Commercial EV company Arrival is restructuring its business for the second time in six months as it tries to squeeze the most out of its remaining capital.
The company said in a regulatory filing posted Thursday that it is shifting its focus towards the to the United States and away from the UK market, where it is headquartered and the first EV vans were supposed to be delivered.
Arrival, which went from stealthy electric vehicle startup to a publicly traded company via a SPAC merger, said it will now put the bulk of its remaining resources towards producing a “family of van products” for the U.S. market. It will also put funds towards related technologies such as core components, composite materials, mobile robotics and what it describes as software-defined factories.
The move is going to cause considerable pain across the company, namely job cuts. The company said it plans to further “right-size the organization and cut cash intensive activities” to extend its cash runway, which at the end of third quarter, was $330 million.
The company didn’t provide specific details on how many jobs it plans to cut. The language the company uses in its regulatory filing suggests it will be significant. Arrival said the restructuring is “expected to have a sizable impact on the company’s global workforce, predominantly in the UK.”
The company said it will provide more information at its third-quarter earnings call November 8.
Arrival said it will also try to raise more capital to fund the commercialization of these vehicle programs in the U.S. and is “exploring all funding and strategic opportunities” needed to bring the vans designed for the country into production at the company’s second microfactory in Charlotte, North Carolina.
Arrival isn’t leaving the UK altogether. The company said it will continue to produce a small number of vans at its Bicester microfactory to support trials with customers.
The major factors in the Company’s decision to shift focus to developing its US business included the tax credit recently announced as part of the Inflation Reduction Act – expected to offer between $7,500 to $40,000 for commercial vehicles, the large addressable market size, and substantially better margins.
In June, Arrival said it would slash costs and cut as much as 30% of its workforce in an attempt to protect the business from a challenging economic environment while meeting its production targets. At the time, Arrival said the plan would allow the company to meet its targets through late 2023 using the $513 million of cash it has on hand.
In August, Arrival lowered its delivery plans from 400 vehicles to 20 and postponed development of its battery-electric buses to focus on vans.
Now it appears those cuts were not enough.
Arrival had planned to use its existing cash on hand of $513 million plus funds available through a $300 million “At the Market Platform” to deliver the first vehicles to UK customers this year, invest in hard tooling and launch the Charlotte microfactory next year. However, the company’s low share price, which today closed at $0.72, coupled with daily trading volumes meant the ATM was an unreliable source of capital.