{"url_path":"/sec/ree/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Quantitative and Qualitative Disclosures about Market Risk","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1843588/0001628280-26-035308-index.html","accession_number":"0001628280-26-035308","cik":"0001843588","ticker":"REE","issuer_name":"REE Automotive Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1843588/0001628280-26-035308-index.html","primary_entity_key":"0001843588","primary_entity_name":"REE Automotive Ltd."},"word_count":880,"has_tables":true,"body_markdown":"Item 11. Quantitative and Qualitative Disclosures about Market Risk\n\nREE 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.\n\nInterest Rate Risk\n\nREE holds cash and cash equivalents for working capital purposes. As of December 31, 2025, we had cash and cash equivalents of $14.2 million, consisting of cash in banks, bank deposits and money market funds.\n\nOur 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 management of cash balances 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\n\n140\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nto material interest rate risks, and therefore have not used any derivative financial instruments to manage our interest risk exposure.\n\nInflation Risk\n\nInflationary 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. Significant increases in the market price for parts or components that we import to the U.S. for production, including, in particular, from the UK and China, could negatively impact our gross loss, if and when we resume production, if we are unable to pass along these price increases to our customers.\n\nForeign Currency Risk\n\nDue to our international operations, our results of operations and cash flows are affected by fluctuations due to changes in foreign currency exchange rates. In 2025, our cost of revenues and operating expenses were denominated in U.S. dollars, in Israeli Shekels (NIS), in British pounds sterling (GBP) and the remainder in other currencies, primarily Euros (EUR) and Japanese Yens (JPY). Our foreign currency-denominated expenses consist primarily of personnel, research and development, rent and other overhead costs. The foreign currency exposure gives rise to foreign currency risk associated with the exchange rate movements of the U.S. dollar against non-U.S. dollar currencies, primarily the GBP and NIS.\n\nA 10% strengthening or weakening in the value of the GBP, NIS, Euro, and JPY against the U.S. dollar would have increased or decreased our operating loss in 2025 by approximately 6.7%, respectively. If non-U.S. dollar currencies in which our operating expenses are denominated strengthen significantly against the U.S. dollar, it may have a material negative impact on our results of operations.\n\nThese estimates of the impact of fluctuations in currency exchange rates on our historic results of operations may be different from the impact of fluctuations in exchange rates on our future results of operations since the mix of currencies comprising our cost of revenue and operating expenses may change.\n\nAs of December 31, 2025, approximately 82% of our cash and cash equivalents were denominated in U.S. dollars. As a result, we are exposed to foreign currency risk. We may, in the future, decide to enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rate of the currencies mentioned above in relation to U.S. dollars. These measures, however, may not adequately protect us and our operations could be adversely affected if we are unable to effectively hedge against currency fluctuations in the future.\n\nLiquidity risk\n\nWe monitor forecasts of our liquidity (comprising cash and cash equivalents). We generally carry this out based on our expected cash flows in accordance with practice and limits set by our management. We have a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future. Our ability to continue to operate is dependent upon our ability to significantly reduce our operating costs and to obtain the necessary financing and/or the receipt of cash revenues from customers to meet our obligations and repay our liabilities arising from the ordinary course of business operations. The outcome of these matters cannot be predicted with any certainty at this time. These conditions raise substantial doubts about our ability to continue as a going concern.\n\n141\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)"}