Electric vehicle startup Arrival SA reportedly warned on Tuesday it might not have enough cash to keep its business going toward the end of next year, sending its US-listed shares tumbling 33.2%.
According to Reuters, the company said it had been exploring options to tackle the fund problem and hinted at cost cuts which could have a sizeable impact on its UK workforce.
Arrival’s move to “right size” also came as it refocused on the larger US market with an eye on incentives from the Biden administration’s recently introduced Inflation Reduction Act.
The news agency noted EV startups which promised to disrupt the automotive industry with novel manufacturing techniques and products were now scrambling to control costs due to supply chain issues and rising raw material prices.
“We’re actively engaged in capital raising … we’ve had some preliminary discussions with a handful of parties,” Arrival chief financial officer John Wozniak said in a post-earnings call, according to Reuters.
It would take about six months for funding to materialise given the macroeconomic environment, he added.
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The report said the company, which posted a larger third quarter loss, expected to have enough cash to fund the business into the third quarter of 2023.
“We will use cash on hand of US$330m and look to secure new funds to achieve our goals in the United States,” Reuters quoted chief executive Denis Sverdlov as saying.
In 2020, the news agency noted, the company received an order for 10,000 electric vans from United Parcel Service with the option for an additional order of 10,000 units.
Arrival’s net loss widened to $310.3m in the third quarter from $30.6m a year earlier, the report added.