CHARLOTTE – The inventor of a novel design and product manufacturing line for electric vehicles, Arrival, reported third quarter earnings on Tuesday amidst a period where the company has, admittedly, experienced a variety of challenges and setbacks.
With North American headquarters in Charlotte, and a planned “microfactory” to be constructed in the Charlotte metropolitan statistical region, the company intends to complete a restructure in order to focus on bringing its electric vans to market in the United States.
In a statement alongside the company’s financial reports, Arrival noted that it has $330 million cash-in-hand and intends to further restructure the firm’s operations in order to extend its runway. That may sound like an ample cash supply, but the company spent $310 million during the third quarter, according to its financial reports.
In addition, the company will be seeking to “secure new funds to bring a family of products to the US,” it noted in the statement.
“2022 has been a challenging year for Arrival as well as the entire sector but we are agile in responding to these challenges,” said Denis Sverdlov, Arrival founder and CEO, in the statement. “Our valuable IP developed through an impressive stack of in-house technologies gives us a unique advantage in developing electric vehicles and adapting to new market conditions quickly.”
The company received notice last week from the Nasdaq Stock Market that the company’s stock is at risk of being de-listed, and a report from the Financial Times tells the story of the challenges the company is facing, with reporter Peter Campbell noting that morale at the firm has fallen to “rock bottom.”
Focusing on the US market
Those new market conditions now include ongoing economic challenges, and also the newly passed Inflation Reduction Act in the United States. That has yielded an opportunity for Arrival, the company noted in a statement.
“The US market, with the recent introduction of the Inflation Reduction Act tax credits offering up to $40,000 for commercial electric vehicles, the large market size, plus the anticipated higher margins for commercial vehicles, has now become the most attractive market for Arrival,” the statement reads.
In the third quarter, the company reported a loss of $310.3 million, which “includes non-cash impairment charges and write-offs of $232 million.” The cash balance for the company was reduced by about $180 million during the quarter, the company said.
But by the end of the year, the company expects to retain between $160 million and $200 million.
Layoffs and restructuring
The company announced layoffs earlier this year, and will absorb $35 million in severance costs and retention-related costs, and an additional $40 million in other restructuring costs.
“Limited resources and the attractive opportunities of the US market makes developing US products the best use of capital, but this means revenues and margins will come later; not in 2023,” the statement reads.
The company will still build vans in its United Kingdom microfactory, where it finished its first production earlier this year, but will also pivot to focus on advancing its materials, components, software, and robotics efforts to bring the EV products to market in the United States, noted Sverdlov. The US market, noted Sverdlov in the statement “has become the most attractive opportunity for Arrival in the mid to long term after the tax credits offered under the IRA became effective.”
And the company will also “look to secure new funds to achieve our goals in the US,” said Sverdlov.