EV Startup Arrival innovates - vehicle is built within a box rather than along a production line

  EV Startup Arrival innovates - vehicle is built within a box rather than along a production line

"Electric-vehicle startup Arrival wants to reinvent not just delivery vans but also the entire business of manufacturing. It might prove too much for its dwindling resources.

Arrival is one of the many early stage EV companies that went public in 2021 via a merger with a special-purpose acquisition company. The stock, which debuted at $10, is now worth $1.21, implying a market value of just $772 million.

That might seem cheap for a company that finished June with $513 million of cash and equivalents, but Arrival is about to embark on the notoriously difficult process of ramping up production. All that cash, and more that it hopes to get by selling shares at prevailing prices in a so-called at the market offering, will be needed to tide it through the coming year or so. The odds are stacked against it arriving at the point of positive cash flows without a bigger influx of capital that would likely leave minority shareholders in the dust.

Arrival isn't as well known as other struggling EV startups such as Lordstown Motors and Canoo. Though listed in the U.S., it was founded in 2015 by Russian entrepreneur Denis Sverdlov, whose Luxembourg investment fund still owns 69% of the company, according to FactSet. Arrival is also based in Luxembourg, but its first factory will be in the U.K.

That factory, which is getting ready for the start of production, is smaller than a conventional car plant.

Mr. Sverdlov's innovation is capital-light "microfactories," where a vehicle is built within a box rather than along a production line. Any initiative to reduce capital intensity in the auto industry is welcome, but the idea remains unproven.

Tesla took the opposite tack with its superscaled "gigafactories."

Arrival is focused on delivery vans rather than passenger cars. This is a solid bet: Businesses tend to use their fleets intensively, meaning that the low running costs of an EV will more easily justify the higher initial expense. Arrival has an order of 10,000 vehicles from United Parcel Service.

But the market for EVs isn't in much doubt these days.

The real question for startups is whether they can make them at a competitive cost within a time frame that capital markets find acceptable.

Arrival's falling share price reflects growing doubts that it can.

This month the company said it would deliver only about 20 vans this year, down from forecasts of 400 to 600 in May and more than 10,000 at the time of its SPAC deal.

Arrival's big production ramp is slated to begin next year. The pattern of other EV startups, from Tesla to Rivian and Lucid, is that this phase causes unexpected problems and costs.

Arrival is running out of charge even before it hits the hills.” [1]

1. EV Startup Arrival Is Losing Charge
Wilmot, Stephen. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 25 Aug 2022: B.12.