Arrival, the UK-based electric-van start-up, is facing a challenging time as it announces another round of job losses and a new CEO. Despite attracting investment from Hyundai and floating two years ago with a value of $15bn, the company has struggled to commercialize its products and has faced a series of problems along the way.
Arrival is a vehicle start-up that is focused on developing and manufacturing electric vans. Founded in 2015, the company quickly gained attention and investment, with Hyundai Motor Group investing in the company and leading its $118 million funding round in 2019. Arrival’s innovative approach to EV manufacturing, using small-scale factories, led to a $15 billion valuation when the company went public in 2020. However, Arrival has faced numerous challenges in commercializing its products and has recently announced a new round of job cuts and a change in leadership.
Arrival seems to be a cutting-edge technology company that creates interesting, completely different vans.
The only issue with the car is the front design. I believe it is way too basic compared to entire vehicle. It should be more developed and more unusual.
In December, the company issued a “going concern” warning that it would run out of cash within 12 months, with cash burn at the time likely to deplete its reserves by the summer. To prevent this from happening, the company has announced that it will shed around half its remaining workforce, with 800 jobs to be cut in the UK and Georgia. This marks the third series of job losses since last summer.
On Monday, Arrival named Igor Torgov, a former Microsoft and telecoms executive who has been with the company for two years, as its new CEO. Torgov acknowledged that the company faced “hard decisions” in the coming weeks but believes that its current strategy is fundamentally sound and might only require “tweaks and improvements.”
In a move to focus on the US market, Arrival ditched plans to produce a vehicle in the UK last year and instead plans to make a van in a factory in South Carolina. Torgov said that this plan was the “best use of our limited resources” and that “if executed right, and with all due discipline, it could be a compelling message for investors.” However, the company does not expect to begin producing the US van until the second half of 2024, which is later than previously expected.
The cuts announced will reduce the quarterly spending of the revenue-less business to about $30mn. At the end of December, Arrival had about $205mn of cash available. The company is in the process of fundraising and has appointed Teneo as a financial adviser to find a buyer or investor. Torgov is hopeful that the cuts will “give us a decent time to work with the investors.”
Torgov, who has an MBA from California State University and a track record of cost-cutting programs or significant strategy changes from his previous roles at Yota and Atol, said, “I am familiar [with turnarounds], I am not getting any fun from it. We have got all this talent, and the vast majority of people in Arrival are brilliant people, and did a lot of good things to bring the company forward.”
One of the things that Torgov is reviewing is Arrival’s controversial flying vehicle program, called “Jet.” Despite dismissing hundreds of workers last year and delaying other projects, including a bus, employees were told that the side venture was protected from cost-cutting, as it was understood to be a pet project of Arrival founder and chair Denis Sverdlov. Torgov indicated that the aircraft program was “probably the only thing that is still under discussion” and hopes to announce a decision at the group’s investor update in early March.
In conclusion, Arrival faces a critical time as it tries to turn its fortunes around and commercialize its products. The company’s new CEO, Torgov, acknowledges the challenges ahead but is optimistic about the future and believes that the company’s current strategy, with some tweaks and improvements, could be a compelling message for investors.
Sources:
https://www.ft.com/content/cb2f8b55-ac2a-4e0e-be4b-195c96d78a77
Honestly, i don’t believe that the only issue with the car concerns the look of the front part, i think that the company musy struggle with developing an efficient mini van which decreases the sales and disables the creation of a competitive advantage. Those factors connected with weak management skills can cause those financial problems.