UK electric van start-up Arrival will slash its headcount by more than 700 and the company warns it will run out of cash by the third quarter of 2023 without a fresh finance injection.
The job cuts will fall mainly in the UK, the company said, as it refocuses its energy on producing a larger 'XL' version of its van for the US market, where margins are higher and incentives are greater, the company said on its third quarter earnings call this week.
Arrival announced in September it had built its first ‘L’ van in the Bicester, Oxfordshire, ‘microfactory’, which was to be the start of a network of similar production facilities.
However, the van was built using ‘soft tooling’ more typically used in the prototype phase of assembly, which costs a lot more than full production ‘hard tooling’. “We cannot make money on the current L van product, given the cost of parts associated with being on low-volume or soft tooling with our suppliers,” chief financial officer John Wozniak told investors on the call.
Arrival had hoped to raise the $150 million (£131m) needed to pay for the move to full production tooling on the stock market but the company had to abandon that “due to the current market cap [capitalisation] and average daily trading volumes” it said in its third quarter business update. Essentially, the market said no, given Arrival’s 96% drop in share price from a high of $32 in late 2020 to 38 cents now.
Arrival is now looking at alternative sources of financing to ramp up van production in its Charlotte, Virginia, plant. That could take up to six months, Wozniak said, meaning the company is in a race to find money to continue to exist given it will end the year with between $160m and $200m of cash.
The company headcount will drop to “below 1700” from 2400 now, Wozniak said, with most of that falling on the UK. The company employed 2600 globally, it said in an April filing.
Arrival announced cuts to its workforce back in July but said cost savings achieved elsewhere meant it let fewer staff go than initially feared.
The latest round of redundancies will be finalised by mid-December, the company told Autocar, without giving exact UK figures. However, the company promised that its UK operations would continue to exist. “We will keep an incredible team in place in the UK to redesign and optimise aspects of our L van for the new EU regulations,” Arrival president Avinash Rugoobur said on the call.
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