Arrival, the British van startup, has recently made significant changes to its operations due to substantial financial losses, leading to its second reverse merger. Previously collaborating with prominent companies such as UPS and Uber for its electric vans, Arrival has decided to wind down its operations in the UK and shift its focus exclusively to the United States. The company aims to take advantage of substantial subsidies available through the U.S. Inflation Reduction Act.
To facilitate its new direction, Arrival has confirmed its merger with Kensington Capital Acquisition Corp, a special-purpose acquisition company, which will provide the startup with $283 million in fresh capital. This funding will be utilized to develop a single model specifically designed for the U.S. market—a Class 4 delivery van. Notably, this model will be eligible for a subsidy of up to $40,000.
John Wozniak, Arrival’s financial officer, revealed to Reuters that the plan is to establish a factory in Charlotte, North Carolina, where the medium-duty van will be manufactured by late 2024. Despite experiencing production delays, Arrival has managed to maintain its partnership with UPS, three years after the latter placed an order for 10,000 delivery vans from the startup.
Wozniak expressed confidence in Arrival’s prospects, stating, “We think that (Class 4) is a sweet spot where Arrival can make a lot of money. We looked across the competitive landscape, and from where you sit today, there’s a lot of room to run in that segment.”
While Arrival initially projected $14 billion in revenue for 2024 through its first reverse merger, the company incurred losses of $2.3 billion between 2021 and 2022. In response, the startup promptly reduced its workforce by 75% and acknowledged that without new investors, it would face a financial shortfall before the end of 2023.
According to Reuters, the Class 4 van segment in the United States is relatively small, with annual sales typically ranging from 30,000 to 40,000 units. This market landscape affords Arrival a favorable position with limited competition, thereby increasing its chances of survival and success.
