(Reuters) -Electric-vehicle (EV) startup Arrival on Monday got a $300 million equity financing line from Westwood Capital and said it seeks to slow its cash-burn rate, as the British firm looks to start U.S. production of its van in late-2024.
U.S.-listed shares of the company closed 13.5% lower.
EV firms have been experiencing a cash crunch over the past few months, as high costs related to production ramp-ups and soaring inflation eat into their reserves.
Arrival expects to achieve its target of quarterly cash-burn rate of $35 million by the second half of 2023, as layoffs and other cost-cut measures take effect. At the end of 2022, the company had about $205 million in cash and cash equivalents.
The developments come after Arrival’s warning last year that said it may not have enough cash to keep its business going towards the end of 2023. In January, it named Igor Torgov as its CEO and announced laying off half of its staff.
Arrival also shifted its focus to the United States late last year, in order to benefit from the Inflation Reduction Act, which provides incentives to spur EV manufacturing and adoption.
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High demand for electric vans, meanwhile, has brought legacy automobile players, including General Motors’ BrightDrop, Ford Motor Co, and upstarts like Rivian Automotive, to the segment.
On Monday, Arrival said the additional capital will provide the company with access to more liquidity and that the infusion will fund the business into late-2023.
The capital raised, however, will not provide for investments in production of its van in its Charlotte, North Carolina facility and the company said it was kicking off fundraising efforts to fund the U.S. production plan.
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.
(Reporting by Akash Sriram in Bengaluru; Additional reporting by Eva Mathews; editing by Uttaresh Venkateshwaran)
