Vehicle OEM Arrival has announced plans to consolidate its efforts on van production in the United States, raising further questions about the prospects for its revolutionary battery-electric bus in the UK market.
The proposal, revealed on 20 October, involves a restructure “to focus resources on a family of van products for the US market as well as [Arrival’s] enabling technologies,” the business says. That is likely to have “a sizeable impact” on headcount at the UK operation, where an example of its bus is used on road to move staff between sites in Bicester.
In August, Arrival had planned to use existing cash on hand of US$513m plus funds available through a US$300m at-the-market platform to deliver the first vans to UK customers this year, invest in hard tooling, and open its US microfactory in North Carolina in 2023. That approach involved further investment in the bus being “deferred” until additional funding was secured.
At the end of Q3, the business had US$330m cash on hand, but it says that the at-the-market platform has not proved to be a reliable source of capital. Founder and CEO Denis Sverdlov told investors in August that further work on the bus would follow when funding had been secured, and Arrival subsequently underlined its commitment to the passenger-carrying segment despite that setback.
However, the most recent proposal will see no planned scaling of production at Arrival’s Bicester microfactory. Such work requires “significant further investment in hard tooling and working capital” that would be better targeted at the US.
Arrival sees potential for better margins there along with a larger market and tax credit incentives, which are expected to offer up to US$40,000 for commercial vehicles. It now plans to raise capital to commercialise production in the US.
A small number of vans will continue to be produced at Bicester “to optimise microfactory processes and support trials with customers.” As a result of its proposals, further work to right-size the Arrival business and cut cash-intensive activities will take place. “The result of these proposals is expected to have a sizeable impact on the company’s global workforce, predominantly in the UK,” it says.
Arrival has not yet confirmed whether it still ultimately plans to productionise its battery-electric bus for UK buyers in light of the change in focus. In August, the bus deferral led the OEM to withdraw from a project that was set to see 193 such vehicles join First Bus for various operating companies in England. That order has since been placed with Wrightbus.
Arrival will provide a business review during its Q3 financial results webinar on 8 November.
