UK electric van start-up Arrival will run out of money next year if it doesn’t find an alternative source of credit, German bank Berenberg has said.
Arrival has been hit by the sell-off in tech stocks currently affecting the US market and has seen the value of its shares fall by 90% since it listed via SPAC (special purpose acquisition company) last May.
Arrival will have between $150m-250m (£121m-201m) of cash left by the end of this year, Berenberg said in an analyst note, citing Arrival’s own figures. “That is not enough to fund our expected 2023E [estimated] cash burn,” Berenberg analyst Michael Filatov said. “Given the current state of capital markets, we believe additional cash would likely come from a strategic partner such as UPS, Hyundai or a new entity”.
Arrival is hoping to generate its first revenue later this year when it starts production of the electric van at its Bicester facility in the third quarter.
The company has paused work on its first electric bus factory in Rock Hill, South Carolina while it concludes trials of the vehicle in the UK, the company said in a filing published with the US Securities and Exchange Commission at the end of April. Arrival initially hoped to start production at Rock Hill in spring this year.
The company said it “does not expect to generate a profit until at least 2024” in the same filing. It also admitted to “material weaknesses in its internal control over financial reporting”.
Arrival generated strong interest among stock market investors keen to ride along with the company’s ambitious plans to create a ground-up van to take on the likes of Ford. The company’s $100 million investment from Hyundai, which took a 2.57% stake in the company, and UPS, which placed a non-binding order for 10,000 vans with an option for a further 10,000, pushed the company’s stock market valuation to around $13.6 billion when it first listed. The company is now valued at $1.2 billion based on its current share price.