Arrival has enough cash to survive only until September next year
Arrival has been running out of cash and options for a while now, every few months there was a new report about money running out but yet somehow the company managed to pull through and carry on. The latest report on the face of things seems to be similar - the company announced it has enough cash to keep it going until September next year. What’s next?
The market reaction was much more severe than in previous similar situations, the shares fell off the cliff - record 35 percent down and still falling. That’s because the cash situation wasn’t the only news from the company. Arrival confirmed that even after all the 700 jobs were cut and all the cost cutting was implemented, the company would still struggle to remain a viable business.
The third quarter of this year was brutal for Arrival, the company has recorded over $310 million in net loss which is 10 times more than in the same period last year. It has $330 million of cash or equivalents left but its cash burn is $180 million per quarter. The company hopes to bring this number down to $60 million once the cost cutting plans are implemented but it still leaves it short.
According to finance chief of Arrival, John Wozniak, the company is already in talks with few interested parties to raise much needed funds but the process won’t be quick and it may be as much as 6 months before the talks are completed. That time frame explains the market mood - there is a very tangible probability of the company running out of funds before the new funding is agreed.
It’s sad times for the company that was once valued at $15 billion and one that is backed by Hyundai and BlackRock. Despite the recent announcement of Arrival’s new van, its commercial version will take years of development and approvals before it can hit the market. To carry on with the project, the company desperately will need to secure substantial funding.
Over the years Arrival was distracted by side projects, bus and car development was talked about at some point and even an electric jet plane was considered. The company wasted precious time and resources on many projects that never gave any fruit, while having its proprietary modular vehicle platform ready for deployment and not deployed. We can only imagine how bad the mood amongst the employees is, morale probably had hit the floor hard.
The company started planning its move to the US and away from the UK, hoping to make the most of the Inflation Reduction Act and its subsidies for EV companies but Arrival’s automotive boss, Mike Ableson, put a dampener on this idea. According to him, getting the Arrival van developed for the US market will take as long as 18 months and the company simply doesn’t have that much time, at least not at the moment.
The Arrival’s president, Avinash Rugoobur, confirmed that the company will not be able to generate any revenue until at least after 2023. Shares have already fallen 37 percent - that’s 2 percent down from where they were at the beginning of this article. This does not look good.
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