Good afternoon. I'm Mark Frohnmeier, CEO and Founder of Arcimoto, and I'd like to welcome you all to Arcimoto's Q2 2021 Stakeholder Webinar. Arcimoto is an Oregon C Corp founded in 2007 with the mission to build products that catalyze the shift to a sustainable transportation system. These quarterly webinars held in tandem with our filings with the SEC, are intended to give our stakeholders a clear and current picture of the company's progress as seen by Arcimoto's leadership. I'm going to run through a presentation starting with our latest company video, discuss the context, the quarter, recent updates and goal progress, as well as a bit of the road ahead, after which I'll be joined by members of the executive team to take stakeholder and analyst questions from SEI.
Q and A. You can find supplementary information, including our earnings press release, financial filings, presentation materials, transcript and a replay of this webinar that will be posted later on our Investor Relations page at arcimoto.com slash IR. You can also sign up for investor updates at that link. Before we begin, 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.
With that said, let's dive in.
At Arcimoto, we build light, electric, ultra efficient rides that are outrageously fun to drive for a reason.
Our vision
multi ton extracted machines that we mostly drive alone or with just one other person and leave parts rusting
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 dialed for a wide range of everyday trips. The fun utility vehicle for daily driving, rentals and rideshare, the deliberator for last mile delivery of essential food and goods, the rapid responder for emergency services and security, the flat Fed for general fleet utility and the Roadster, a fun machine that drives like nothing else on the road. Every
The Ride.
I've been driving it everywhere. I'm 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. Kit. It's got plenty of power, all the power you need, and it's just comfort.
Everybody wants it when they see 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 So I'd like to give a big shout out to the Arcimoto team. Your workmanship and design is
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 are 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 and Associates with the goal of kicking off mass production late next year. Finally, we acquired Tilting Motorworks, developers of the Trio accessory that can turn 2 wheeled motorcycles into amazing tilting 3 wheelers.
Together, we're building a new ultralight 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's 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
To set the frame, the IPCC just issued a Code Red for humanity. And we are in the middle of a global pandemic, more infectious and harmful variants of COVID-nineteen are circling the globe. Every organization we interact with, all the people are under significant stress as the fragility of the global supply chain has been laid bare and as our patterns of behavior are showing an ever more clear perilous toll on our home. At the end of the day, sustainability is a social networking exercise. The rightsizing of our relationship with our planet who's going to take all of us working together to accomplish.
We are heartened that leaders around the globe are advancing targets for carbon reduction, including the Biden administration, our Oregon congressional delegation and state and local leaders around the country. Channel. More specifically, much of what I'm going to talk about today in the context of Arcimoto's rapidly accelerating pace of innovation towards its mission as reflective of a shared commitment to maintain a livable planet. Q2. But first, the numbers.
The 2nd quarter wasn't all roses. As I have cautioned in several prior updates and as anyone who is following the automotive industry already knows, we are subject to a topsy-turvy supply chain in an emerging field. Two prominent examples. During Q2, one of our critical supply components had both production and transportation setbacks that would have resulted in an extended production shutdown starting mid August on our earlier planned path. And another key components update exhibited software error that prompted a delivery pause for several weeks as a multi organization Tiger team Dissected Root Cause and Solutions.
Consequently, we adjusted our build rate and have revised our planned mainline target production output to 425 FEV platform vehicles in 2021. This will in the context of our planned marketing efforts, I'll discuss shortly. This will impact total planned customer deliveries in 2021 as well. Q2. That said, by the financial metrics that we see as most important to the achievement of Arcimoto's mission, Q2 was far and away company's best quarter to date.
Our balance sheet is the strongest in the company's 14 year history. Continued to maintain a disciplined approach to resource expenditure, and we've made substantial 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 or a loan to fund the substantial portion of our planned expenditures for next stage production. And further, ATM facility we put in place this year in partnership with Canaccord Genuity allows us to continue to fortify our position at current market prices and times we believe are in the best interest of our stakeholders. Contemporaneously, as our balance sheet has strengthen, we have noticed a meaningful rise in the number of market bets against the company.
You can refer back to our last two webinars if you want more color on some of the knock on ecosystem effects of such activities. But to provide some perspective on relative size, at the time of the last NASDAQ report. Short sellers of our stock collectively had short positions that totaled almost double the amount of funding the company is presently contemplating requesting in its next ATVM loan application revision. Moving on, Q2. We have 3 broad top level goals for 2021.
The first we laid out 1 year ago during 2020's Q2 report to get to mass production in a new facility starting by the end of next year with a targeted capacity once at full output 50,000 vehicles per year that provides further a pattern for yet higher scale replication. 2nd, continue to build the market for Arcimoto's products to support that level of production and ultimately way beyond. And finally, showcase, the full presently contemplated range of Arcimoto solutions for sustainable mobility. I'll go into the progress to date on all three fronts. Channel.
The push to volume production is our most important overarching objective, bar none. We believe achieving scale will allow us to reduce vehicle cost to the point where the Arcimoto is affordable to almost everyone, while providing the positive cash flows necessary to sustain the business long term. And I'm pleased to report that in the Q2 through present, we've made significant headway towards this primary goal. Close on the purchase of a new facility more than 200,000 square feet under roof on 10 acres of land. We landed our new plastic thermoforming cell in new facility and are aiming to have it operational before the end of this year.
We've completed the first phase of construction planning and that building will commence when the prior owner completes move out targeted at the end of this month. With our partners at Monroe and Associates, we have completed architectural down selection of all major vehicle subsystems, essentially the materials and manufacturing method choice for the parts of the vehicle for volume and engineering and assembly planning are now moving ahead full steam. And as I mentioned earlier, in Q2, we submitted our first draft to the U. S. Department of Energy for a vehicle manufacturing loan and are now in regular conversation with their team expecting to submit a refined draft imminently that takes into account their feedback and requirements as well as our ongoing engineering refinement efforts.
In summary on goal 1, significant progress and mountain of work ahead. On the marketing front, one thing is clear. The more people get a chance to drive an Arcimoto vehicle and experience their one of a kind electric performance, The More Hour Market Growth. In addition to test drive and media events across the West Coast, we've also held large scale test drive event Portland International Raceway in July and continue to receive positive product reviews from top tier EV press, including a review on forbes.com last week which stated the FUV made more people smile than any other vehicle I've ever reviewed. Channel.
We've also grown our rental operations in key markets, opening our first two company owned stores in Eugene and San Diego. Who will also be delivering additional rental vehicles to goCAR Tours in both San Francisco and San Diego. We continue customer deliveries in Oregon, Washington, Florida and our home state of Oregon and are preparing to open sales and rental in Hawaii, Arizona and Nevada, where we expect to begin taking reservations from our pre order customers in the coming months. We have recently relaunched the FUV configurator tool on our website in order to further streamline the ordering process, the first of several major planned upgrades to the initial user experience for prospective customers. We're actively working with both city and state officials with the goal to electrify government fleets.
The City of Encinitas in California is testing Arcimoto vehicles for use by Encinitas lifeguards and infrastructure and sustainability departments. Continuing Mayor Catherine Blakespear's efforts to Reduced Carbon Pollution and Advanced Sustainable Transportation in Encinitas. This week, we will begin our statewide pilot program in the state of Tennessee, introducing Arcimoto's in Memphis, Knoxville, Chattanooga and Nashville with test drive events this month. In addition to retail sales and rentals, channel. We believe a key path for Arcimoto vehicles is in shared mobility and I'm engaged with multiple potential partners to begin rolling out vehicle share programs.
As the population in cities continues to grow and as vehicle ownership in urban areas declines, the need for right sized shared sustainable fleets becomes ever greater and our vehicles offer clear environmental efficiency and economic advantages over current car share options. Channel. We continue to work with state governments across the country to improve access to Arcimoto vehicles, most recently successfully advocating removal of special motorcycle endorsement requirements in Florida, Hawaii and Louisiana, so the customers there can operate an Arcimoto with a standard driver's license, thereby modernizing legacy three wheeled legislation with a common sense solution. Channel. And as we look globally, we've begun developing a measured strategy to enter the world market, starting with countries that fully accept the United States Federal Vehicle Motor Vehicle Safety Standards.
In summary on Gold 2, significant progress and a mountain of work ahead. Q2. Finally, Arcimoto has continued to rapidly accelerate its pace of innovation in order to demonstrate the full range of our solutions for sustainable mobility. At our summer event just a few weeks ago, we launched our 1st production roadster, showed the long awaited half door accessories and showcased with partners some of the truly exciting technologies now in development. Torque vectoring to dramatically improve low speed steering as well as vehicle handling, driverless capability by remote heated storage deliveries for meals and finally battery recycling in line with our long standing goal to create true cradle to cradle products.
By the way, it's not lost on us that the top 3 best selling cars in the U. S. Last year were pickup trucks. I'd explain all the excitement around Cybertruck, Rivian, Ford's Lightning F-one hundred and fifty and others. Well, now Arcimoto has a pickup truck.
We showed the first prototypes of the Arcimoto flatbed and it's awesome. Same base scalable Arcimoto platform, incredible configurability and volumetric carrying capacity in a small footprint. We aim to begin piloting the flatbed later this year. I want to emphasize again the importance of partnership and collaboration. Monroe and Associates, Stoffel Systems, Sherp Tech, Retevibis, BIV Technologies and so many others have pitched in their brilliant minds and hard work towards our shared purpose.
On that note of partnership, just shy of a year ago. I reached out to Bob Mile, Founder of Tilting Motorworks about an idea for a new micro mobility product line that would leverage their expertise in tilting trikes with Arcimoto's electric vehicle capabilities. And I'm incredibly excited to report that the first prototype from that collaboration is now on the road. We're not ready to show the product yet, but I will tell you I got to ride it for the first time on Thursday. And on that first drive, I leaned it way farther than I've ever leaned a bicycle.
Easy, smooth and stable. I can't wait to show it to you in product form. This mean machine is chock full of new electric vehicle technology. We Are Actually Reinventing the Wheel This Time and it's targeted squarely at the rapidly growing e bike and e scooter marketplace. 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. Channel. I want to take a moment to talk about what else we got in the 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 12,000,000 motorcycles in use and the trio is already adapted to the leading big bikes, Harleys, of which 180,000 were sold last year worldwide, Indians, Gold Wings and most recently, the Lightning Electric superbike, which we intend to with which we intend to compete for a land speed tilting three wheel record at Bonneville next year. Channel. In summary, Arcimoto is shipping and continuing to further develop kickass ultra efficient 3 wheelers alongside a world class team with whom we share a mission to rightsize mobility as we grow our market presence in preparation for volume production. We must continue to improve the experience for the Arconauts, our early customers and riders, their vehicles, the first time user experience and sales, service and communication processes.
This means listening closely to feedback we receive from customers and pilot partners to improve our offerings for scale. We must continue to cultivate our leadership skills as our team and demands expand. Arcimoto is more than 200 people channel right now, about double where we were 1 year ago. And this means continued emphasis on process, culture and our core values of continuous improvement, environmental efficiency and fun. We must maintain our focus on the health and safety of our team during an ongoing pandemic, encouraging good life choices and bolstering our resilience for the road ahead.
The plan is 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. Q and A. And with that, let's bring on the rest of the C team, except Terry, who is on his way back to Eugene and dive into Q and A.
All right.
Q
and A.
I can't turn my camera on, Mark.
Mics are on. You may need to enable a camera option for panelists. And if not, you can just listen to our disembodied voices.
Perfect, Perfect. Let's start there. Okay. So I just want to give a little bit of background here. We are this is our quarterly stakeholder webinar.
We do quarterly webinars in tandem with our filings with the SEC. This is sort of the modern day replacement for the conference call, dial in and operator and stuff like that. Call. We are aiming to modernize that approach in order to give our stakeholders a clearer picture of the company. Channel.
So we are still continuing to experiment with the format. And of course, if stakeholders and analysts have any feedback on the format, feel free to send it into the company and we will adjust accordingly. Call. And with that, let's take our first question from Sei.
All right. In regards to the ATBM loan, what time frame does Arcimoto believe they might get access to funding? Also what percent of the Arcimoto project you believe will be covered by the ATV alone?
So very good question. We are anticipating submitting our next draft revision of that application imminently within the next week or 2. And we anticipate that it would likely be somewhere in the vicinity of a 4 to 10 month process from there should the department decide that Arcimoto is worthy of that loan. In terms of what percentage of the project it would cover. As I mentioned earlier, we are in the best balance sheet position we've ever been in.
We have plenty of cash on hand to move forward. Ultimately, we're I I think we'll end up asking for the ATVM to cover something like 80% or a little bit less of the overall total project cost for scale production, which is what we're now calling 1.x.
Q3. Once Arcimoto's second facility goes into production, will the current AMP facility be converted into a production line for Platform 2 vehicles.
We no. On our current plan, we have our current facility will still be doing production targeted at Platform 1. So it is we're going to be playing a little bit of musical chairs as we move forward over the next 18 months or so, which I guess less than that next well, next year and change, is that we're going to be moving certain components that are presently in the AMP Into the Ramp and that will make space for some new development programs that are going to come online to support the scale production version in the AMP. We've not yet selected a facility for the manufacture of our Platform 2 product.
When does Arcimoto believe it will be able to implement Fraction's remote controlled systems into a type of shared vehicle network? And related question from Chad from Ed Hartley. Curious if that technology will be available as an upgrade for existing vehicles to allow existing owners to use a rideshare service or will it be limited 2 company owned vehicles.
So the and is that is the question really around will so around shared use, something we've talked about for a long time is the potential for Arcimoto customers to share out their vehicles to others, basically set rental rates and let their neighbors go get groceries with their Arcimoto's. That is still in certainly in the long term plan. Channel and in terms of really more the driverless component technology that Faction demonstrated using the Arcimoto platform. In terms of when that is going to be meaningfully deployed in even in sort of like on road pilot form that has yet to be determined and certainly yet to be announced. So stay tuned on that front.
We are very heart. I mean this is the Faction was able to take an Arcimoto provisioned with our intermediary torque vectoring and driverless layer and get those vehicles up and running inside of about 4 weeks. So those guys were are moving fast and certainly very motivated as we are to get rideshare working in an actual useful way out in the world that leverages that tech. And what that really does, we think, as it will make it more convenient for vehicle sharing customers to get vehicles, having a vehicle sort of delivered to you without paying for somebody to actually drive you once you're in it. And we think that that is a very compelling future model 4 vehicle sharing that we are pursuing aggressively.
I see a follow-up question for Med regarding the phone app and when we can expect to see that come online.
It is in development. We have mapped out the sort of initial stages of sort of the Phase 1 requirements. It's in development now and it will be ready when we release it. So we don't have a fixed timeline that we have announced yet. But we it is a it's a critical piece of the puzzle.
So something that is we are definitely pushing on.
When will the FAV get over the year updates? And how much do you anticipate this will end up saving Arcimoto in service costs?
Business. It will save I have not run the numbers on what it's going to save us, but it's just such an obvious win. In terms of when that's going to happen, we're balancing that with a number of different priorities. And so again, we don't we have not announced the timeline on that for as one of our top level goals, but it's something we're pushing
product. When will owners get a personalized Arcimoto portal account to track service and referrals? And will it show data like battery health and mileage.
My goal is that the so we've talked about this a little bit in terms of the FUB. Life portal. That's both an owner portal for getting more details on vehicles, tracking service updates. It's one of the critical pieces of customer communication that we want to bring online. My goal is to have the first incarnation of that online this fall at some point.
And this would be this is going to be a pretty rudimentary first step into both the sort of owner portal as well as some of the, I would call it, virality pieces of the puzzle. So as any owner of an FUV knows, you are constantly bombarded with questions about the vehicle whenever you park and it just draws a ton of attention and a ton of questions. And what we really want to enable on that side is to have our owners as ambassadors be able to point someone to a QR code on the side of the vehicle, sort of tracks them on a high scoreboard and lets us all participate in the sharing of the Arcimoto product family idea.
How has your partnership with Monroe and Associates had an effect on the SUV product and your ability to quickly scale mass production?
Well, we are it's been a substantial impact. Having the Monro team really jump in with both feet to help push the Arcimoto to scale has been a huge shot in the arm for Arcimoto. They bring a whole different lens of expertise focused on mass production of large automobiles and the technologies and materials and capacities for pulling that off in an expedited reason manner. And so we are working with them hand in hand week in, week out to push this project forward. We're still targeting having the ramp open and shipping vehicles at the end of next year.
It will be obviously a continued ramp up in terms of vehicle output at that point to achieve maximum capacity. We're planning multiple systems that will come online and programs that will come online over the next years in order to continue to drive down costs and ultimately provide a foundation for true global scale. Channel. Yes, they've been pivotal help to the company.
What is the status on the doors and their effect
So some astute folks out there have noticed that the ATVM requires what they call a fully enclosed fully enclosed compartment vehicle. And so the vehicle that we are applying for funding and the factory that we are applying for funding for is to deliver squarely on that requirement. In terms of the half doors that we demonstrated the production version of just a few weeks ago and plan to ship to first customers this quarter. That is it's a piece of the puzzle in terms of understanding closures, but the full scale version will this is a product that we haven't actually shown yet. If you recall from our last earnings call, we sort of ballparks about 75% completion in terms of showcasing new products on the Arcimoto platform family.
This is one of them. There's another one that we also have not yet shown. And we are aiming to at least display where we're going by the end of this year.
Does Arcimoto have plans to export or build a plant in Europe? That would seem like an excellent market. And then kind of perpendicularly related from Jeffrey Campbell in chat, can you point out a country of 2 that would meet the requirement to be receptive 2 U. S. Standards.
Sure thing. And actually, hey, we've got Dilip Sundaram on the line, our Chief International Business Officer. And Dylop, would you like to give a little bit of color on to that question?
Yes, absolutely. Thanks, Mark. So yes, thank you for that question. As mentioned earlier, I think Mark had mentioned earlier, we are developing a very cogent and a comprehensive strategy to enter global markets. Our first priority, of course, will be to focus on countries that fully accept the U.
S. Federal Motor Vehicle Safety Standards. And To answer the second part of the question is basically, it is countries like Mexico, Belize, Barbados, Bahamas, Honduras, Guatemala and there's a host of others. Channel. Now this FMBSS market itself represents a huge market.
Now this will be followed with the homologation of our products to meet EU standards and that will make it possible either to export, which is definitely, Again, Europe is a large market, so which would be more quite likely export. Otherwise, it is quite likely also that we might find a partner to manufacture in Europe.
And to add a little bit on that, we also see Europe and actually the entire global market as being very right for our Platform 2 efforts. So again Platform 2 is aiming at something yet again an order of magnitude more efficient and less expensive then the Platform 1 product family. And so we see true global applicability for that product as well.
Tesla is opening up the supercharger network to other EVs. How and when will the SUV be able to take advantage of this? What are you doing right now to make the platform long trip capable?
Great questions. We have not talked in specific detail about product features of what's coming off of the 1.x development effort. But what I would like what I would really like to is just that customers get the choice of what charge port they want and can have options for things like higher capacity charging. I mean, that's sort of a no brainer. And it is certainly on the roadmap.
But to me, it would just make we've got a bunch of customers who are also Tesla drivers. And so having us the same charge port, the same capabilities to us just makes a lot of sense. Tesla has done an absolutely fantastic job building out a global charging network for electric vehicles. And we're super thrilled that they are now looking to open that network to makers of other vehicles.
Have there been any discussions with large food retail chain operators about the deliberator and possibility of a fleet acquisition?
We have discussion yes, is the short answer to that question. No details that I'm willing to talk about now other than we did have a pilot at a franchise here in Eugene and just got phenomenal feedback from that operation for the Deliverator as a food delivery vehicle. And if you look at what BIB Technologies has done with the platform, they have taken what we're calling Project Hotbox. They have built a deliberator that is a serves up piping hot food. Show.
So it's we are definitely looking in this sort of in the early pilot phase at getting as much feedback from prospective customers to really fine tune those offerings for the mass production versions of the vehicle platforms.
Production is slow. Can we focus on production and getting vehicles in customers' driveways. When will we see at least 100 a week being produced and delivered? And then there's several kind of related questions in chat just related to the earnings results. Maybe you can provide a little color on revenue projections versus actual.
I know you mentioned some of the struggles in the presentation, But perhaps a little bit more on plans for deliver revenue projections and amount of inventory on our balance sheet.
Sure. So as we again, and I did touch on this at some length at the beginning of the presentation, channel. We are definitely still within the COVID-nineteen pandemic that is still having substantial effects on our supply chain. And that does impact production. We think we have got clarity for the end of this year in terms of our planned production output of 425 vehicles.
A portion of those will go to customers. Where we see particularly in the stage that we're at right now, we think it is very important to get as many sort of demonstration and rental vehicles into the market as well. We have had in Eugene here just our local rental shop of Arcimoto's we've had fully subscribed vehicles on many days, about a quarter of the days that we've had the Eugene Rental shop up and we've had all of our rental vehicles fully subscribed and utilized. And that's what we're really going to end up having to balance is delivery to early customers versus building, seeding the marketplace for scale using rideshare pilots and rentals. I'm expecting a substantial increase in output in 2022 beyond what we are building in 2021.
And we're still fine tuning those numbers. So I would expect that on our next quarterly stakeholder update that we'll have more guidance about what 2022 looks like. But this is still again and this is in advance of our push to mass production, which is where we would start to see numbers like 100 vehicles a day.
What are some of the current biggest risks that would delay start up production in the new facility? And how is the Arcimoto team taking steps to ensure the schedule stays on track?
So the biggest risks that I see are sort of unnecessary couplings between vehicle systems and cost reduction efforts. And so we've taken great pains over the last couple of months to really identify and this is what the 1.x program is all about is identifying what the long lag items are and making sure that we decouple those from the scale improvement and cost reduction programs that we can execute sooner. And there are any number of potential risks, whether you're talking about construction slowdowns to compliance testing that can always take longer than you think. Now I think the advantage that Arcimoto has is that we have already gone through that with with our first platform vehicle. We're very familiar with that terrain.
And so I think that is a risk reducer for us. Q1. But as of now, we are still targeting end of next year for first vehicles emerging from the ramp.
We talked about HVM earlier, but I'm not sure this question was addressed. What exact stage is the loan in?
Channel. So we are in the pushing towards the substantially complete application phase. That's what we are aiming this next piece to accomplish. And then there are, of course, multiple gates beyond that in terms of conditional commitment and then ultimately funding of the loan.
A delivery vehicle needs to operate in all weather conditions. Are there plans to fully enclose the Deliverator and make it viable for 4 season use. And a related question in chat is Wondering about the full size, full doors and what the timeline might be on that.
Totally. Well, I mean, the assumption that I mean, I guess, a question of the basic assumption since there are plenty of deliveries being done on bicycles and motorcycles and so on. But to the point for a full all world, all season vehicle, yes, you need full enclosure. And so same thing with the sort of the answer a little bit back on the AGDM loan regarding closed compartment. That's part of that program and those doors that will apply to the fund utility vehicle will also work on the deliberator.
We've designed them to work for both.
Can production and profit be increased by eliminating the options customer when ordering and build the same design over and over.
In theory, there are multiple ways that profit could be increased, but actually options are where we see a real opportunity for higher profit margins. And ultimately, we see the fun utility vehicle as having that optionality is a big part of the selling features of it, particularly when we actually have our full accessory family launched. So as we've looked out at other vehicles, I mean, I think we've it's hard to find except perhaps like the Model T, product family that has where optionality was issued and not a part of the profit story. Channel. I do think that one of the things that we are really focused on is streamlining that process of option selection just to make it easier to get through that whole piece of the puzzle.
What opportunities do you see in last mile transportation, specifically with e scooters and e bikes that FEV's platform 2 will be uniquely enabled to address.
Channel. We'll talk more about
it when we actually show the product.
All right. Is there anything specific that you hope to learn in the upcoming Tennessee pilots that might be different Denpilots in Florida and California or are you looking for patterns of repetition in all three efforts?
I think probably a little bit of both. We expect that there's largely people who get in the FEV and Arcimoto platform vehicles. There's a lot of the same feedback, particularly regarding the enjoyment of the ride and the sort of that unique FUV experience. But every pilot that we've done has provided specific option sort of specific enhancement requests related to how they use vehicles. And I would expect that defined folks that we talked to in Tennessee will have lots of good ideas about how we can make Arcimoto's better for them.
Are CAFE credits being used in future cost calculations as a credit when estimating reduction of retail price? Is this a large portion of the tactic to reduce consumer prices?
No. So the in terms of like carb credits, there is now discussion about bringing motorcycles into that regime. But that's going to take some time and we have not modeled it as part of our sort of profitability story. We do see a nearer term opportunity in terms of end user tax credits at the federal level. We think that the substantial pronouncements that
the Biden administration has made
as well as congressional leaders supports situation has made as well as congressional leaders supports a much higher tax credit for Arcimoto type vehicles. We think there is a very strong argument that affordable vehicles that are super, super efficient and don't take up a lot of space should benefit from the same tax credits that much larger, much more expensive full size cars get. So that's an area of advocacy that we are continuing to push on with partners and with others in the field. Channel. And if you think about it, I mean, that could have a truly dramatic impact, particularly in the near term on the affordability of Arcimoto's products for the wide market.
Any plans to change battery chemistry or format since a lot has changed since the first FUV introduction? What order would you rank your battery priorities reduce weight, reduce costs core increased
range. Well, I should say that we have some very interesting battery developments in the works, something we will be talking about on future earnings calls and stakeholder webinars. But versus priority for me at this point would be reduction of cost and improvement of range. The battery is actually in a really good spot in the vehicle. And we will likely see as energy density continues to incrementally improve, we will see batteries that are essentially the same weight that go farther have higher volumetric energy density.
And we're also seeing continued push down the cost curve of battery cells. So we got a lot of good stuff coming on that front. I would say from the customer perspective, it really is about just incremental changes over time for the foreseeable future.
Has Arcimoto been testing with any other company's software for autonomous vehicle arrival.
None that we've talked about publicly yet.
All right.
Q and
A Going shifting over to chat, kind of touched on this already. Can you comment on why retail sales were only 30 units last quarter? The number of consumer events, plenty of people drove Arcimoto's this quarter. Weather is perfect springtime, why didn't you sell more?
It's again, we are now in a position where we are constrained on the production of Arcimoto vehicles. And as we looked at our options and what we need to do to execute the growth of our market plan, we allocated a significant number of our vehicles to things like our opened rental stores in Eugene and San Diego. I also mentioned that there was a delivery pause for several weeks due to a software glitch that did impact sales numbers as well, because we actually count the sale when we deliver the vehicle. And again, I think what we're going to see in terms of end user sales is that Arcimoto has to balance the growth of our market growth plan with sales to existing preorder customers and new customers who want our vehicles.
As a stakeholder, it's critical to understand in greater details issues related to the supply chain. Can we hear how precisely Arcimoto plans
to jump production in
Q3 from 75 units to
So, well, we it is looking like we are in good shape today for quarter 3 and quarter 4 in terms of hitting that target of 425 vehicles produced this year. There are some challenges that Arcimoto has that are unavoidable in the supply chain at our scale. We have parts that are single supplier sourced. We are producing at a low enough volume that in a lot of cases, we have only a single supplier who supplies a particular component for the vehicle. As we look to higher scale, obviously those are elements that we are going to address and make much more robust.
But and again, this is caution that I put out, I believe over at least the last couple of quarterly stakeholder webinars is that we expect a relatively flat growth curve quarter over quarter with the potential for lots of choppiness due to the supply chain. I mean, just as one example, we had what was I mean not quite a port shutdown that one of our suppliers uses like an 8 week delay. We've had multi week delays at the port down in Los Angeles. And then suppliers as well as us face always the questions around the movement of the pandemic and now more and more related to extreme weather events and things like things you wouldn't even normally expect like the Texas freeze that shutdown petrochemical plants in Texas actually had an impact on our gearbox and the seals that we used. So it's we are going to continue to use absolutely best efforts to make sure that interruptions are as least problematic as possible while executing our market growth plan, continuing to deliver vehicles to customers opening up rental locations, but it is we are still amidst choppy seas in a global pandemic.
One more thing actually, Fritz, on that topic. Just as a way to look at this, particularly given that Arcimoto is we are one of a dozen nascent EV companies here in the U. S. That are targeting bringing clean transportation solutions to the world. One of the real advantages that Arcimoto has in building towards that mission is that we are already in market.
We are in market today. We have vehicles out for demonstration. The constraints that we have on production at very low volume certainly have an effect on near term measures of the company's progress. But our really next stage goals are to step up to much higher production volume and to do so in a time window when we've got a lot more clarity on things like the global chip shortage, battery supply chain constraints and all the rest. I think that really positions Arcimoto well, certainly versus others who are attempting to launch scale production of vehicle programs towards the end of this year.
So we've already got vehicles on the road. Channel. We're definitely doing our absolute best to deal with the supply challenges in the near term. But our again our overarching focus right now is the push to scale, the planning for scale, building resilient supplier relationships for the scale production version of the product family. And so everything that we are doing in the near term really needs to be balanced through that lens.
When will Hawaii get a rental facility and which island in Hawaii?
Which island singular. I think there are multiple islands in Hawaii that certainly that Arcimoto team members have volunteered to go spearhead. In terms of timing, we are waiting on the acceptance of our vehicle manufacturing license for Hawaii so that Arcimoto's can be easily registered on the road there. But we see tourist season and sort of the winter tourist season as being a good time to get first rentals going in Hawaii. And so we're that's we I'm not I don't have fixed timeline for you today, but we're pushing hard.
I would like to have at least one of those facilities opened up right around the end of the year or the beginning of next. In terms of what islands we see opportunity on in Honolulu, on Maui. Really, I think the Arcimoto platform vehicles are just going to be phenomenal vehicles for that marketplace, both for people who live there and for people who are visiting.
Arcimoto expressed support for Black Lives Matter last year. What has been done to increase African American employment at the company? The national average is approximately 15%.
So what we've done put in place at the Board level is a real push for getting diversity programs in place. I would like to report that we've made more progress on this front than we have. But it is still certainly a key piece in terms of Arcimoto at its root is all about transportation, clean transportation and ultimately transportation equity. And so making sure that we as an organization take that seriously in terms of our own composition is really important.
Can you comment on the status of customer preorders? Is the backlog growing, folding or declining?
Call. We actually saw a meaningful rise in terms of indications of interest in quarter 2. And I'd refer you back to our 10 Q if you want to look at that exact breakdown of numbers.
Doug, do you have
that right in front of you? It was approximately 700 vehicle or 700 preorder increase. Yes. And again, just a note about preorders. We look at preorders as strong indications of interest in the product.
They are either refundable nominal deposits or they are things like letters of intent from commercial customers and so on. But we definitely do see them as a meaningful indicator of future market traction for our products. So seeing a big substantial step up is not a bad thing.
And then what looks to be the last question in chat here, any opportunity for alternate controls of the vehicle?
Well and is there any indication there about what
There seems to be some trepidation towards the handlebar controls specifically. But I would say that there has been several questions about ultra abled folks and other opportunities for an alternate control system.
Channel. One of the things we've heard from ultra abled folks is actually that the handlebars are a real advantage there. And it will for folks who have limited lower body mobility that would require certain special hardware to be added for example for the hydraulic brakes be able to move them to the handlebars. I was the one thing that was really cool that we saw at the summer showcase wisdom work that Stoffel Systems has been doing on torque vectoring. And what that the implication of that for the FUV.
This is just a much smoother experience on the handlebars, particularly at low speed. But for anyone who's trepidatious about driving the Arcimoto, I mean, it really it takes a very short time to get the hang of it. If you've ever ridden a bicycle, it's a piece of cake. And what you end up ultimately feeling is like the sort of like the vehicle becomes an extension of your will to move. We are going to continue to refine that user experience, particularly through the software controls work that we're doing with Stoffel.
But we have no present plans to change to something like a steering wheel. In fact, it was a switch from a steering wheel that really unlocked the true win of the Arcimoto platform in terms of being able to carry an awful lot on a small footprint vehicle. And the move to handlebars was actually a big piece of that.
All right. A couple more rolled in. How are we doing on time?
I think we got time for one more and then I'll wrap it up.
Have you considered making an electric all terrain vehicle similar to the Tesla Cyberquad? How about that one to hit us?
Short answer on that one is, yes, we have considered making a number of different types of vehicles. For the moment, we are very focused on bringing our current product offerings to scale and focusing heavily on the daily driving problem as well as vehicles that sort of fit in that same go to market approach. So one of the things I really like about Platform 2 again is that it we think those vehicles are going to do very well in our rental shops. We think they're going to be do very well in terms of the rideshare conversations that we're having. And so where you get that overlap of business model, it becomes easier to move multiple products through it.
When I look at off road, I think the platform has real opportunity there, particularly at least constituent elements of that platform. But it has a whole different go to market approach and a lot of additional engineering work to make it happen. So we want to keep Arcimoto as focus as possible, particularly right now in getting our existing product lines refined, getting our new factory up and running and really pushing to scale to deliver on the mission.
All right. One more, since we've got a question couched in a compliment. Arcimoto is the 2nd largest pure EV maker in production in the U. S. Designed behind Tesla With extremely low cash burn compared to other EV makers, can you explain how you've managed this success?
Wow, that is a thank you for the question. I do think that one of the things we pride ourselves on is focus on a meaningful solution that is simple, lightweight, ultra, ultra efficient. And we just abhor waste. And I think that has kept us we Arcimoto was for our 1st 7 years, I was the 1st funder. I put in the 1st couple million.
And sort of treated every additional investor dollar going in as though it were my own in terms of really trying to get the most bang for the buck. I mean that meant that we basically got into production with, I think a total spend over our first 12 years of about $42,000,000 So 0 napkin sketch to 1st production vehicle on $42,000,000 for a next generation EV company is fairly impressive. So I also We have an Oregon ethos of building startup companies into more mature companies. And that has also been the Oregon has a it's very collaborative, but it also used to be very capital efficient. So and just one example, I mean, you think about building out marketing and sales, we've really focused, particularly in the early years and up to production launch on the vehicle, on getting the product really dialed, on getting something that we think is going to sell itself once we can really get it to scale into the right price.
And so that is that's another element of it I think is just focus. Q and A. Shall we wrap it up? We're a little bit over time. I Q1.
Thank you guys all for attending. This officially concludes our 2021 quarter 2 Arcimoto Stakeholder Webinar. I would add that I got a little something special for you. If you all could have been there at our summer showcase. You would have seen some truly impressive things.
Tilting joy torque vector driverless vehicles, tilting joy rides and a community of peers rowing together towards a brighter future. You also might have caught Uncle John and the From Here band serenading the crowd with another fine tune. Now, John couldn't make it back down for the call today, but in honor of him, Sandy and all the fine companions who joined us on our quest. Emily Jensen, Founder of and CEO of Thinking Tree, Yours Truly and Rich Lamas, the best stand in stand up guy I only just met, played again the song we penned for the showcase. Course for anyone of the opinion that good fun tunes have no place in a stakeholder webinar, now is your queue to hit the log out button.
I
had a warm summer showcase In a little town called Portland, met hippies and some techies to build the world a ride across the parking lot of song. A grizzled auto veteran, so I walked right up and asked him, Sandy, can you give me some advice. He said, Son, I made my life out of tearing down the big cars, knowing where clean design the moto and get you guys to scale. You got to
know when to hold them. Know when to hold
Now every builder knows that the secret to designing is keeping all things simple. Great suppliers by your side because every fastener can be trouble. Ponkyoke for Bob's assembling. Short the shadow of design trust and we'll build the best of rights. You got to know
when to hold them, know when to hold them,
keyboard they'll be coming up for counting. When the factory is done and when he Finished Talking. He turned back toward the last scene, winked at those hippie chicks and got into his plan. And somewhere in the darkness, we see that big ramp coming. And in this awesome team, we've got the aces that we need.
You got to know when to hold them. Know when to hold them. Know when to walk to work. Know When you fall, you never count. Your 10 is when you're sitting at the keyboard.
There'll be timing off for
keyboard.