May 24, 2024
This EV startup was going to revolutionize how cars were made – now, it’s on life support | TechCrunch


Arrival set out eight years ago to make electric vehicle production “radically more efficient.” So far, its plan to forgo the gigafactory for local microfactories has proved anything but.

Arrival trumpeted how its automated microfactories would simultaneously churn out electric vans for UPS, cars for Uber drivers and buses for the U.K., Italy and California. The past 15 months provide a different story line. The company laid off workers four times, slashed production targets and dropped its Uber car and bus programs. It’s even struggling to meet Securities and Exchange Commission filing requirements. The company reported Friday in a regulatory filing that it missed another deadline to file its 2022 annual report, putting it out of compliance with the Nasdaq Exchange. If Arrival fails to appeal, Nasdaq will suspend trading of its ordinary shares November 9. 

Arrival, which went public via a merger with a special purpose acquisition company in the high-flying meme stock days of 2021, appears to have little hope of realizing its goals. 

Prior to its first SPAC, Arrival started life in stealth. Will it die the same way?

Arrival’s next earnings report could shed light on whatever gas it has left. Yet, since the company failed to share its September financial report, and hasn’t responded to TechCrunch’s requests for comment, we’ve rolled back the clock ourselves to put Arrival’s current state of limbo into context. Here’s how Arrival, a company that debuted on Nasdaq valued at $13 billion, has withered over the past 15 months to a market capitalization of just under $20 million. 

Layoffs

Layoffs first hit Arrival in July 2022, when the company said it would slash its workforce by 30%. Arrival had 2,700 workers at the time across the U.K., EU and U.S., per the Financial Times. By that math, the company would lay off more than 800 people.

At the time, the Hyundai-, BlackRock- and UPS-backed startup was far from alone — Tesla and Rivian also announced significant layoffs around this time. Collectively, the automakers blamed a looming recession, rising interest rates, inflation, the pandemic, supply chain issues and so on, for the jobs they eliminated. 

‘Big achievements’

In August 2022, Arrival founder and CEO Denis Sverdlov looked back at the second quarter and noted “big achievements,” including EU certification for its van and bus, and “successful internal trials […] on public roads.” The CEO added that Arrival would produce EVs in its first microfactory in a matter of weeks — a moment he said would “fundamentally change the automotive industry.” Sverdlov also doubled down that Arrival would deliver its first vehicles to UPS that year, and kick off U.S. production in Charlotte, North Carolina in 2023.

The company would make good on at least one of those promises. 

Arrival’s reported cash on hand was $513 million at the end of Q2 2022. The publicly traded firm said it would raise an additional $300 million from investors via an at-the-market stock offering based on its share price. For reference, Arrival opened on August 1 at $77 per share.

First microfactory van

By the end of September 2022, Arrival celebrated its first microfactory-built van. Reaching the milestone was “more difficult than we had initially imagined,” said Sverdlov. Tucked into the announcement was news that everything Arrival made in 2022 would “be used for continued testing, validation and quality control” — and not sold to customers.

Arrival initially said it would deliver 10,000 EVs to UPS “from 2020 to 2024.” The shift meant the company had just two years to reach that goal.

Arrivals big pivot to the U.S. came in October 2022, just one month later.

U-turn

Arrival’s stock price steadily declined. By mid-October, it slipped to around $35 per share. On October 20, the company announced that, “due to the current share price and daily trading volumes,” it did not find the at-the-market offering to be “a reliable source of capital.” (So much for that $300 million.)

To save its expansion plan in Charlotte, North Carolina — and take advantage of Inflation Reduction Act EV credits — Arrival abandoned its plan to scale up production in the U.K. The company said it would “restructure” in order to “focus resources on a family of Van products.” That meant layoffs, and hitting pause on its bus and Uber-inspired electric car.

A depiction of Arrival's UPS van.

A depiction of Arrival’s UPS van. Image Credits: Arrival.

Arrival also had plans for a U.S. factory in Rock Hill, South Carolina, where the company said it would produce electric buses by the end of 2021. Arrival even received a $500,000 grant from South Carolina’s Commerce Department, on the condition that it create 240 jobs and invest $45 million into the facility. If Arrival doesn’t meet those commitments by December 3, 2025, it will be “required to repay a pro rata portion of the grant funds disbursed,” SC Commerce Department spokesperson Alex Clark told TechCrunch over email.

It seems Rock Hill has yet to produce a single bus. Arrival’s “project in Rock Hill is not active,” York County’s director of economic development, David Swenson, clarified in a separate message to TechCrunch.

More layoffs

When Arrival reported its third-quarter results in early November 2022, it disclosed a $310.3 million loss. (Up from $30.6 million in Q3 the prior year). Sverdlov said the company would hunt for additional capital after a “challenging year.” The CEO argued that Arrival’s IP still gave it a “unique advantage in developing electric vehicles and adapting to new market conditions quickly.”

Arrival reiterated that it would restructure to extend its runway, cutting jobs “predominantly in the UK.” The company didn’t say how many jobs it would cut, but if we assume the earlier disclosures and reports were accurate, the math says it eliminated roughly 300 roles during the third and fourth quarters of 2022, leaving it with about 1,600 staffers.

Arrivial told investors it would end the year with between $160M and $200M in cash, and it warned that revenues wouldn’t come until 2024. The firm added that the cash it had would fund the firm “into Q3 of 2023.”

The swap

Weeks later, Arrival’s wealthy, visionary founder/CEO stepped down. Sverdlov switched places with Arrival’s board chair Peter Cuneo, who previously led Marvel and got involved with Arrival via the SPAC merger.

Arrival’s president and strategy boss Avinash Rugoobur also stepped down around the same time, “for personal reasons.”

Arrival reiterated to investors that its “mission is to master a radically more efficient” method of making EVs. Sverdlov said in a statement to The Guardian, “I am more committed than ever to ensuring Arrival’s success.” The company’s stock price fell to around $17 per share.

Yet more layoffs

By the end of January, Arrival appointed another CEO — its former digital boss Igor Torgov. The company said it would halve its remaining workforce to about 800 employees. Arrival said it brought on a consulting company called Teneo to help it find funds. Soon after, it raised $50 million in equity from Antara Capital, a hedge fund.

Running out of cash

By March 2023, Arrival’s fiscal 2022 looked all the more dire. The company said it finished 2022 with $205 million in cash, and Hyundai executive Yunseong Hwang left the board.

In April, Arrival planned to merge with another blank-check company, or SPAC, to avoid bankruptcy. The deal pegged Arrival’s value at around $524 million. (Two years earlier, Arrival was valued around $13 billion on the Nasdaq.) Come May, Arrival said it ended the first quarter of 2023 with $130 million in cash. The van was still in the works, targeted “for production in 2024,” according to Arrival’s CEO. He added that the planned SPAC deal “validates Arrival’s strategy.”

By early July, the reSPAC deal died. Arrival’s stock price hovered around $2.60 per share. 

Undelivered vision

Arrival’s efforts in Charlotte are also in question. 

Axios Charlotte reported in August 2023 that Arrival removed a sign from its offices there, noting they looked empty. The company said it maintained a diminished presence in the city, adding that it “is committed to maintaining our North American headquarters in Charlotte.” Also that month, Arrival announced that it would report its Q2 2023 results in “early September.” It didn’t. 

More layoffs arrived in October, affecting “up to approximately 25%” of its workers. By this point, Arrival’s lack of transparency made its workforce size unclear. 

While researching this story, Arrival’s website went down temporarily for maintenance. According to a Reddit group dedicated to Arrival, the same thing happened a week or so earlier. 

UPS confirmed that Arrival has not provided the company with commercialized production vehicle as of early November. Arrival has not responded to repeated requests for information from TechCrunch.

Arrival raised around $1 billion to totally rethink how the auto industry makes cars. It pitched its small local hubs as the way of the future; a cheaper, scalable vision for the next generation of EVs. Yet Arrival hasn’t produced a single commercial production vehicle, and its market cap now sits around $20 million.



Source link