UK-Based EV Startup Postpones Battery-Electric Bus Development

Arrival, a commercial electric vehicle (EV) startup turned publicly traded company based in the UK, has announced a significant reduction in its delivery plans from 400 vehicles to just 20. This decision comes as the company postpones development of its battery-electric buses and shifts its focus towards vans.

Financial Struggles Persist

The news follows Arrival’s report on Thursday that it widened losses for the second quarter, with a loss of $89.6 million compared to $56.2 million in the same period last year. The adjusted EBITDA loss for the period was $76.2 million, up from $41.2 million during the same period in 2021.

CEO Denis Sverdlov’s Comments

During a call with analysts, Arrival’s CEO Denis Sverdlov confirmed that the company is switching its focus towards vans, citing better chances of success. "We are switching from the mode where we have two products, two shifts and two micro factories to the mode where it’s one factory, one shift, one product," he said.

Arrival’s Original Plans

Initially, Arrival had expected to deliver between 400 and 600 vehicles in 2022. However, due to production delays, the company has decided to focus on delivering a smaller number of vehicles in perfect condition rather than pushing for high volumes.

Production Delays and Class-Action Lawsuit

Arrival has faced several production delays since going public in March 2021 through a $660 million Special Purpose Acquisition Company (SPAC) deal with CIIG Merger. These delays have triggered a class-action lawsuit against the company, which now plans to open its Charlotte, North Carolina factory next year.

Restructuring Efforts

Last month, Arrival signaled plans to slash costs and cut up to 30% of its workforce in an effort to protect the business from a challenging economic environment while meeting production targets. The plan was designed to allow the company to meet its targets through late 2023 using the $500 million of cash it has on hand.

Raising Additional Funds

Arrival ended the second quarter with approximately $513 million of cash and cash equivalents, which will be used to support restructuring efforts. Additionally, the company is aiming to raise money through a $300 million at-the-market offering.

CEO’s Vision for Arrival

In an emailed statement, a company spokesperson said: "The ‘Arrival Car’ is no longer a lead vehicle with the significant majority of management and engineering time being spent on the van. The car is part of our longer-term vision and will join the van and bus to provide cities with the multi-modal zero-emission transportation ecosystem that they require in order to meet their sustainability goals over the coming years."

Arrival’s Future Plans

While Arrival’s decision to slash its delivery plans and postpone battery-electric bus development may raise concerns about the company’s future prospects, Sverdlov remains optimistic. "We believe that this opportunity to switch gives us better chances to be successful," he said during the call with analysts.

Industry Reaction

The news has sparked a mixed reaction within the industry, with some experts questioning Arrival’s decision to focus on vans at the expense of other products. However, others see it as a strategic move that will allow the company to establish itself in the EV market more effectively.

Conclusion

Arrival’s reduction in delivery plans and shift towards vans is a significant development for the commercial EV startup. While it may raise concerns about the company’s future prospects, Sverdlov remains optimistic about its chances of success. As the industry continues to evolve, Arrival will need to navigate the challenges of production delays and cost-cutting measures while maintaining its focus on delivering high-quality vehicles.

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