Arrival Ditching UK Production For US To Tap Into EV Tax Credit

Less than a month after building the first production verification Van at its microfactory outside London, commercial EV startup Arrival has announced it will shift its manufacturing focus to Charlotte, North Carolina.

The company's earlier plan had been to deliver its first Arrival Vans to UK customers this year, then launch its US microfactory in 2023. But with cash reserves diminishing and its microfactory in Bicester, northwest of London, requiring significant investment in hard tooling and working capital to scale up production, Arrival decided that the benefits of such an investment would be best directed to the US market.

"As a result, today the Company announced a plan to restructure its business to focus resources on a family of Van products for the US market as well as its enabling technologies - including core components, composite materials, mobile robotics, and software-defined factories."

Arrival said it will continue to build a small number of Vans in Bicester to optimize microfactory processes and support trials with customers.

Gallery: Arrival Van revised prototype

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The startup noted that the main factor in its decision to shift focus to developing its US business is the tax credit recently announced as part of the Inflation Reduction Act, expected to offer between $7,500 to $40,000 for commercial vehicles. Other important factors are the larger size of the US market and substantially better margins.

Company founder and CEO Denis Sverdlov last month signaled Arrival's interest in seizing on the climate bill signed by President Joe Biden, which supports investment in manufacturing EVs in the US and subsidizes purchases of cars and commercial vehicles.

Arrival added that it is exploring all funding and strategic opportunities needed to bring the Vans designed for the US into production at the microfactory in North Carolina, and warned that significant layoffs will follow in the UK. Approximately 1,000 of the more than 2,000 people employed by Arrival as of August were in the United Kingdom.

"In order to extend the company's cash runway, Arrival plans to further right-size the organization and cut cash intensive activities while continuing to advance its core technologies. The result of these proposals is expected to have a sizable impact on the Company's global workforce, predominantly in the UK."

Arrival ended the third quarter of 2022 with about $330 million cash on hand, but its plunging share price (90 percent drop this year) prevented it from raising funds through at-the-market (ATM) stock offerings.

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