Company: REE
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001628280-25-025661
Chunk: 157

Company: REE Automotive Ltd.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 11
Chunk 157
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 and China, would negatively impact our gross profit if we are unable to pass along these price increases to our customers.

Foreign Currency Risk

Table of C ontents

Due to our international operations, our results of operations and cash flows are affected by fluctuations due to changes in foreign currency exchange rates. In 2024, our cost of revenues and operating expenses were denominated in U. S. dollars, in Israeli Shekels (NIS), in British pounds sterling (GBP) and the remainder in other currencies, primarily Euros (EUR) and Japanese Yens (JPY). Our foreign currency-denominated expenses consist primarily of personnel, research and development, rent and other overhead costs. The foreign currency exposure gives rise to foreign currency risk associated with the exchange rate movements of the U. S. dollar against non-U. S. dollar currencies, primarily the GBP and NIS.

A 10% strengthening or weakening in the value of the GBP, NIS, Euro, and JPY against the U. S. dollar would have increased or decreased our operating loss in 2024 by approximately 6.5%, respectively. If non-U. S. dollar currencies in which our operating expenses are denominated strengthen significantly against the U. S. dollar, it may have a material negative impact on our results of operations.

These estimates of the impact of fluctuations in currency exchange rates on our historic results of operations may be different from the impact of fluctuations in exchange rates on our future results of operations since the mix of currencies comprising our cost of revenue and operating expenses may change.

As of December 31, 2024, approximately 98% of our cash and cash equivalents were denominated in U. S. dollars. As a result, we are exposed to foreign currency risk. We may, in the future, decide to enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rate of the currencies mentioned above in relation to U. S. dollars. These measures, however, may not adequately protect us and our operations could be adversely affected if we are unable to effectively hedge against currency fluctuations in the future.

Liquidity risk

We monitor forecasts of our liquidity (comprising cash and cash equivalents and short-term investments). We generally carry this out based on our expected cash flows in accordance with practice and limits set by our management. We continue to be in the process of incurring expenses associated with the production of our SDVs. We have a history of losses and expect to incur significant expenses and continuing losses for