Times are tough for electric vehicle startups out there, even for those that have already managed to put cars on the road, such as Rivian and Lucid.
Understandably, things are more difficult for companies that have yet to bring products to market, and UK startup Arrival makes no exception.
In a short statement last week, the company founded by Denis Sverdlov confirmed that it has proposed a reorganization of its business “in response to the challenging economic environment” consisting of supply chain issues, an ongoing pandemic, geopolitical tensions and rising inflation.
The restructuring aims at a 30% cut in spending to help Arrival meet its business targets until late 2023 using the $500 million the company still has in cash reserves.
This could result in a reduction of its staff by up to 30%, with the startup noting that the move is necessary for the company to achieve its next major milestone—starting production of the Arrival Van in the third quarter of 2022.
“Arrival’s proposal includes a targeted 30% reduction in spend across the organisation and anticipates that it could potentially impact up to 30% of employees globally.”
Arrival press statement
The company claims it continues to see “a huge amount of interest in its products” and believes that its proposals are the right step at this time to ensure the long term success of the business and enable it to service this demand.
Arrival believes that its vertical integration and new method for the production of EVs using the so-called Microfactories put it in a unique position to respond to the current global issues. Furthermore, the startup claims the proposed changes will enable it to be even more agile in the face of ongoing global uncertainty.
The company remains committed to starting production of its Van in Q3 this year. While Arrival initially focused on electric vans and buses, it announced last year that it would add a minivan-like vehicle designed for ride-hailing services called the Car.
Arrival’s US-listed stock has tumbled 80% so far in 2022 as worried investors abandon companies that do not turn a profit. The startup posted a net loss of $10.4 million in the first quarter of this year. The company will provide a business strategy update on its second quarter earnings call on August 11.