Rolls-Royce CEO talks Spectre electric vehicle, chip supply, new clients

Rolls-Royce Motor Cars CEO Torsten Müller-Ötvös joins Yahoo Finance Live’s Pras Subramanian to discuss the car brand's highest-ever annual sales results despite a chip shortage, the average age of a Rolls-Royce owner, and production of its new EV model, the Spectre.

Video transcript

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BRIAN SOZZI: Rolls-Royce motor cars reported today saw record sales last year with its top line surging 49% from a year ago. The company also released a few details on its first ever all electric car called Specter. Let's talk more about this with Rolls-Royce Motor Cars CEO, Torsten Muller-Otvos. Yahoo Finance Senior Correspondent, Pras Subramanian, is here as well. Good morning to you both. Torsten, I'll start with you. Who is the core customer coming to Rolls-Royce driving these sales?

TORSTEN MULLER-OTVOS: Yeah. I mean, first of all, good morning to everybody and happy new year. We have quite an eclectic mix of clients worldwide. You can say, in general, 80% of our clientele is entrepreneurs running businesses, their own businesses. And 20% of our clients are the world famous celebrities sort of. So what we observed over the last 10 years is that they are all getting younger and younger and younger. And we have lowered average age of Rolls-Royce motor cars in a substantial way.

When I joined 12 years ago, we have been on 56 as an average age and we are now down to 43. And that's a substantial, let's say, change since then because you can make up your own math. For everybody who is around 60, you need at least some who is around 20. And I think that is great.

We have also seen a dramatic shift from being chauffeured in a Rolls-Royce to I drive myself and I sit behind the wheel. Was it formerly 20%, self drivers 80% chauffeuring, it is exactly opposite now. It is 80% self driving, 20% chauffeuring.

PRAS SUBRAMANIAN: Hey Torsten, thanks for coming on. You guys had your biggest 2021 ever, biggest year ever for the brand. How's 2022 looking? You guys have your order book pretty much set right now. Can you reach those production goals for this year?

TORSTEN MULLER-OTVOS: I think we are, and me in person, anyhow very optimistic about 2023. I think, fortunately, I must say, we have not seen any constraints when it comes to semiconductors or whatever. So we have seen all semiconductors we needed for production last year due to the fact, I need to mention that and want to mention it, that we are part of the BMW Group. And they, anyhow, played quite a good role in how they handled that semiconductor issue.

So for that reason, we always got preferential delivery of semiconductors. And the same will happen again this year. So I am very optimistic that we're going to build all the cars ordered, and which are in the order book so far. So we are, more or less, I wouldn't call it sold out, but we are now already reaching into the fourth quarter. If you order a Rolls-Royce today, you take delivery in one year from now. That's basically how it goes.

PRAS SUBRAMANIAN: So Torsten, speaking about the future, EV's obviously a big part of that for Rolls-Royce. The Specter, you guys unveiled that last year. I understand you guys are testing it right now. How is that going? And are you guys still going to meet that 2023 target for that release?

TORSTEN MULLER-OTVOS: Yeah. I think we are well on track with the testing program. We have started that a couple of weeks ago. Cars are now going out all over the world. The most extensive testing program we have ever conceived for Rolls-Royce. So for that reason, great to witness that in the world. And I'm very confident that we're going to see a start of production in 2023. And the first deliveries to our clients will happen by the end of 2023. Orders and also interest worldwide is already really on remarkable good levels.

JULIE HYMAN: Torsten, it's Julie here. I want to go back to what you were saying about the customer changing, driving their own cars, getting younger. How has that changed the design of the cars, if at all? Are you focusing on making them maybe more exciting to drive, less sort of stable? Or what's the thinking behind the design?

TORSTEN MULLER-OTVOS: Yeah. I think you might have seen that, for instance, with Ghost, the car we brought into the market last year. We have already changed the way how we conceive a Rolls-Royce. This is a more subtle way to drive a Rolls-Royce. It's very much done, particularly in the regular wheelbase version for the self driver. On top comes what we have developed with Black Badge, which makes that car a real, very enjoyable, drivable car by yourself.

But one thing is clear for us, we would never compromise comfort. Comfort is the name of the game for Rolls-Royce motor cars. That world famous magic carpet ride you are riding on when you sit-in a Rolls-Royce would be never compromised for, I call it now, "sportiness" or whatever you want to call it I think our clients love us because we are magic carpet ride, and that will not change.

BRIAN SOZZI: Torsten, I'm a car guy through and through, I've reviewed many of your models through the years. It's been a great experience. What can you tell us about the specs on this new electric car? How fast does it go? What's the horsepower? How long does it take to charge? What can you tell us?

TORSTEN MULLER-OTVOS: Nothing today because we just started the testing program, so you won't hear any details from me. We will release that later the year. I pleased to ask you to watch this space. We will come back on that, obviously. And I think one thing is for sure, it will be a proper Rolls-Royce.

And I think for us in developing that car it was always-- and we've learned that from all our clients worldwide, first comes it needs to be a true perfect Rolls-Royce. And then number two comes electrification, that's the right sequence and not the other way around. So meaning that we would never compromise the experience, what a Rolls-Royce stands just, for the pure sake that we have a different drive train in the car.

PRAS SUBRAMANIAN: Great, Torsten. I just wanted to double check on this last thing you talked about with your clients, talking about how a lot of new clients, younger clients, are coming in. They want to drive their own cars. Are you seeing that they're also the kind of clients that want to order more Bespoke-type of cars? And does that actually make it easier for you from a supply chain and chip point of view?

TORSTEN MULLER-OTVOS: I think very much you are spot on with that, particularly the younger ones are all into Bespoke. You can say that nearly, I would even say, 100% of all cars leaving the line here are Bespoke in the meantime. And once you are in that game, to order a Rolls-Royce, you want to make sure that this is your own car.

Clients are interested to leave their personal signature, their story on our cars, and they want to create together with our designers what I would call a "masterpiece of art." And it's their dreams. And we are building their dreams. And I think that is very much what Bespoke is all about and that's why Bespoke in conjunction with Rolls-Royce is super attractive.

PRAS SUBRAMANIAN: Hey Torsten, one last question here. You've said before that Rolls operates in the luxury goods business, not the car business exactly. What are your clients telling you about the future, where they see markets right now? Are they kind of concerned about where the global economy is headed?

TORSTEN MULLER-OTVOS: I mean, global economy is always something we watch closely because we are not immune against any, let's say, recessions worldwide. We have seen that in some years to happen. On the other side, we're also profiting when the economy is doing extremely well. And that relates back to what I said in the beginning, the structure of our clients. That is very much 80% business owners. And for that reason, if their business is good, also their appetite for ordering luxury goods is good.

So I think we are here in the same league as all luxury goods manufacturers. When the appetite is around and when the mood is perfect, then people are there to flesh out the money and to spend money for luxury goods. And we see exactly the same happening for Rolls-Royce.

BRIAN SOZZI: We are looking forward to following your push into electric vehicles. Rolls-Royce Motor Cars CEO, Torsten Muller-Otvos, good to see you and good to see you as well, Yahoo Finance Senior Correspondent, Pras Subramanian.