British start-up Arrival is facing a series of setbacks, including a multi-year delay in its first salable van, a recent vehicle fire spotted by its biggest customer and a distracting side-project to manufacture an electric jet, according to several people in the company or near the company.
Morale in parts of the company has plummeted after widespread job cuts were announced two weeks ago to preserve its dwindling cash balance.
This has led to the looting of tools from one of the group’s sites and the leaking of commercial information, people say.
Concerns have also been raised about its unproven strategy of using small, highly automated facilities called micro-factories.
While Arrival said it built a van in September that proves the system works, several people said the model in question was mostly hand-built over several days.
The group also rejected an Amazon van order worth billions because it included an exclusivity clause, several people added. Amazon declined to comment.
After the Financial Times contacted Arrival with a detailed list of questions, founder and CEO Denis Sverdlov sent an internal message accusing anyone who provided information of “treason.”
The message, seen by the FT, said leaks “reduce everything we’ve accomplished to date and dishonor your own incredible work and the reputation of your colleagues.”
He added, “It’s betrayal I don’t understand how whoever did that can live with it.”
Arrival said some employees who left may be upset, but added that a “motivated, passionate employee base” remains.
Shares in Arrival, backed by Hyundai and once valued at $15 billion, have plummeted since listing on the Nasdaq in 2021. It is now valued at $444 million.
Dozens of electric vehicle start-ups have listed on the stock market in hopes of emulating Tesla, but most have seen shares fall as they find making vehicles harder than expected.
Starting production “is certainly a lot harder than we thought,” Swerdlow told the FT in September.
When asked if its first model was hand-built, Arrival defended the process, saying its robots worked as planned and only parts of the process had to be done manually, such as: B. the installation of cables.
The company is also facing delays that have not been fully appreciated by investors, say several people close to or within the company.
Chief among these is the development of a US van, which will be the company’s first commercial product after it abandoned plans to sell a delivery vehicle in Europe and shelved its bus and car projects to save money.
Its European van, which the company shows internationally at auto shows, is not suitable for the US market. A new, larger model needs to be developed to pass US crash and official tests, which could take years, three people said.
So far, Arrival has built a US prototype that’s not fully functional, two people said, and the company needs to raise more funds to develop the vehicle and build a factory in Charlotte, North Carolina.
The development work did not always go smoothly.
A vehicle fire at the Banbury development site recently occurred while demonstrating a delivery truck for UPS, the company’s largest publicly disclosed customer.
No one was injured in the incident in early September, but after the vehicle rolled out of the facility, the fire melted part of the parking lot’s surface.
Although the company is now streamlining its global operations to cut costs, it once proposed expanding an office in Mauritius, where one of its executives has family commitments, and allowing employees to work from the tropical island for several weeks a year fly and work to four people.
The ax on jobs also fell unevenly. While the company has announced “significant” staff cuts in the UK, a hundred-strong software team in Georgia, relocated from Russia following the invasion of Ukraine, was unaffected by an earlier round of cuts over the summer.
In an all-employee presentation two weeks ago, seen by the FT, the company revealed it is also cutting funding for a previously undisclosed venture: making a jet plane.
The closely guarded plan was to build a commercial cargo plane or passenger vehicle with a dedicated team based in an industrial estate in Feltham, west London, staffed in part by former executives of electric plane start-up Lilium, according to three people.
It’s a “pet project” owned by Swerdlow, people said, and had 26 employees and £2.3million in research and development costs, according to the subsidiary, as of 2020.
“They saw a lot of shiny things and tried to follow them all,” said a person close to the company.
Finally, the company is struggling with growing shareholder dissatisfaction.
Company President Avinash Rugoobar had to interrupt his visit to the US this year to travel to San Francisco and meet BlackRock, a cornerstone investor, according to two people. Arrival declined to comment.
Retail investors have also turned up unannounced at the Banbury site, resulting in a dedicated security guard outside the car park entrance.
This has largely succeeded, although a shareholder recently gained access to the site via the catering entrance, the people added.
“The problem with the company is that they got the claim and the plan mixed up,” said a person who worked for the company. “They tried to bite off more than they can chew.”
Charlotte is in North Carolina, not South Carolina as stated in an earlier version of this story.
https://www.ft.com/content/2b02c573-9342-44df-bb4b-9223a78e2a09 Electric Vehicle Launch Delayed arrival at first working van