On Tuesday, Arrival, a startup focused on electric vehicles, announced that it would run out of money by the end of 2023.
The company announced that it has been looking at its options to deal with the cash flow problem and hinted at cost reductions that would have a major impact on its UK staff.
The “right-sizing” decision by Arrival was made in part because the company is shifting its attention to the larger U.S. market in anticipation of incentives provided by the Inflation Reduction Act.
Electric vehicle (EV) startups that promised to disrupt the automotive industry with revolutionary manufacturing processes and products are scurrying to keep a lid on prices in the face of supply-chain issues and escalating raw materials costs.
The process of raising funds has begun. “We’ve had early negotiations with a few parties,” CFO John Wozniak said in a statement released after the company’s quarterly results report.
According to his estimation, the macroeconomic climate would require around six months for the money to materialize. Despite reporting an even larger deficit in the third quarter, the company believes it has secured sufficient funding to operate until the third quarter of the following year.
To meet our objectives in the United States, we will utilize our current cash balance of $330 million and seek to get further funding, as stated by CE Denis Sverdlov.
In 2020, UPS placed an order with the company for 10,000 electric delivery vans, with the option to purchase an additional 10,000 vehicles. When compared to the same period a year ago, Arrival’s net loss increased from $30.6 million to $310.3 million.
Shares of the company listed in the United States have hit a new low in trading, hovering around 36 cents.