Company: REE
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001628280-25-025661
Chunk: 156

Company: REE Automotive Ltd.
Filing Date: 2025-05-15
Form: 20-F
Item: Item 11
Chunk 156
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Item 11. Quantitative and Qualitative Disclosures about Market Risk

REE is exposed to a variety of market and other risks, including foreign currency exchange fluctuations, changes in interest rates and inflation. We regularly assess currency, interest rate, and inflation risks to minimize any adverse effects on our business as a result of those factors.

Interest Rate Risk

REE holds cash and cash equivalents for working capital purposes. As of December 31, 2024, we had cash and cash equivalents of $72.3 million, consisting of cash in banks, bank deposits and money market funds.

Our exposure to interest rate risk primarily relates to excess cash invested in bank deposits bearing fixed interest rates with original maturities of less than one year and money market funds exposed to variable interest rates. Such interest-earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates. Variable rate securities may negatively have an impact on the interest income received from those securities due to a decline in interest rates. The primary objectives of our investment activities are the preservation of capital and the fulfillment of liquidity needs. We do not enter into investments for trading or speculative purposes. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical consolidated financial statements. As a result, we have not been, and do not expect to be, exposed to material interest rate risks, and therefore have not used any derivative financial instruments to manage our interest risk exposure.

Inflation Risk

Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe that inflation has had a material effect on our financial position or results of operations to-date. However, a high rate of inflation in the future may have an adverse effect on our research and development and selling, general and administrative expenses. More specifically, the Trump Administration in the U. S. imposed tariffs on a variety of countries and regions that it perceives as engaging in unfair trade practices, including a 10% tariff rate on the UK and up to 125% on China prior to a recent UK trade deal and announcement of postponement of certain tariff amounts with respect to China. Significant increases in the market price for parts or components that we import to the U. S. for manufacturing, including, in particular, from the UK