Arrival has announced it will furlough 50% of its workforce as the UK-based electric vehicle start-up seeks to survive a funding shortfall that threatens its survival in a highly competitive market.
The move promises to disrupt the auto industry, but highlights the pressure on EV startups that are scrambling to cut costs in the face of supply chain problems and rising raw material prices.
High demand for electric vans has brought legacy players such as General Motors’ Brightdrop, Ford Motor and Rivian Automotive to the fore. Tesla has lowered the price of its EVs, making the competition even more intense.
Arrival warned in November that it may not have enough cash to continue operations through the end of 2023.
The company has shifted its focus to the United States to benefit from inflation reduction laws that provide incentives to boost EV manufacturing and adoption.
The layoffs will reduce Arrival’s headcount to 800 and reduce the cost of operating the business to approximately $30 million per quarter. This includes benefits from previously announced moves, such as reduced real estate and third-party spending.
Arrival did not disclose whether the layoffs will result in costs. It did not immediately respond to Reuters’ request for comment.
Arrival also appointed insider Igor Torgov as CEO.
Tolgov, who joined from Russian retail tech company ATOL in 2020, will lead after Denis Sverdlov becomes chairman in November.
The company, which had $205 million in cash at the end of 2022, said it would provide details of its business plan when it reports quarterly results on March 9.
Subject to additional funding, the company plans to begin producing vans in Charlotte, North Carolina, next year.