Arrival, the British van startup that has been working with companies such as UPS and Uber on electric vans, is shifting its focus to the United States after years of considerable financial losses. The company recently decided to wind down operations in the UK and is now focusing exclusively on the US, hoping to receive significant subsidies through the US Inflation Reduction Act. Arrival will merge with special-purpose acquisition company Kensington Capital Acquisition Corp and receive $283 million in fresh cash, which it will use to develop a single model in the US. This will be a Class 4 delivery van that will be available with a subsidy worth as much as $40,000. Arrival plans to build its medium-duty van at a factory in Charlotte, North Carolina by late 2024.
The company has managed to keep its deal with UPS intact after a series of production delays, three years after UPS ordered 10,000 delivery vans from it. Arrival claimed in its first reverse merger that it would deliver $14 billion of revenue in 2024, but during 2021-2022, it lost $2.3 billion. It promptly cut 75% of its employees and as recently as November, said it would run out of money before the end of 2023 if it didn’t find new investors.
According to Reuters, the Class 4 van segment in the US is quite small with annual sales typically around 30,000 to 40,000. This means Arrival has few competitors, giving it the best chance of survival. Arrival’s financial officer John Wozniak said the company plans to build its medium-duty van at a factory in Charlotte, North Carolina by late 2024. “We think that (Class 4) is a sweet spot where Arrival can make a lot of money,” Wozniak noted. “We looked across the competitive landscape, and from where you sit today, there’s a lot of room to run in that segment.”
Arrival’s shift in focus to the US is a strategic move to take advantage of the subsidies available through the US Inflation Reduction Act. The company has faced considerable financial losses in recent years, prompting it to cut 75% of its employees and wind down operations in the UK. The merger with Kensington Capital Acquisition Corp will provide Arrival with fresh cash to develop a single model in the US, a Class 4 delivery van that will be available with a subsidy worth as much as $40,000. The Class 4 van segment in the US is relatively small, giving Arrival few competitors and the best chance of survival. Arrival plans to build its medium-duty van at a factory in Charlotte, North Carolina by late 2024.
