In an attempt to get the most out of its remaining capital, commercial electric vehicle company Arrival is restructuring its business for the second time in six months. The company said in a regulatory filing released Thursday that it is shifting its focus to the U.S. rather than the U.K. market. The company is said to be based in Britain and its first electric vehicles were supposed to be delivered there.
Arrival, which went from a secretive EV startup to a publicly traded company through the SPAC merger, says it will now devote most of its remaining resources to producing a “line of vans” for the U.S. market. In addition, it will use the funds for related technologies such as core components, composites, mobile robots and what it calls a software-defined factory.
The move will cause considerable pain throughout the company in the form of job cuts. The company said it plans to extend its cash runway, which stood at $330 million at the end of the third quarter, by further “resizing the organization and reducing cash-intensive activities.
The company did not provide specific details on how many jobs it plans to cut. The language used by the company in its regulatory filings suggests it will be significant, and Arrival said the restructuring is expected to have a considerable impact on the company’s global workforce – mainly in the U.K.
The company said it will provide more information during its third-quarter earnings call on Nov. 8.
Arrival also said it will try to raise more money as a way to fund the commercialization of these vehicle programs in the U.S. In addition, it is exploring all funding and strategic opportunities to bring vans designed for this country into production at the company’s second microfactory in Charlotte, N.C.
Arrival isn’t leaving the U.K. entirely, though. The company says it will continue to produce a small number of vans at its Bicester micro plant to support trials with customers.
Key factors in the company’s decision to shift its focus to growing its U.S. operations include the country’s recently announced tax breaks as part of the Inflation Reduction Act – which are expected to provide $7,500 to $40,000 in funding for commercial vehicles, the size of a large addressable market and significantly higher profit margins.
Arrival had said in June that it would cut costs and lay off up to 30 percent of its workforce in an attempt to meet its production goals while protecting the business from the challenges of the economic environment. At the time, Arrival said the plan would allow the company to use its $513 million in cash on hand to meet its goals by the end of 2023.
In August, Arrival cut its delivery schedule from 400 to 20 vehicles, plus delayed the development of its battery-electric buses to focus on vans.
Now it seems these cuts are not enough.
Arrival had reportedly planned to use its existing $513 million in cash and funds provided through a $300 million “market platform” (ATM) to deliver its first vehicles to U.K. customers this year, invest in hard tooling and launch the Charlotte micro factory next year. However, the company’s low share price, which closed at $0.72 today, combined with daily trading volumes, means that the ATM is not a reliable source of funding.
