"Welcome to the Future" Event at the AMP: Thur 9/19/19

[Odi]

I was surprised by harriska2's post on FB about the 20k not even covering the materials cost of the Evergreen. So if they get loans to order enough materials for 1000 FUVs, then the 40% price reduction in materials will maybe enable a 15k-17k FUV to be profitable. However, even at 5 per day at the end of the year, that's only 100 per month, and I don't know what the interest on those loans are for 10 months.

[harriska2]

The interest on that loan is pretty high. 10% rings a bell but I can’t remember (it was in an earnings update). They’ll have to have some money bags behind them like Amazon and Tesla to continue losing money month by month. That or get bought out. Or fold.

[Rickb]

Order enough materials for 4000+ reservation vehicles assuming production has scaled to those numbers. If there is an actual plan to scale production successfully to the max 200 units per week over the first 12-18 months of 2020 and there is public acceptance and demand for the FUV, Arcimoto will have retail sales revenue rolling in and the money bags won’t have to be that big. As I recall, Arcimoto doesn’t have much debt, typical of a new startup company.

[loopy]

The problem is those 4000 preorders are for the 12k price point. At 20k, I was around 2000 but ended up as 55/100 after waiting a month to even be able to order one. What I imagine they will do is produce 100 first. Then they will get an inventory loan to order materials in bulk and fill rental agreements. And they will go through the 4000 again and see who wants one at the lower price point (but nowhere close to 12k yet)

Also, starting off slow lets them mitigate the risk of a recall issue that might pop up in real world scenarios as opposed to lab testing

I think you also forget, there is a very limited distribution area where as the 4000 pre-orders came from all over the country and beyond. So they are also fighting a warranty serviceability issue.

[harriska2]

Order enough materials for 4000+ reservation vehicles assuming production has scaled to those numbers. If there is an actual plan to scale production successfully to the max 200 units per week over the first 12-18 months of 2020 and there is public acceptance and demand for the FUV, Arcimoto will have retail sales revenue rolling in and the money bags won’t have to be that big. As I recall, Arcimoto doesn’t have much debt, typical of a new startup company.

Pretty sure they have a 10% loan - with a balloon payment? In addition they are bleeding money as their output is nil and their labor and loan interest/payments are eating into their cash. Not sure how their weak Wall Street position affects them. I think they are in a very precarious/vulnerable spot right now so they’ll tread carefully. Mass ordering is probably not going to happen as they don’t have a proven demand at a higher price - something lenders probably want.

[Rickb]

I agree regarding the cash burn period, but the primary issue is tooling up for production scale! Frankly, I thought they had been working on scaling production ever since they got AMPED a couple years ago.

I understand it’s not feasible to order parts for the 4000 reservation FUVs with their current max production at 1 unit per day. If they were tooled to assemble and deliver the 4000+ reservation units at 100-200 per week those numbers would warrant ordering parts from suppliers in mass and allow them to offer a profitable $11,900 FUV that the vast majority of those reservationists expected, need, and want. I’m seriously puzzled and concerned about the slow retail assembly roll out. The only feasible way I see Arcimoto scaling from 5 to 200 units per week is tooling the AMP with ROBOT assemblers working 24/7. Easy to armchair supervise and critique the production strategy.

[ricschug]

I'm concerned about the slow rollout as well. I would think that the only way AM will survive is to ship product, lots of product. A handful a day probably won't cut it.

[Rickb]

A handful a day would cut it as they scale production numbers, but to my surprise I’ve seen no signs of 5 units actually assembled and delivered last week. That won’t cut it for very long.

[jimball]

An OEM like Arcimoto should be able to negotiate with vendors for better volume pricing with an agreement to split the shipping & billing into several units shipped over a specified time, The vendor is guaranteed the sales, but the OEM does not have to pay everything up front, and does not have to warehouse a huge inventory of parts. It's one part of 'Just In Time' manufacturing.

[Rickb]

Jimball, I agree, thinking that was the situation in that Arcimoto had qualified volume pricing for parts based on 4000+ reservation vehicles. Apparently not the case.