Arrival Electric Bus and Van Production - 2024 Launch

Arrival EV Company Updates Investors on Launch Timelines

Executives at Arrival, a commercial electric vehicle (EV) firm headquartered in London, informed investors on Thursday that the company remains on schedule to launch its products as planned.

However, successful execution hinges on the ability to convert existing orders and non-binding letters of intent into confirmed sales.

UPS Order is Crucial

A particularly significant order is the potential deal with UPS, which could generate over $1 billion in revenue for Arrival.

Currently, the company boasts a total of 59,000 non-binding orders and letters of intent for its vehicles.

This figure encompasses an agreement with UPS for the purchase of up to 10,000 vehicles across both the U.S. and Europe.

Furthermore, the agreement includes an option for UPS to acquire an additional 10,000 vehicles.

Should UPS exercise this option and purchase the full 20,000 vehicles, the total value of the deal could exceed $1 billion, as previously communicated to investors.

Recent Agreements

Since the end of the last quarter, Arrival has secured two additional sales.

These include an agreement with LeasePlan, a car leasing company, for 3,000 vehicles, anticipated to be finalized in the third quarter.

Additionally, a five-bus order was received from the public transportation network in Anaheim, California.

Important Disclaimer Regarding Orders

The company’s earnings report includes a key disclaimer: “All references to orders and LOIs are non-binding and subject to cancellation or modification at any time.”

Several milestones must be achieved before Arrival’s vans and buses become operational, including public road trials, completion of prototype construction, and securing production certification.

Production Timelines

Despite these pending tasks, Arrival executives stated that trial production of the Arrival Bus will begin in the U.K. by the end of the current year.

Full-scale production at the company’s microfactory in South Carolina is projected to commence in the second quarter of 2022.

The first Arrival Vans are scheduled to be manufactured in the U.K. during the third quarter of next year.

Expansion into India

Arrival President Avinash Rugoobur announced the company’s decision to establish a product development and research & development (R&D) center in India.

This decision follows an observed increase in “potential” orders within the Indian market.

Significance of the Indian Market

Arrival CEO Denis Sverdlov emphasized the importance of the Indian market, noting its unique characteristics in terms of size.

He explained that product pricing and certification requirements differ significantly from those in Europe or the United States.

Sverdlov stated that entering the Indian market is a crucial step towards creating vehicles that can succeed in Asian countries, including India.

An Alternative Manufacturing Strategy

Arrival, backed by investors including Hyundai Motor Company and Kia Motors Corporation, is pursuing a novel approach to automotive production. Rather than constructing a large, centralized manufacturing plant, the company intends to produce commercial electric vehicles (EVs) within a network of scalable, capital-expenditure-efficient regional microfactories – with a goal of establishing 31 facilities by 2024.

Arrival’s manufacturing process leverages autonomous mobile robots (AMRs), developed internally by the company. These robots are engineered for fully autonomous operation, managed by a unified AMR software platform.

Currently, Arrival has announced plans for two U.S.-based microfactories: one located in West Charlotte, North Carolina, and another in Rock Hill, South Carolina. Additionally, a microfactory is already operational in Bicester, U.K., having already yielded over 500 composite panels.

The North Carolina facility is slated for completion in October of this year, with production scheduled to begin in the final quarter of the following year. The EVs manufactured at this site are ultimately destined for integration into UPS’s North American delivery fleet.

Similar to other emerging EV manufacturers, Arrival has yet to generate substantial revenue, and its financial reports reflect the costs associated with bringing a new vehicle to market. The company reported an EBITDA loss of €29 million ($34 million).

Its adjusted EBITDA loss totaled €35 million ($41 million), representing an increase compared to the €27 million ($31 million) loss recorded in the first quarter.

Capital expenditures reached €65 million ($76 million), primarily driven by personnel costs related to product development and expenses linked to factory equipment. The company projects further capital spending of between €175 million to €225 million ($205 million to $264 million) for the remainder of the year.

This anticipated increase is attributed to the acceleration of expenses from the Bicester, U.K. microfactory, alongside planned openings in South Carolina and one-time tooling costs.

The company concluded the quarter with a cash reserve of €445 million ($522 million).

Since the close of the first quarter, Arrival has forged several strategic partnerships, including collaborations with Microsoft for an open software platform, Hitatchi, and STMicroelectronics. LG Chem serves as the company’s supplier of battery cells.

Founded in 2015, Arrival became a publicly traded entity through a merger with a special purpose acquisition company (SPAC) in March. This transaction valued the company at an enterprise value of $5.4 billion and provided approximately $660 million in capital.

The company is experiencing rapid growth, currently employing over 2,200 full-time personnel, compared to a workforce of 1,300 in December 2020.

Arrival’s stock price peaked at $37.18 per share in December. As of today, the share price opened at $12.80. The company’s stock is traded on the Nasdaq exchange under the ticker symbol “ARVL.”