Another chassis car manufacturing star company, has been listed, but is facing the problem of broken capital chain.
Arrival, known as the "skateboard chassis", is often mentioned at the same time as Canoo and Rivian. It was heavily invested by South Korea's Hyundai Motor and became one of the largest unicorns in the UK at that time. It was later listed on the NASDAQ in 2021 and was valued at more than $15 billion at one point.
However, judging from the financial report just handed over, the performance is really worrying-
It has not been profitable for 8 years, and it burned more than 588 million US dollars, equivalent to about 4.05 billion yuan, in just one quarter. Based on the cash reserves currently on the books, I am afraid that it will not be sustainable.
Just now, they struggled to raise $300 million, but it was a drop in the bucket.
Last year, it experienced the baptism of "layoffs, mass production and delivery have been repeatedly postponed", but I did not expect that Arrival's situation has not improved until now...
So this type of chassis car player, really can't do it?
Received $300 million in life-saving money, but it was a drop in the bucket
According to Arrival's latest financial report, they are currently facing a serious crisis of capital chain breakage.
According to the financial report, in the fourth quarter of 2022, the company's loss was in the range of 588-597 million US dollars, compared to only 67 million US dollars in the fourth quarter of 2021.
The official explanation for the large loss was that "non-cash impairment expenses and debt write-offs" accounted for $406 million. However, even after deducting this amount, the loss for a quarter is still in the range of $1.82 to $191 million.
Arrival's administrative expenses for the fourth quarter of 2022 were $133 million, an increase of 209.3% from $43 million in 2021; (Non-capitalized) R&D expenses were $31 million, an increase of 107.14% from $28 million in 2021. As of December 31, 2022, cash and cash equivalents were $205 million.
Let's look at Arrival's revenue scale: $0. According to the past loss trend, Arrival is likely to be unsustainable.
In other words, the car has not yet been mass-produced, and the money in hand is almost spent.
It is worth mentioning that the conference call, which was supposed to be held at the same time as the day of the earnings release, was also abruptly postponed, and the official explanation given at that time was:
Free up time for the company to close a deal that, if successful, brings in additional cash flow.
Now the deal has surfaced — Arrival just announced a new $300 million in new funding (from Westwood Capital) that could help the company last a little longer.
But this is clearly not enough, on the one hand Arrival currently wants to use as little of this money as possible so as not to give up too much equity; On the other hand, they hope to raise another $500 million by the end of this year to finance electric van projects.
What happened before?
Prior to this, Arrival was already in crisis.
For the most concerned question from the outside world - when will the car be delivered with energy? When will revenue be realized? ... Arrival repeatedly gave promises, and repeatedly bounced tickets and could not be fulfilled on time.
So far, they have only produced 2 electric vans. In terms of financial performance, it is reflected in the delay in generating revenue.
Going back to the fact that when they first sprinted to go public on the NASDAQ, they disclosed historical financial data in their prospectus:
Revenue has been 0, with a net loss of €30.19 million in 2018 and a net loss of €48.1 million in 2019. And they also wrote in their earnings report: "It is expected that future spending will increase further and will continue to be in a loss until mass production and delivery actually begin." Mass production deliveries are expected no earlier than 2022. ”
Indeed, the losses continued, with a net loss of $95 million in 2020 and $1.304 billion in 2021.
Immediately after 2022, the first quarter financial report gave a plan:
It is expected that 400-600 vans will be produced in the second half of 2022, while some buses will be produced in small batches.
It also disclosed that it has received 143,000 vehicle intentional orders, including 10,000 orders from UPS (United Parcel Company).
However, things did not go as smoothly as expected. In the second quarter, as losses widened, all plans changed – cutting deliveries of electric vans in 2022 from 400 to 20 and temporarily shelving bus production plans to target the U.S. market.
The strange thing is that Arrival, headquartered in London, England, suddenly abandoned its Bicester plant in the United Kingdom and planned to open a second factory in Charlotte, North Carolina, in the United States in 2023.
In general, from two products, two shifts and two factories, it was reduced to one product, one shift, and one factory.
At the same time, in order to cut costs and start mass production smoothly in the third quarter of 2022, Arrival laid off 30% of its employees worldwide. Correspondingly, they also warned that there would be no revenue in 2022.
Then, on the last day of the third quarter, Arrival lived up to expectations and built a car. However, this is only a production validation vehicle for testing, verification and quality control, and is not delivered to the customer.
At the end of 2022, it was announced that the full-year loss was expected to be in the range of 9.98-1.008 billion US dollars, and even the official direct pessimism predicted that revenue would not be realized until after 2023.
The water reversal in 2022 does not seem to have ushered in an improvement in 2023, but the total loss in the past five years has exceeded 17.091 billion yuan.
In January, Arrival laid off 50 percent of its workforce, leaving only 800 employees left.
What kind of story is told?
Electric vehicle manufacturer Arrival, a new European automaker, was founded in 2015.
Headquartered in London, UK, with offices in the USA, Germany, the Netherlands, Israel, Russia and Luxembourg.
The company is mainly engaged in the production and manufacturing of electric trucks, electric buses and other commercial vehicles, and has launched an electric bus and an electric truck so far.
They say their mission is "to design, produce, sell and service the best electric cars ever built in a new, more efficient way." The "new approach" mentioned here refers to the "skateboard chassis" and "micro-factory".
The skateboard chassis is actually a non-load-bearing body structure, the advantage is that the mechanical connection is eliminated, and the cabin can retain more space; In addition, the same chassis can flexibly adapt to different vehicle types of different sizes, thus increasing the scalability of the entire automotive product range.
The "micro-factory", according to the introduction, the most obvious feature is the small footprint, the factory uses autonomous mobile robots, rather than the traditional assembly line - "can be placed anywhere in the world to serve the region", but also can operate at a very low cost, quickly replicate and expand.
The company's founder is Denis Sverdlov, a billionaire in the Russian telecommunications industry who served as deputy head of mass communications in the Russian Kremlin and general manager of the Yota Group, a Russian mobile service provider.
Board members also have rich backgrounds, such as having worked at Marvel, Hyundai, Lyft and Netflix.
At the beginning, Arrival was widely favored by the outside world, and financing and orders continued to flow.
Hyundai and Kia, for example, invested 100 million euros to make Arrival one of the UK's largest unicorns. It also raised $118 million from BlackRock, a U.S. fund manager. In addition, it has established cooperative relationships with UPS, Uber, and LG Energy.
In March 2021, Arrival successfully listed on NASDAQ through a merger with special purpose company CIIG, and its valuation at its peak was more than $15 billion, falling to $250 million in January this year.
And at the end of 2022, due to the low stock trading price, the NASDAQ directly issued a delisting warning for it.
The reason why we have come to this point may be because a real, closed-loop, sustainable business model has not been found in the short term.
It is worth mentioning that the new car company facing the crisis of bankruptcy and bankruptcy is not the only Arrival.
Lordstown, Nikola, and Faraday Future, in their just-released full-year 2022 report, have all expressed "substantial doubts" about their ability to continue as a going concern.
Now, Arrival staggers forward with the remaining $205 million in his left hand and the $300 million in life-saving money he has just raised in his right hand.
There is only one goal: mass production delivery.
But chassis builders are now facing difficulties in delivering.
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