REE Automotive Kick-Off U.S. Production With Roush Industries as Contract Manufacturer

Rhea-AI Summary

REE Automotive (Nasdaq: REE) has selected Roush Industries to assemble its P7 electric trucks at Roush's Detroit-area factory, with production set to begin in Q4 2024. The facility will have an annual capacity of up to 5,000 trucks. Motherson will manage the global supply chain and provide on-site manufacturing and quality assurance support.

REE will continue manufacturing its proprietary REEcorner® technology in the UK. The P7 lineup, built on four REEcorners®, features x-by-wire technology and offers up to 35% more interior volume for passengers, cargo, and batteries. The vehicles have the industry's lowest step-in height and are autonomous-ready.

The partnership aims to accelerate production ramp-up, improve unit costs, and expedite the path to free cash flow generation. Customers have already begun securing production slots for the P7 electric trucks.

Positive

• Partnership with Roush Industries for P7 truck assembly, leveraging their expertise in commercial EVs
• Annual production capacity of up to 5,000 trucks at Roush's Detroit facility
• Motherson's involvement in supply chain management expected to reduce costs and improve margins
• P7 lineup offers 35% more interior volume compared to traditional designs
• Established network of 78 service and sales locations through 24 authorized dealers across North America

Negative

• Production not set to begin until Q4 2024, potentially lagging behind competitors
• Reliance on third-party manufacturers may impact control over production processes and quality

Insights

Automotive Industry Analyst

REE Automotive's partnership with Roush Industries marks a significant step in their production strategy. The decision to outsource vehicle assembly while retaining core technology manufacturing demonstrates a focused approach to scaling. This move could potentially accelerate time-to-market and improve cost efficiency, important factors in the competitive EV market.

The planned annual capacity of 5,000 trucks indicates a measured production ramp-up, aligning with the company's build-to-order model. This approach could help minimize inventory risks but may limit rapid scaling if demand surges. The existing network of 78 service and sales locations provides a solid foundation for distribution, potentially facilitating faster market penetration.

However, investors should note that REE's market cap of $62.7 million suggests it's still a small player in the EV space. The success of this production strategy will be important for the company's growth and ability to compete with larger, established manufacturers.

Supply Chain Expert

The involvement of Motherson in managing the global supply chain and logistics is a strategic move that could yield significant benefits. Their expertise may help optimize costs and improve unit economics, which is important for a smaller company like REE in achieving profitability.

The decision to manufacture REEcorners® in the UK while assembling vehicles in the US creates a geographically diverse supply chain. This could provide some resilience against regional disruptions but also introduces complexity and potential for increased logistics costs. The success of this setup will depend heavily on Motherson's ability to manage these challenges effectively.

The build-to-order model, while reducing inventory risks, places high demands on supply chain responsiveness. REE will need to ensure that their supply chain can support quick turnaround times to meet customer expectations in a market where speed often provides a competitive edge.

Electric Vehicle Technology Specialist

REE's x-by-wire technology and REEcorner® design represent a significant innovation in EV architecture. The claimed 35% increase in interior volume could be a major selling point, especially for commercial applications where cargo space is crucial. The flat chassis design also offers flexibility for various vehicle configurations, potentially allowing REE to address multiple market segments with a single platform.

The focus on commercial vehicles, particularly with features like the lowest step-in height and autonomous-readiness, positions REE well in the growing electric fleet market. However, the company will face stiff competition from both established automakers and other EV startups targeting this space.

The ability to support both battery and fuel cell powertrains adds versatility, but it's important to note that widespread fuel cell adoption in commercial vehicles is still uncertain. REE's success will depend on how well their technology translates into real-world performance, reliability and cost-effectiveness compared to more conventional EV designs.

• Production of P7 electric truck line-up to begin Q4 2024 at Roush’s facility in Detroit, Michigan, with annual capacity of up to 5,000 trucks.
  
• Motherson to manage global supply chain and logistics for U.S. production as well as on-site manufacturing and quality assurance support via Motherson SAS in Detroit.
• Faster production ramp up, improved unit costs, and accelerated road to free-cash flow generation are expected.
• Customers have begun securing production slots.

TEL AVIV, Israel, Sept. 23, 2024 (GLOBE NEWSWIRE) -- Marking a significant milestone on its path to electrifying fleet vehicles across North America, REE Automotive Ltd. (Nasdaq: REE), an automotive technology company and provider of full by-wire electric trucks and platforms, today announced that it has selected Roush Industries, a leading innovative vehicle contract manufacturer, to assemble REE’s P7 vehicles at Roush’s Detroit-area factory. REE will continue to manufacture its proprietary REEcorner^® technology in its UK Coventry Integration Center. With a focus on speed to market and impeccable build quality, Roush’s assembly team unites decades of design, engineering, machining, fabrication, testing, manufacturing, and supply chain expertise to deliver a scalable process for REE. Roush will be supported onsite by a joint REE and Motherson team, who will be responsible for overall quality assurance, logistics, and testing.

Roush, as U.S. contract manufacture for the P7 lineup, will be responsible for the assembly of full vehicles according to REE’s requirements. REE’s software-defined electric trucks will be assembled at Roush’s Detroit based site specifically chosen for REE’s requirements and designed to have a yearly capacity of up to 5,000 trucks. Motherson, a leading global automotive part supplier with whom REE signed a strategic agreement, will manage global supply chain and logistics targeting cost reduction, improved unit economics and higher margines.

REE’s P7 electric commercial trucks line-up is built on top of four REEcorners^® featuring REE’s disruptive x-by-wire technology. REEcorners^® pack critical vehicle components into the area between the chassis and the wheel, enabling a fully flat electric chassis end-to-end with up to 35% more interior volume for passengers, cargo and batteries. Electric vehicles built on the P7 chassis have the industry’s lowest step-in height, are autonomous ready, and can be powered by either batteries or fuel cells. The P7 is well established with a network of 78 service and sales locations through 24 authorized dealers across North America with potential access to over 200 fleets in the U.S. and Canada.

“We chose to work with Roush because of their proven capabilities and expertise in the commercial EV market, their capacity to scale production, and their understanding of our unique business model, which is to build our vehicles to order, not for inventory,” said Josh Tech, Chief Operating Officer of REE. “We want to get our trucks in the hands of our customers as soon as possible, while not sacrificing on quality, making sure our customers can count on us as they build their electric commercial fleets. By partnering with Roush, we can concentrate on our core technology and production of the REEcorners while optimizing production costs and reducing go to market times benefiting from their nearly 40-year track record of engineering and manufacturing spans from NASCAR, to lunar terrain vehicles, to the most innovative EVs.” 

To learn more about REE Automotive’s patented technology and unique value proposition that position the company to break new ground in e-mobility, visit www.ree.auto.

About Roush
For close to 50 years, Roush has boldly imagined and created remarkable solutions for some of the world's greatest organizations. We dream, design, engineer, test, and deliver extraordinary products for customers in the advanced mobility, aerospace, defense, and theme park industries. Roush is unique in its ability to leverage services across the complete product development cycle, solving customers' most complex challenges and accelerating critical product launch targets.

Learn more at www.roush.com.

About REE Automotive
REE Automotive Ltd. (Nasdaq: REE) is an automotive technology company that allows companies to build electric vehicles of various shapes and sizes on their modular platforms. With complete design freedom, vehicles Powered by REE® are equipped with the revolutionary REEcorner^®, which packs critical vehicle components (steering, braking, suspension, powertrain and control) into a single compact module positioned between the chassis and the wheel. As the first company to FMVSS certify a full by-wire vehicle in the U.S., REE’s proprietary by-wire technology for drive, steer and brake control eliminates the need for mechanical connection. Using four identical REEcorners^® enables REE to make the industry’s flattest EV platforms with more room for passengers, cargo and batteries. REE platforms are future proofed, autonomous capable, offer a low total cost of ownership (TCO), and drastically reduce the time to market for fleets looking to electrify. To learn more visit www.ree.auto.

Media Contact
Malory Van Guilder
Skyya PR for REE Automotive
+1 651-335-0585
ree@skyya.com 

Investor Contact
Dana Rubinstein
Chief Strategy Officer for REE Automotive
investors@ree.auto 

Caution About Forward-Looking Statements
This communication includes certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements regarding REE or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. For example, REE is using forward-looking statements when it discusses timing of the production, the benefits and advantages of production with Roush and its unique business model. In addition, any statements that refer to plans, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “aim” “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would”, “designed,” “target” and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements, other than statements of historical facts, may be forward-looking statements. Forward-looking statements in this communication may include, among other things, statements about REE’s strategic and business plans, technology, relationships and objectives, including its ability to meet certification requirements, the impact of trends on and interest in our business, or product, intellectual property, REE’s expectation for growth, and its future results, operations and financial performance and condition.

These forward-looking statements are based on REE’s current expectations and assumptions about future events and are based on currently available information as of the date of this communication and current expectations, forecasts, and assumptions. Although REE believes that the expectations reflected in forward-looking statements are reasonable, such statements involve an unknown number of risks, uncertainties, judgments, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. These factors are difficult to predict accurately and may be beyond REE’s control. Forward-looking statements in this communication speak only as of the date made and REE undertakes no obligation to update its forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. In light of these risks and uncertainties, investors should keep in mind that results, events or developments discussed in any forward-looking statement made in this communication may not occur.

Uncertainties and risk factors that could affect REE’s future performance and could cause actual results to differ include, but are not limited to: REE’s ability to commercialize its strategic plan, including its plan to successfully evaluate, obtain regulatory approval, produce and market its P7 lineup; REE’s ability to maintain and advance relationships with current Tier 1 suppliers and strategic partners; development of REE’s advanced prototypes into marketable products; REE’s ability to grow and scale manufacturing capacity through relationships with Tier 1 suppliers; REE’s estimates of unit sales, expenses and profitability and underlying assumptions; REE’s reliance on its UK Engineering Center of Excellence for the design, validation, verification, testing and homologation of its products; REE’s limited operating history; risks associated with building out of REE’s supply chain; risks associated with plans for REE’s initial commercial production; REE’s dependence on potential suppliers, some of which will be single or limited source; development of the market for commercial EVs; risks associated with data security breach, failure of information security systems and privacy concerns; risks related to lack of compliance with Nasdaq’s minimum bid price requirement; future sales of our securities by existing material shareholders or by us could cause the market price for the Class A Ordinary Shares to decline; potential disruption of shipping routes due to accidents, political events, international hostilities and instability, piracy or acts by terrorists; intense competition in the e-mobility space, including with competitors who have significantly more resources; risks related to the fact that REE is incorporated in Israel and governed by Israeli law; REE’s ability to make continued investments in its platform; the impact of the COVID-19 pandemic, interest rate changes, the ongoing conflict between Ukraine and Russia and any other worldwide health epidemics or outbreaks that may arise and adverse global conditions, including macroeconomic and geopolitical uncertainty; the global economic environment, the general market, political and economic conditions in the countries in which we operate; the ongoing military conflict in Israel; fluctuations in interest rates and foreign exchange rates; the need to attract, train and retain highly-skilled technical workforce; changes in laws and regulations that impact REE; REE’s ability to enforce, protect and maintain intellectual property rights; REE’s ability to retain engineers and other highly qualified employees to further its goals; and other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in REE’s annual report filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2024 and in subsequent filings with the SEC.

FAQ

When will REE Automotive begin production of the P7 electric truck lineup?

REE Automotive plans to begin production of the P7 electric truck lineup in Q4 2024 at Roush Industries' facility in Detroit, Michigan.

What is the annual production capacity for REE's P7 trucks at the Roush facility?

The Roush facility in Detroit has an annual production capacity of up to 5,000 trucks for REE's P7 lineup.

How does REE's P7 truck design differ from traditional electric trucks?

REE's P7 trucks feature REEcorner® technology, which packs critical components between the chassis and wheel, allowing for a fully flat electric chassis with up to 35% more interior volume for passengers, cargo, and batteries.

What role will Motherson play in REE's P7 truck production?

Motherson will manage the global supply chain and logistics for U.S. production of REE's P7 trucks, as well as provide on-site manufacturing and quality assurance support via Motherson SAS in Detroit.