Arrival announces an electric van strategy for the USA
The British electric vehicle startup Arrival has announced a plan to restructure its business to focus resources on van products for the US market. However, the company will continue to produce a small number of vans in Bicester to optimize microfactory processes and support trials with customers.
The major factors in the company’s decision to shift focus to developing its US business included the tax credit recently announced as part of the Inflation Reduction Act, which is expected to offer between $7,500 to $40,000 rebate for commercial vehicles on the large addressable market size, and substantially better margins, compared to business in Europe. Arrival had also realigned their business strategy recently towards electric transporters, putting bus and car development in the background. This means that their ride-hailing car concept will not be hitting the roads any time soon.
In August, Arrival has stated plans to use their existing cash supply of $513M plus funds available through a $300M At the Market (ATM) Platform to deliver the first vehicles to UK customers this year, invest in hard tooling and finally launch the microfactory in Charlotte next year. At the end of Q3, Arrival found itself with about $330M cash on hand and found the ATM to not be a reliable source of capital. Scaling production in the Bicester microfactory would require significant further investment in hard tooling and working capital, prompting Arrival to determine that the benefits of such an investment would be best directed to the US market.
Arrival has announced their intention to further explain the plans in a business review on the 8th of November covering the British startups Q3 financial results for this year. Interestingly enough, the decision to focus on electric transporter vans in the USA hearkens back to Arrivals roots developing an electric transporter together with UPS postal service back in 2018.