British electric-vehicle startup Arrival received a $300 million equity financing line from Westwood Capital to slow down its cash-burn rate as it prepares for U.S. production of its van in late 2024. The company aims to achieve a quarterly cash-burn rate of $35 million by the second half of 2023 by implementing cost-cutting measures. Arrival had $205 million in cash and cash equivalents at the end of 2022. Arrival is focusing on the U.S. to take advantage of the Inflation Reduction Act, which provides incentives for EV manufacturing and adoption.
Arrival secured a $300 million equity financing line from Westwood Capital to slow down its cash-burn rate. The capital will provide Arrival with access to more liquidity and fund the business into late 2023. Arrival expects to achieve its target of quarterly cash-burn rate of $35 million by the second half of 2023 by implementing layoffs and other cost-cut measures.
The $300 million raised by Arrival will not be used for investments in the production of its van at its Charlotte, North Carolina facility. The company is kicking off fundraising efforts to fund its U.S. production plan. Arrival’s shares dropped 13.5% after the announcement of the equity financing line.
Arrival faced a cash crunch in the past few months due to high costs related to production ramp-ups and inflation. Last year, the company warned it might not have enough cash to keep its business going towards the end of 2023. In January, Arrival laid off half of its staff and appointed Igor Torgov as its CEO. The company also called for an extraordinary meeting of shareholders to vote on a reverse stock split proposal to regain compliance with Nasdaq’s listing rules.
Arrival’s $300 million equity financing line from Westwood Capital will slow down the company’s cash-burn rate and fund the business into late 2023. However, the funds will not be used for investments in production at its Charlotte, North Carolina facility, and Arrival will need additional funding to support its U.S. production plan. The company is taking cost-cutting measures to achieve its target of a quarterly cash-burn rate of $35 million by the second half of 2023.
