Microplant developer Arrival cut 800 jobs — half of its workforce — and named a new CEO Monday. The Luxembourg-based startup continues to cut costs to help it reach production of Class 1 delivery vans.
The company has struggled to conserve cash. It dropped bus manufacturing in favor of the small vans for which it has customers waiting, including UPS.
Arrival is one of several electric mobility startups that went public during the special purpose acquisition company (SPAC) frenzy of 2020 and ’21. Several of those companies are now gasping for survival. Money from their reverse merger business combinations is running out. And financial markets and venture funds avoid most capital infusions.
The company named Igor Torgov as permanent CEO. He will lead the restructing and oversee its microfactory assembly approach to making electric vehicles. Torgov is former executive vice president of Arrival’s digital business. He succeeds Peter Cuneo, who led the March 2021 SPAC and had been serving as interim CEO since November.
“Following a detailed evaluation of Arrival and the wider EV market during the past two months, the leadership team and the board have taken decisive action to ensure the most effective use of our current resources and optimize the efficiency of the business,” Torgov said in a news release.
Focus on electric delivery vans
Arrival in November said it would refocus its resources, which stood at $205 million on Dec. 31, on the small van planned for production in Charlotte, North Carolina, in 2024. The company said it needs to raise additional capital to reach that goal. Arrival hired management consultant Teneo to evaluate strategic initiatives and help with fundraising.
“When combined with other cost reductions in real estate and third-party spending, the company expects to halve the ongoing cash cost of operating the business to approximately $30 million per quarter,” Arrival said in the news release.
Arrival’s goal is slowing its cash burn
Arrival probably burned $50 million in cash in the final three months of 2022, according to Cowen Inc. analyst Jeffrey Osborne.
“With the significant reduction in costs, we would assume Arrival to have enough cash on hand to continue operations into 2024, providing the company an extra quarter or two to seek strategic alternatives to raise additional capital,” Osborne said in an investor note Monday.
Following a second-quarter loss of $90 million, Arrival cut its production estimate to 20 vehicles from an earlier estimate of 400-600 units. Public road trials continue in the United Kingdom of Arrival’s first certified and registered vans.
Cuneo steps aside as interim CEO
Arrival finalized its SPAC combination in March 2021 with CIIG Merger Corp. formed by Cuneo, the former CEO of Marvel Entertainment. Arrival’s high-water valuation of $13 billion when it went public has shrunk to less than $259 million.
“My challenge, as interim CEO, was to work with the senior leadership team and the board of Arrival to create a plan to take the company successfully into the future — one that would encourage investors to provide financial support to Arrival,” Cuneo said.
Arrival in jeopardy of delisting from Nasdaq
Arrival shares closed Monday on the Nasdaq at 39 cents. They are in jeopardy of being delisted from the exchange, which requires participants to trade above $1 a share.
Another last-mile van startup, Electric Last Mile Solutions, filed for bankruptcy liquidation in June after its cash all but ran out amid an insider trading scandal that led to the removal of both the company’s chairman and CEO. Better-capitalized entities like BrightDrop, an internal startup created by General Motors, are delivering electric delivery vans to customers.
Related articles:
As others fail, BrightDrop charges toward $1B in EV revenue
Dead on arrival: EV firm slashes 2022 production target more than 95%
Arrival and its automated driving system reach major milestone
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