EV startup Arrival raises going-concern risk, warns of job cuts in UK
Electric-vehicle startup Arrival SA warned on Tuesday it may not have enough cash to keep its business going toward the end of next year, sending its U.S.-listed shares tumbling 33.2%.
The company said it has been exploring options to tackle the fund crunch and hinted at cost-cuts that could have a sizeable impact on its workforce in the United Kingdom.
Arrival’s move to “right-size” also comes as it shifts focus to the larger U.S. market, with an eye on incentives from the Inflation Reduction Act.
EV startups that promised to disrupt the automotive industry with novel manufacturing techniques and products are scrambling to keep a lid on costs due to supply-chain issues and rising raw material prices.
“We’re actively engaged in capital raising … we’ve had some preliminary discussions with a handful of parties,” Chief Financial Officer John Wozniak said in a post-earnings call.
It would take about six months for funding to materialize given the macroeconomic environment, he said.
The company, which posted a bigger third-quarter loss, expects to have enough cash to fund the business into the third quarter of next year.
“We will use cash on hand of $330 million and look to secure new funds to achieve our goals in the United States,” said Chief Executive Denis Sverdlov.
In 2020, the company received an order for 10,000 electric vans from United Parcel Service (UPS.N), with the option for an additional order of 10,000 units.
Arrival’s net loss widened to $310.3 million in the third quarter from $30.6 million a year earlier.
The company’s shares were trading at an all-time low of 36 cents.