TEL AVIV, Israel — Ree Automotive, an Israeli startup with an innovative design grabbing the attention of U.S. truck dealers, sees federal and state incentives as the pathway to grab a foothold in the increasingly competitive market for electric vehicles.
The company based near Tel Aviv, in Herzliya, Israel, is avoiding the consumer arena, instead attacking the fertile medium-duty commercial vehicle sector. Truck incentives don't have the same U.S. origin of content restrictions as consumer autos and can cover most of a zero-emission vehicle's cost.
A $40,000 federal credit is available for the type of truck Ree plans to produce. California's incentive starts at $60,000 and rises depending on the size and demographics of the business. Massachusetts, New York and New Jersey also have large ZEV purchase incentives.
Midsize commercial vehicles are a prime area for electrification, according to the North American Council for Freight Efficiency. Medium-duty trucks are typically used for delivering food and consumer goods and travel predictable, short routes, returning to their depots at night, where they can be recharged, according to the council.
The council estimates sales of Class 3 to Class 5, or midsize, commercial vehicles in the U.S. average about 192,000 trucks annually and are growing because of e-commerce. California's Advanced Clean Fleets regulation approved in April to push the transition to zero-emission trucks will be a significant market driver for the products Ree is developing. Fifteen states and the District of Columbia plan to follow all or some of California's truck regulations.
Four-corner drive system
Ree's first product will be the P7-B box truck, which targets the core of the medium-duty electric market.
The selling point is the novel wheel-based drive system called Reecorner, said KC Heidler, CEO of Tom's Truck Center, a two-store chain based in Santa Ana, Calif.
Each corner has an electric motor as well as steering, braking and suspension components packaged into a module positioned between the chassis and the wheel. The system is controlled by wire, similar to how commercial aircraft operate, but is scaled and modified for the everyday driver rather than a skilled pilot, said Daniel Barel, Ree's co-founder and CEO.
The modules allow for a flat skateboard platform, creating a low step-in height with more room for cargo or passengers if used as a shuttle. The vehicle has significantly more agility — especially useful for dense urban environments — than other commercial vehicles. It has a 39-foot turning circle.
The truck offers a 150-mile range with up to a 7,000-pound payload, consistent with the drive cycles of box trucks. The vehicle architecture would allow for a bigger battery pack and longer range, but customers neither need nor want to pay for that extra capability, Barel said.
The system also makes for easy service. Technicians can swap a module out in about an hour, limiting the time the truck would be out of service, a key metric for commercial vehicle users, he said.
Ree demonstrated the technology for guests at its headquarters Monday during EcoMotion, a conference and weeklong series of events focusing on Israeli automotive technology.
Ree has a plant in Coventry, England, where it will launch production this year. Barel said Ree could assemble up to 20,000 vehicles annually, working two shifts at the factory.
When it reported its first-quarter financial results Tuesday, Ree said it had 100 truck orders. It set a production target in the low hundreds of vehicles for 2024 and into the low to mid-thousands by the end of 2025.
Ree is recruiting independent truck dealers to build its distribution network. Tom's Truck Center, with stores in Santa Ana and Santa Fe Springs, Calif., is among the first eight.
Heidler said he sees a market opportunity to help businesses tap federal and state incentives to transition their fleets to ZEVs. He's working with Nikola Corp. and GreenPower Motor Co., among others, and gets pitched constantly by green vehicle startups.
"Most will be out of business or merged into something else in two or three years. But we have vetted many of these startups and think we are picking the ones that will survive," Heidler told Automotive News.
One problem is that few offer innovative technology that would provide an advantage to businesses, Heidler said. They typically have similar, conventional designs, he said.
But the Ree technology offers advantages that could make it a survivor.
"In the commercial space, weight and space is everything," Heidler said. "The corner technology opens up everything else on the truck for us to design for the customer."
Ree is the only company Tom's is working with that doesn't have a product already on the road, he said.
Prepping for cash burn, distribution
But as with other EV startups burning quickly through their cash reserves, success is not assured for Ree.
The company anticipates operating expenses of $70 million to $75 million this year. It ended the first quarter with liquidity of $126 million, made up of cash, cash equivalents and short-term investments. It has no debt. It expects to complete the year with $65 million of liquidity, including financing the initial 25 P7-B trucks for internal testing and pilot delivery.
Still, Ree is going to need more cash. It estimates ramping production to the thousands will require $80 million to $100 million.
"We will explore options for raising debt or equity in the right form, all in line with the progress of our business cycle and needs," the company said in its first-quarter report.
There are other hurdles.
"They have a very long road to build this dealer distribution system," Heidler said.
Ultimately, Ree could leverage its corner module technology and become a powertrain supplier to vehicle builders, emulating Cummins' business strategy.
That's a pivot Barel said he is already considering. Ideally, Ree would produce its corner modules and the drive-by-wire technology that legacy vehicle manufacturers would integrate into their offerings.
"We would be a subbrand like 'Powered by Ree,' just like 'Intel Inside,' " Barel said.
But vehicle makers are slow to move, conservative and unlikely to launch such a product line until the technology is proved, he said. That's why Ree plans to get the trucks into the market and demonstrate the technology's advantages, Barel said.
The strong demand for medium-duty electric trucks, combined with the federal and state purchase incentives, gives Ree the latitude to pursue that strategy.
The goal, Barel said, is to "get drivers into the truck, gain market acceptance and scale up."
