Arrival catches a lifeline by Westwood Capital
Struggling EV developer Arrival has secured a $300 million injection from Westwood Capital, giving the company access to additional liquidity under certain conditions. The financing line may come as a lifeline to the British company to pull through the year.
Arrival expects Westwood Capital to give it sufficient liquidity to keep its business running until the end of 2023. However, Arrival must keep in line with new requirements. These include lowering its current targeted cash spend to no more than $35 million/quarter. This would “significantly reduce the size of investment required to fund the business this year,” so Arrival.
Other measures are a continuation of changes Arrival announced earlier this year. These included laying off half its staff, resulting in less than 800 employees by the end of March 2023.
Arrival has also agreed to build ten vans in the Bicester micro-factory to further develop the automated factory processes and integrate them with the company’s autonomous mobile robots. These vans will also be used to accumulate 250,000 kms of public road mileage to validate Arrival’s engineering designs and components by the end of 2023.
The XL Van designed specifically for the US market is not part of the agreement, however, since it will require a dedicated capital raise to fund production in the Charlotte factory, according to Arrival. The start of production in Charlotte is targeted for late 2024 and the company expects the larger vehicle to attract higher average selling prices, margins and tax credits than the L Van. The company continues to look for backers to fund the program.
Referring to the changes already being made, Arrival, in today’s statement, said these were “decisive steps to significantly reduce its headcount and cash burn”. Pushing back on US production, Arrival rephrased as a “sharpened focus” on its US product strategy.
Igor Torgov, who was appointed CEO also in January, said he had joined the business “at a critical time”. Commenting on the news, he added, they had taken “important steps to help us take advantage of this opportunity, including raising additional capital as well as placing a sharper focus on the key U.S. market and driving significant efficiency improvements.”
Arrival is positive to achieve its target quarterly $35 million burn rate by the second half of 2023. With available capital resources and additional initiatives to reduce working capital, the company expects to have sufficient liquidity to fund the business into late 2023 without the investments required for XL production.