Company: REE
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001628280-25-025661
Chunk: 94

Company: REE Automotive Ltd.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 94
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 current threats from Iran, including after Iran’s attacks in 2024. The fall of the Assad regime in Syria likewise created additional regional instability, including with respect to Turkey.

The current conflict has led to a deterioration of certain indicators of Israel’s economic standing, including a downgrade in Israel’s credit rating by rating agencies such as by Moody’s, S& P Global, and Fitch. There have also been periods of political instability in Israel, including through widespread protests, multiple elections in the past, and a corruption trial of Israel’s Prime Minister.

Any conflict involving Israel, the interruption or curtailment of trade between Israel and its trading partners, significant downturn in the economic or financial conditions in Israel, or any political instability in the region or in Israel could adversely affect Israel’s economy, business conditions and/or our business operations, results of operations, and financial condition. It may also result in parties with whom we have agreements claiming that they are not obligated to perform their commitments pursuant to force majeure provisions in such agreements. This may also make it more difficult for us to raise capital, which would adversely affect REE’s operations and results of operations and the market price of our Class A Ordinary Shares.

Key Components of Statements of Operations

Revenue

We have not begun significant commercial operations and currently have no significant revenues. Once we reach commercialization and commence production and sales of our products, we expect that the significant majority of our revenue will be derived from direct sales to OEMs, dealers, logistics and technology companies and, thereafter, other related products and services within the REE ecosystem. In 2024, we recognized revenues with respect to the sale of SDV prototypes. In 2023, we recognized revenues with respect to previously deferred revenues following a termination of a strategic development agreement with a customer and with respect to the sales of SDV prototypes.

Cost of Revenues

Cost of revenues is primarily comprised from the cost of SDVs and includes direct parts, material and labor costs, share-based compensation expenses, manufacturing overhead (e. g., depreciation of machinery and tooling), shipping and logistics costs, and reserves including for estimated warranty costs related to the production of SDVs and adjustments to write down the carrying value of inventory when it exceeds its estimated net realizable value, or NRV. In 2023, our cost of revenues also included the expensing of deferred expenses following a termination of a strategic development agreement with a customer.

Research and Development Expenses, Net

Research and development, or R& D, expenses consist of our costs