00:00I want to start actually if I may with with the environment that we're in and just the supply chain
00:05impact but also the financing impact that you're seeing from the war in Iran because of course Saudi Arabia and
00:13different Saudi entities are your biggest backers.
00:16What are you seeing on your desk right now. Well so for the moment I mean the disruption that we
00:22have seen have been rather minimal.
00:24So we have not noticed major disruption as far as our supply chain and so forth.
00:32We did see some tactical adjustment of some of the logistic costs.
00:37The shipping companies have indeed increased some of the pricing.
00:40But as far as our operation is concerned we didn't see any disruption for the time being.
00:45So we will need to see long term if the events and the tension are extending for too long how
00:53it will impact the business.
00:55But for the moment I have to say that the disruption is rather minimal.
00:59The big headline for you in the finance org was a timeline or a plan to get to positive free
01:07cash flow.
01:07Yes.
01:08I'd kindly ask for a little bit more detail.
01:11What is the timeline on that and mechanically like what is it what are the levers you can use to
01:17achieve positive free cash flow.
01:19Yeah.
01:19So we have two important milestones.
01:21The first one is the gross margin positive and this is expected to happen in the midterm and you should
01:26read midterm basically the next three years.
01:30And the free cash flow positive expected by the late decade.
01:33So this is the plan that we have this is the guidance that we have provided yesterday during our investor
01:39day.
01:39So several levers that we will be activating to get there.
01:43First of all I mean we are in industry where scale is important school scale coming out of midsize is
01:49one of the key catalysts to allow us to go to break even margin and cash flow positive.
01:57So that's the first lever.
01:59The second one is the margin improvement and the additional revenue streams that we will be adding to our top
02:06line.
02:06So the margin is expected to improve on the back again of the scale the various improvements that we're doing
02:13not only in terms of constraining the bill of material or constraining some of the cost lines that we have
02:21in the company.
02:22And it's also about simplifying what we will be bringing to the market going forward.
02:26So when you work on a platform with the 95 percent part commonality over time this is how you leverage
02:34the cost and this is how you constrain it and you accelerate the journey towards the gross margin positive.
02:39Then there's the additional revenue stream and I guess that we will be talking about that the fact of software
02:45revenue revenue from business partnerships on robo taxis.
02:51This is an additional catalyst which will accelerate the journey.
02:55So we are we are so focused right now on the business model for robo taxi for all the different
03:01conduits of what is a web of partnerships right.
03:04You have announced project lunar purpose-built robo taxi to Cedar.
03:08But what I want to understand is at volume there's there's a financing risk and an execution risk from taking
03:17the vehicles off the production line and then a fleet operator taking them.
03:24So who takes on that burden whose balance sheet gets that done.
03:30Well there are different models and these models are not meant to be static.
03:34So I mean speaking about what exists and what we already know.
03:37So the first deal that we have done with our partners with Nuro and Uber was a deal which was
03:44based on the assumption that Lucid provides the technology and the platform and the car.
03:51Nuro provides the software and the AI autonomous driving capabilities and Uber takes on the asset.
04:00So this is how we have set up the first iteration of the deal and we have always said that
04:06there will be other iterations and yesterday the first step has been announced.
04:13It's not completely finalized it will be finalized in the coming weeks but we have announced what the next step
04:20would be and we can perfectly imagine that things will evolve over time.
04:25So the whole question is about the value chain in the ecosystem and how it is split between the different
04:33components or partners being involved in this business.
04:38To be we're having a finance conversation which is you know it's appropriate you are the CFO.
04:44I wonder like how interesting the mechanisms can get like you know Uber has a financial interest in this but
04:51they have a capital like model.
04:53So do you see maybe private equity or the banks coming in with some kind of special purpose vehicle right.
04:59They finance that that block of volume production until some time where the fleet operator pays you and says here
05:08here's the money for all the cars that we're we're taking from you because you're not going to operate the
05:12service right.
05:13You're not going to operate the fleet.
05:15And then you know to what extent do you need some revenue guarantees from those other partners.
05:20Yeah. So obviously I mean the the gold standard in this kind of businesses is to secure recurring revenues.
05:30So this is how you spread the risk over time and this is how you give confidence on the validity
05:35of of the business case.
05:37Having said that I mean we are also staying away from whatever is associated with the capital intensive business.
05:45So I don't think that we will ever have a model where we own the assets and we generate revenue
05:53out of it.
05:53There are companies who do this kind of business very well companies institutions businesses who are experts in managing assets.
06:02So I think that over time with the growing robot taxi market and the expectation in terms of growth and
06:10you saw the various assumptions in terms of market size.
06:13It's really ranging from 300 billion dollars to over a trillion depending on the study you look at.
06:20I think that this will create new business models and new operators who will start joining the the overall value
06:28chain over time.
Comments