REE Automotive (REE) Risk Factors

Investing in our Class A Ordinary Shares involves a high degree of risk, as fully described below. The principal factors and uncertainties that make investing in our Ordinary Shares risky, include, among others: - REE's limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE. - Projecting REE's operational or financial performance relies in large part upon assumptions and analyses that are inherently uncertain and subject to risk, and that if proven incorrect could result in significantly lower actual results. - REE may not succeed in controlling the costs associated with its operations. - If the market for commercial EVs does not develop as REE expects or develops slower than REE expects, its business prospects, financial condition, and operating results may be adversely affected. - Adverse conditions in the automotive industry could have adverse effects on REE's results of operations. - REE's business model has not been proven, and any failure to obtain significant orders for its products would have an adverse effect on its operating results, business, or reputation, resulting in substantial liabilities that may exceed its resources. - REE's marketing and sales model may fail to achieve market success or acceptance, which may cause REE not to achieve profitability. - REE's agreements with potential customers, suppliers, dealers and strategic partners are preliminary in nature. - REE's ability to make additional sales following sales of demo vehicles to customers depends in part on REE's ability to prove that REE's products are to the full satisfaction of such customers and to establish and maintain confidence in REE's business prospects among such customers and others within its industry. - REE may not succeed in establishing, maintaining and strengthening the "Powered by REETM" brand. - REE is subject to risks associated with strategic alliances. - REE operates in a highly competitive market and may not be able to compete successfully in the market as a result of rapid changes in EV technology and the entrance of new and existing, larger manufacturers into the EV space. - REE is subject to risks associated with the anticipated timing of REE's initial commercial production and subsequent increased commercial production. - REE's development of an outsourced manufacturing business model may not be successful. - REE is reliant on its UK Engineering Center and REE's Integration Center at Coventry, UK for the design, validation, verification, testing and homologation of its products. - REE will depend on its suppliers, and the inability of such suppliers to deliver the components of REE's products in a timely manner or at all and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results. - REE's business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells. - REE's production targets are subject to a variety of risks, including the completion of REE's production tooling investment plan, sourcing materials and components from its suppliers on its agreed upon deadlines and securing sufficient funding. - REE targets customers, some which are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. - Discontinuation, lack of commercial success, or loss of business with respect to a particular product model for which REE is a significant supplier could reduce REE's sales and adversely affect its profitability. - Pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect REE's business. - REE may become subject to product liability claims. - REE does not currently have extensive experience servicing its products. - REE may be subject to risks associated with autonomous driving and EV technology. - REE is dependent on its founders Daniel Barel and Ahishay Sardes. - REE's success depends, in part, on its ability to attract and recruit key employees and hire qualified employees and management. - Financial results may vary significantly from period to period due to fluctuations in REE's operating costs and other factors, which may or may not be foreseeable. - REE will need to improve its operational and financial systems to support its expected growth. - REE expects that it will need to raise additional funds. - REE may not be able to continue as a going concern based on REE's business plan to start mass production in late 2024 and early 2025 if REE is unable to obtain sufficient additional funding or does not have access to capital to finance its current business plan, and REE may be forced to change its business plan as a result. - REE's financial and operational projections rely in part on existing and future regulations and incentive programs supporting EV adoption. - REE may encounter obstacles outside of its control that slow the adoption of EVs in the market, including but not limited to regulatory requirements or infrastructure limitations. - REE is subject to various environmental laws and regulations that could impose substantial costs on its business and cause delays in building its manufacturing facilities. - REE may become involved in legal and regulatory proceedings and commercial or contractual disputes. - REE's management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed. - If REE is unable for any reason to meet the continued listing requirements of Nasdaq, such action or inaction could result in a delisting of the Class A Ordinary Shares. - REE is subject to cybersecurity risks to its various systems and software, and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent REE from effectively operating its business or may cause harm to its business that may or may not be reparable. - REE may incur significant costs and expenses in connection with the protection and enforcement of its intellectual property rights, including but not limited to litigation costs. - Lawsuits alleging infringement or misappropriation of intellectual property rights of third parties could be both costly and time consuming and could prevent REE from developing or commercializing its future products. - The dual class structure of our Ordinary Shares has the effect of concentrating voting power. - Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel's war against them, may affect REE's operations.

REE's ability to successfully carry out its business plan is primarily dependent upon its ability to raise sufficient additional capital. There are no assurances, however, that REE will be successful in obtaining an adequate level of financing needed to support its operations. If REE is unable to maintain sufficient financial resources its business, financial condition and results of operations will be materially and adversely affected. As an early-stage growth company, REE's ability to access capital is critical. Until REE can generate sufficient revenue to cover REE's operating expenses, working capital and capital expenditures, REE will need to raise additional capital. Additional equity financing may not be available on favorable terms, or at all, and could be dilutive to current stockholders. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments. If capital is not available to REE when, and in the amounts needed, REE could be required to delay, scale back, or abandon some or all of our development programs and operations, which could materially harm REE's business, financial condition and results of operations.

REE's existing agreements and REE's ability to engage with definitive agreements with current and potential suppliers, dealer or strategic partners are and will be subject to a number of risks with respect to operations that are outside REE's control, any of which may materially and adversely affect REE's business and prospects. REE could experience delays to the extent its current and potential suppliers, dealers or strategic partners do not continue doing business with REE, meet agreed upon timelines, experience capacity constraints or otherwise are unable to deliver components or manufacture products as expected. There is risk of disputes with current and potential suppliers, dealers and strategic partners, and REE could be affected by adverse publicity related to its current and potential suppliers, dealers or strategic partners whether or not such publicity is related to their collaboration with REE. REE's ability to successfully build a premium brand could also be adversely affected by perceptions about the quality of REE's suppliers, dealers or strategic partner's products or other products manufactured by the same suppliers or strategic partners. In addition, although REE intends to be involved in material decisions in the supply chain and manufacturing process, given that REE also will rely on its current and potential suppliers, dealers and strategic partners to meet its quality standards, there can be no assurance that REE will be able to maintain high quality standards for its products. Furthermore, REE will also be exposed to risk associated with sharing its proprietary information with any such third party.