Operator: Your next question comes from the line of John Babcock of Bank of America. Your line is open.
John Babcock: Hey, thanks for taking my questions and thanks for the details here. I guess just starting out, if you could just provide a little bit more clarity on the production. I mean, it sounds like basically what you’re doing is point back production in part to make sure that you can deliver the vehicles in a reasonably expedient fashion, but also at the same time, not building inventory. If you could just provide some clarity on that, and also whether you’re having any challenges in getting the vehicles built. I just want to make sure I fully understand that setup.
Geeta Gupta-Fisker: Yes. So I think on production, I want to reiterate, as I mentioned earlier, we have absolutely 0 challenges in ramping up production. In fact, we even have days where we have hit 200 units a day. Absolutely no challenges in building vehicles and absolutely no challenges in getting parts into the factory and building up vehicles. As Henrik mentioned, we’ve already built up a very healthy inventory of 9,000 units. Where we are today is the lag between getting the vehicles from Europe into U.S. as I explained in detail. And along the way, we are also, of course, performing software updates as we are releasing software on a continued manner, and this creates a certain lag or delay as the vehicle arrives in U.S. and processing.
As we built up a very healthy inventory, we think it’s very prudent and it would almost be irresponsible to not control that inventory in a more responsible manner and also to make sure that we don’t have too many vehicles sitting around. Since these are all presold, we want to get the vehicles as fast as we can to the customer. So it’s a conscious, very prudent approach to make sure we manage our inventory, customer expectations, provide a world-class experience and also do proper cash management. It also goes to show that as we ramp up our service and delivery infrastructure, along with that, we can completely ramp to our ultimate target, which as Henrik mentioned, was 300 units a day.
John Babcock: Got you. Thank you. That’s perfect. And then just one follow-up here. As it pertains to Foxconn, you’re working to finalize the contract there. Assuming that is ultimately completed, how far along is the Foxconn facility? So in other words, is it at the point where you’d be able to produce vehicles there in 2025? Or might it be pushed back a little bit because there’s still a decent bit of setup that needs to be done within the facility to get vehicle production to that state?
Henrik Fisker: No, you’re correct. We are still on target to start producing vehicles in 2025 as fast as we can make them.
Operator: Thank you. Your next question comes from the line of Chris McNally of Evercore. Your line is open.
Chris McNally: Thanks so much and again I appreciate the detail on the growing pace [ph]. So just a follow-up on John’s conversation. Maybe to start, there will be a focus on, Geeta, you mentioned the cash cycle. And with the big working capital outflow in Q3, as you sort of closed the gap on production versus deliveries in Q4, could you just talk about how we should see that working capital change into Q4 and maybe the beginning of next year as that’s probably the biggest swing on your free cash flow?
Geeta Gupta-Fisker: Yes. I mean, Chris, I think our goal, like I mentioned earlier, was to bridge the gap between what you produce and what you deliver. And there was always — there will always be a lag, of course. But I think that the goal is to get that gap shorter and shorter and shorter. And I don’t think we’re ready to give guidance for 2024 yet but I think it’s very obvious what we can produce. And it’s — as we mentioned, we have a goal as to where we want to go to when it comes to actual deliveries. So I think our goal is to have pretty much, at the most, the inventory that’s in transit and to come very close to have a very high-level of efficiency of the inventory that’s at hand. So typically, the 5 to 8 weeks is something that you can shorten. Time on a boat is time on a boat, but the goal is to make sure that we ensure that everything at hand is very quickly delivered to the customer.
Henrik Fisker: Maybe one thing I could just add, Chris, to this is if you look at how fast we were able to deliver the Oceans, the Ocean Ones in Europe, they’re pretty much delivered. I mean, Germany is the biggest market. We already delivered all the Ocean Ones there, and we are now already delivering the Extreme and we’ll start Ultra and Sport in a few weeks as well. So that’s obviously something where once we catch up, you can see how fast it will go. We just have to model it correctly and get the big — much bigger throughput here in the U.S. But we have shown we can do it. In Europe, we’ve already shown we can do it in the last few weeks, so I think you’ll see a very fast ramp also in the U.S.
Geeta Gupta-Fisker: I think also, Chris, just to highlight that as we get our real estate going, what we found is that contrary to what we believe during COVID that customers don’t want to pick up the vehicles, customers actually do want to pick up their vehicles. So as we get our real estate organized, we will be able to provide more pickup locations throughout the country, and that should also help speed up some of these deliveries. We were and we have been using what they call enclosed trucks. There’s a shortage of enclosed trucks in the U.S., especially given our matt paint vehicles, and we have encountered just a shortage of enclosed trucks to get the cars to our customers. Those are the logistical challenges that we want to overcome.
Chris McNally: Thank you. And then the two follow-up questions just on timing, I guess on rectifying some of the issues, the first is, how long do you think the delivery infrastructure, as you, Henrik, you talked about some of the some of the hiring patterns? Do you think this is sort of a 1 to 2-quarter issue or could it be longer? And then Geeta on, just wanted to give you the ability to talk about the delay in the 10-Q. Obviously, there’s some statements on material weakness. Again, just given the personnel changes, how long before that’s rectified as well?
Henrik Fisker: Yes. So look, we are a growth company so it’s not like we are expecting that in 1 month, we are up at a certain level and then we stop hiring and now we just keep delivering. We are going to be hiring and growing for many, many years. However, when we talk about the immediate need is to get to the 300. And I think we will be able to do that by the end of this year. We are opening, I think it’s about 3 or 4 facilities in the next — with the next month. So like Geeta mentioned, the difference is if you think about sending out 100 trucks to 100 people versus inviting, just on 4 places, 25 people, come and pick up the car, you can probably even invite 100 people on each of these locations. So now you can much quicker get to these 300 a day.
And that’s something we have — we have not been able and I’m sure people may not understand that. Unfortunately, we could not invite people to [indiscernible]. It’s an enclosed compound where no people is allowed to enter. They’re in the middle of nowhere where people barely can drive and it’s just not a facility you can do deliveries. So that impacted us much more negatively than we originally had thought. And we immediately changed that in the last couple of months, and we are now ready to start these mass deliveries at our own facilities.
Geeta Gupta-Fisker: Chris, to answer the second part of your question, Q3 was a highly complex quarter. Went from $800,000 of revenue to $71 million of revenue. In multiple countries, ForEx, very complex accounting along with convertible notes and accounting for derivatives. So we experienced quite a lot of complexity in the business, and as you rightly pointed out, personnel changes as well. We, of course, continue to understand all these different areas. We are continuing to hire. We do have already three controllers in place, 2 in the U.S., 1 in Europe, and we continue to strengthen the team. We continue to add more experts within the team. Some other areas that were extremely complex were because of contract manufacturing, things like raw material inventory accounting and finished goods inventory accounting, things that we had not done before and extremely complex as you look at IT integrations with Magna, in-house integrations.
