, they made a statement of, you know, "So this is what American manufacturing looks like." It struck me as, you know, this is what Arcimoto is doing as well. This is a part of our story. This is really necessary for the U.S. to move forward, is to demonstrate new technologies on manufacturing, bringing new products into the world. This is what we need right now. This is what all of us need right now. This is a future expansion.
Not necessary, as soon as we're ready to move past the 7,500 units a year, we'll start kicking off these programs. This is more of a detailed slide for the analysts to have fun with. This is, you know, some of the costs and programs to get us to the 7,500 units. All right.
Thank you, Jesse. We wanna give you guys a bit of meat. Right. Here is the indication that we're on the right path. We're ready for takeoff. Right. This is Q1 2022 as compared to Q1 2023. We've seen an increase of revenue of 108%. If you look at material costs, we have an increase of 33%, simply because we've made and sold more vehicles. In parallel of raising that to 108% on the revenue, we've been able to reduce manufacturing overhead by 47%. Overall, giving us an increased gross margin between years at 77% increase. On the spending side, which is equally as important. You can see R&D, we've dropped by 74%.
Those are the 12 capital-intensive initiatives that we put on the shelf that will come in later when they make sense and when we've earned the right to continue to innovate. We've increased revenue by 108% whilst decreasing marketing and sales spend by 51%. Naturally, you see a slight increase in G&A that's commensurate with making more vehicles. All in all, the so what is operating income has been increased by 39.3% year-over-year. Here's a quick graph on, in the short term, as to how we're gonna correlate units with the gross margin. As we can see, Q3 of 2024, we're looking at about 600 per quarter or 2,400 per year. We can actually back off a little bit in Q4.
There's an inherent seasonality to this product, and we've also worked that into the modeling. Here are our projections based on the cost down effort that Dwayne and the team have been driving, and based on all the information that Jesse's been gathering through third party and other, to develop a very conservative approach as to how we scale this into a profitable company. We think with that, getting 10% of those total addressable market, just getting the attention, and then converting 5% of that 10%, we think we can scale this up by 2027 to in excess of $400 in revenue. If we drop down and look at our gross margin, you can see where the tipping point is that I was alluding to earlier.
Right at the end of 2023 into 2024, we'll actually see gross margin tip over the event horizon and really fall in. In 2025, we'll be near 16% on that gross margin, almost hitting 17% in 2026, which will give us an opportunity to then drop the purchase price down to drive more acquisition of those products and hold a very reasonable margin at 15.7% for the product. Again, the so what on this is that what that means is, at the end of the day, we'll be able to keep that very conservative spend, tighten the belt, and only spend money as required to meet the scale plan. As you can see, from 2022 to 2023, we've been able to drastically reduce that and only slightly increase it.
The relative to where we expect to be in 2027 on that spend, as relative to the 2022 spend, is still less at a far greater unit output. This is all a function of the cost- down effort, having the data, the markets to go after, and trying to earn the right to innovate and earn the right to scale. This is based on hitting that 7,500- unit target that Jesse alluded to. The little to no capital equipment spend that we would need here, because this is a predominantly manual build process, much like I talked about with the Model 3 rollout, where we stumbled at Tesla, was we took the Viking approach, and we burned the ships.
We kicked that manual build process out and said, "No, we're gonna make the automation work." We spent nine months floundering when we could have delivered thousands of vehicles in that time frame and really support the customer. This 7,500- plan is with the current line that we have now, which we could actually push to seven units per shift without extending it by any measurable amount. Going to a three- shift operation at 350 days gets you to 7,500 units. That's a space that we're not even utilizing completely, as Jesse alluded to, with the overall map. There's a ton of room for scale as we start to induce different levels of automation.
Coincidentally, that space, where we're manufacturing today and using a very small corner of, is almost exactly the same size as the fully automated Model 3 general assembly line. As far as what's possible, a lot is possible, but with a very conservative approach, very conservative, total addressable market that we can claim, and a very conservative, predominantly manual build, we can hit targets to build a very profitable company off of. In, in the market right now, right, and I alluded to it earlier, we see three-wheel electrics, micromobilities, closing their doors and going back to the drawing board, and the same thing in the autonomous and driverless space. With us attached to the hip at Faction, we feel like we can absolutely execute on that.
We already are, like I said, we'll have some announcements later this year of some big names that you've definitely heard of. We're continuing to gather more and more of the market. It's clear that this is the right tool for the job. It's road-tested, it's been out there, we've been driving quality up, costs down, there's clearly enough demand for it. Today, we've really painted this picture as like, not only is profitability possible for Arcimoto, it's in the near future. We'll start tipping over those points later this year and into the next, by 2025, off and running. Right tool, right job. We've got to get all those large, clunky vehicles, you know, off the road really start serving the customer with the right tool. This is Arcimoto.
It's clearly the rocket ship that's ready to take off, and we're prepared to drive the future forward. We've got these vehicles down in Times Square if you guys wanna pop down and take a look. From here, we'd like to open the floor for questions.