Arrival will shed about half its remaining workforce to prevent it running out of cash this year, as the struggling UK electric-van start-up named a new chief executive amid renewed efforts to raise funds.
The company’s ambition of making electric vans in small-scale factories enabled it to attract investment from Hyundai and float two years ago with a value of $15bn.
But the group has run into a variety of problems while trying to commercialise its products.
In December, it issued a “going concern” warning that it would run out of cash within 12 months, with cash burn at the time likely to leave its reserves fully depleted by the summer.
On Monday, the company named Igor Torgov, a former Microsoft and telecoms executive who has worked at Arrival for two years, as its new chief executive, alongside a fresh wave of job losses.
The group will cut 800 jobs, predominantly in the UK and Georgia, its third series of job losses since last summer.
Torgov told the Financial Times the company faced “hard decisions” in the coming weeks, and said the current strategy was fundamentally sound, but might require “tweaks and improvements”.
Last year, the group ditched plans to produce a vehicle in the UK, and instead focused on a van for the US market, which will be made in a factory in South Carolina that is not yet built.
Torgov said the plan was “the best use of our limited resources”, and “if executed right, and with all due discipline, it could be a compelling message for investors”.
He added that the business did not expect to begin producing the US van until the second half of 2024, which was later than had been expected. The FT reported last year that the US model faced a delay of two years.
The cuts announced on Monday will take the quarterly spending of the revenue-less business to about $30mn. At the end of December, Arrival had about $205mn of cash available, it said.
Fundraising efforts, which include appointing Teneo as a financial adviser to seek a buyer or investor, were “promising,” said Torgov. The cuts “give us a decent time to work with the investors”, he added.
Torgov, who has an MBA from California State University and worked at Microsoft, previously ran Russian mobile phone group Yota, and retail technology equipment maker Atol.
At both companies he oversaw cost-cutting programmes or significant strategy changes, he said.
“I am familiar [with turnrounds], I am not getting any fun from it,” he said. “We have got all this talent, and the vast majority of people in Arrival are brilliant people, and did a lot of good things to bring the company forward.”
Torgov also indicated he was reviewing the future of Arrival’s controversial flying vehicle programme, which the company had kept secret from investors.
Called “Jet”, employees were told in a meeting last year that the side venture, understood to be a pet project of Arrival founder and chair Denis Sverdlov, was protected from cost-cutting, despite the business dismissing hundreds of workers at the time and delaying other projects, including a bus.
Torgov said the aircraft programme was “probably the only thing that is still under discussion”, and he hoped to announce a decision at the group’s investor update in early March.
Source: Financial Times