Company: REE
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001628280-25-025661
Chunk: 43

Company: REE Automotive Ltd.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 3
Chunk 43
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 acceptance. In order to sell products that have a falling average unit selling price and maintain margins at the same time, REE would need to continually reduce products and manufacturing costs. To manage manufacturing costs, REE must engineer the most cost-effective design for its products. In addition, REE will continuously promote initiatives to reduce labor cost, improve worker efficiency, reduce the cost of materials, use fewer materials and further lower overall product costs by carefully managing component prices, inventory and shipping cost. REE also needs to continually introduce new products with higher sales prices and gross margin in order to maintain its overall gross margin. If REE is unable to manage the cost of older products or successfully introduce new products with higher gross margin, its revenue and overall gross margin would likely decline.

The automotive industry and our technology are rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies may adversely affect the demand for our electric vehicles.

While our vehicles may be adaptable from battery cells to certain alternative technologies as an energy source, we may be unable to keep up with, or be compatible with, technological changes, including alternatives to electricity as an energy source and, as a result, our competitiveness may suffer. Specifically, developments in alternative technologies, such as advanced diesel, ethanol, fuel cells, or compressed natural gas, or improvements in the fuel economy of an internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. Any failure by us to successfully react to changes in alternative technologies could materially harm our competitive position and growth prospects. Similarly, in the event that certain alternative technologies are developed that are incompatible with our vehicles as an energy source, it could materially harm our competitive position and growth prospects.

Risks Related to REE’s Quality

REE’s products rely on software and hardware that is highly technical, and if these systems contain errors, bugs, defects, or vulnerabilities, or if REE is unsuccessful in addressing or mitigating technical limitations in its systems, REE’s business could be adversely affected and it may result in a decrease in the demand for REE’s products and harm our reputation.

REE’s products rely on software and hardware that is highly technical and complex that will require modification and updates over the life of the products. In addition, REE’s products depend on the ability of such software and hardware to store, retrieve, process and manage large amounts of data. REE’s software and hardware may contain, errors, bugs, inadequate, inaccurate, biased or otherwise flawed data or algorithms used to train certain