Shares of electric vehicle maker Arrival lost more than a quarter of their value Nov. 9 – wiping out about $3 billion in market value – after the company’s executives withdrew their long-term forecasts and markedly lowered their outlook for 2022 sales.
Founder and CEO Denis Sverdlov and his team have backed away for now from their plans for a fourth microfactory in 2022 to make their buses, vans and cars and are investing more in their operations, including by bringing in house logistics work and assembling more battery modules. As a result, they are delaying production plans for their large van to 2023 from next year. (The schedules for buses and regular vans haven’t changed from the second and third quarters of 2022, respectively.)
Arrival, which has yet to book revenue from vehicle sales, lost about $30 million in the third quarter, when it spent $94 million on capex projects. Its leaders now say they expect bus and van production next year to be “modest” with sales kicking in during the second half. On a Nov. 8 conference call with analysts and investors, Sverdlov said the Arrival team isn’t focused on quantity – even though executives repeatedly touted their order backlog of about 64,000 units on their call – but instead wants to focus on improving its processes.
“I would not call it a slowdown,” Sverdlod said in response to a question about the slower ramping up of production. “It’s just a more careful approach to the start of production.”
Mike Ableson, Arrival’s Automotive CEO, said the company still expects to be able to crank out 10,000 vehicles once its three microfactories – in Bicester, England and one each in North and South Carolina – are running at full capacity for two shifts. But that assurance and others like it weren’t enough for many investors, who understandably focused on execs' retreat from 2022’s forecasts. Arrival shares (Ticker: ARVL) fell nearly 28% Nov. 9 to $12.88, wiping out a month’s worth of gains. Following the drop, the company’s market capitalization stands at about $8 billion.
