British electric car maker Arrival said on Dec. 12 that it plans to restructure its business, including laying off 30 percent of its workforce, according to Reuters. Arrival said the reorganization is in response to the current challenging economic environment and will help the company reduce expenses by 30 percent to ensure it can start production of the Arrival Van electric vehicle in the third quarter of this year as originally planned.
Arrival said it currently has about $500 million in cash on hand and, using those funds, hopes to meet its business goals by the end of 2023. Arrival said it will continue to update its business strategy during its second-quarter earnings call on Aug. 11.
Following the announcement, shares of Arrival rose 3.4 percent to $1.51 per share in after-hours trading on the same day.
Over the past two years, like Arrival, many electric vehicle startups have chosen to go public through SPACs. Arrival’s growth strategy is to build electric vans and buses through smaller and lower-cost plants. However, the company’s U.S.-listed stock price has fallen 80 percent this year as investors worry about the economic outlook and sell off shares in companies that are not yet profitable. In the first quarter of this year, Arrival still lost $10.4 million.
Some analysts say electric car startups are facing a competitive market environment, with major competitors including not only Tesla Inc. but also traditional electric car makers such as GM, Volkswagen and Ford. At the same time, supply chain issues are continuing to put pressure on their production.
Rivian has also recently indicated that it may streamline its staff. Rivian currently has about 14,000 employees worldwide, according to Bloomberg 11, sources said, adding that Rivian may plan to lay off about 5 percent of its workforce because it is growing too fast in some areas.
