UK electric vehicle startup Arrival says net loss grows to $310.3 million; lacks funding to keep business running through 2023

2022 has been a very difficult year for the entire electric vehicle industry and UK electric vehicle startup Arrival is no exception. In May 2021, Arrival became UK’s biggest tech IPO after the startup went public at a valuation of $13 billion. Since then, it has not been smooth sailing for the 7-year-old startup.

In August, Arrival slashed its production target from 400 vehicles to 20 after the startup reported a loss of $89.6 million in the second quarter, compared with a loss of $56.2 million in the second quarter of the prior year. Its adjusted EBITDA loss was $76.2 million during that period, compared with a $41.2 million loss during the same period in 2021.

Then last month, Arrival announced job cuts, without providing specific details on how many jobs it plans to cut. The company also announced plans to shift its focus away from the UK market to the United States, according to the company’s regulatory filing with the Securities and Exchange Commission (SEC). It’s now November and Arrival is out with its third-quarter report and things don’t appear to be getting better.

In the third quarter, Arrival’s net loss widened to $310.3 million from $30.6 million a year earlier. Arrival warned today that it may not have enough cash infusion to keep its operation running toward the end of next year. Arrival’s shares are now trading at 36 cents from an all-time high of $28.

In a post-earnings call today, the company said its responding to the ongoing challenges facing the entire sector. The startup added that it has been exploring options to raise new funding to keep the company afloat. When asked what capital raising options the company is considering beyond Q3?

“We’re actively engaged in capital raising as we speak … We’ve had some preliminary discussions with a handful of parties that have been very productive at this point, and we’ll continue to have those discussions,” Chief Financial Officer John Wozniak responded in a post-earnings call.

The company’s decision to “right-size” comes with its plans to move to the US market with an eye on incentives from the Inflation Reduction Act.

Founded in 2015 by Denis Sverdlov, Arrival is a competitor to Rivian, another electric vehicle startup backed by Amazon. Arrival develops a generation of two electric vehicles. The company develops software, materials, components, and scalable skateboard platforms and its micro-factories allow them to make vehicles and adapt to any mobility ecosystem. So far, Arrival has received a massive order to the tune of 10,000 vehicles from U.S. parcel service UPS, which is also an investor in the company. Arrival is backed by BlackRock, Hyundai, and Kia.