Britain’s Arrival SA said it was laying off 50% of its employees in a move that will help halve its cash operating expenses, as the electric-vehicle startup tries to ride out a cash crunch threatening its survival in the competitive market.
The move announced on Monday underscores the pressure on EV startups that had promised to disrupt the automotive industry but are now scrambling to slash costs in the face of supply chain issues and steep raw material prices.
High demand for electric vans has brought legacy players including General Motors‘ BrightDrop, Ford Motor Co and upstarts Rivian Automotive to the front, with Tesla slashing its EV prices intensifying competition further.
Arrival, which also named insider Igor Torgov as its chief executive officer on Monday, had in November warned that it may not have enough cash to keep its business going toward the end of 2023.
The company has shifted its focus to the United States in order to benefit from the Inflation Reduction Act, which provides incentives to spur EV manufacturing and adoption.
The layoffs will reduce Arrival’s headcount to 800 and cut the cost of business operations to about $30 million per quarter, including benefits from already announced moves like reductions in real estate and third-party spending.
Arrival did not disclose if it expects a charge from the layoffs. It did not immediately respond to a Reuters request for comment.
Torgov, who joined the company from Russian retail tech firm ATOL in 2020, takes the helm after Denis Sverdlov took up the role of chairman in November.
The company, which had $205 million in cash at the end of 2022, said it would provide more details on its business plan when it reports quarterly results on March 9.
Subject to raising additional funds, the company expects to start production of the van in Charlotte, North Carolina next year.
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