Here’s Why Arrival Will Shift Production to the US

North Carolina is now expected to be the main manufacturing base for this EV startup.

2023 arrival van
  • Arrival is reorganizing its business, revealing plans to bring electric delivery Van production stateside, citing the Inflation Reduction Act.
  • The startup plans significant layoffs in the UK, as it shifts production to North Carolina, citing a much larger potential market for its vehicles.
  • Arrival shelved plans for the Bus and Car models earlier this summer amid diminishing cash reserves, as it gets ready to start series production.

    EV startup Arrival first caught investors' attention with its microfactory approach and a wide variety of prototypes, from buses to passenger EVs. The company had a lot on its plate coming into 2022, and recently chose to prioritize its electric Van model for production after achieving Bus and Van certification in the EU in the first half of the year.

    Despite starting Van pre-production in the UK just a month ago, Arrival is suddenly shifting its manufacturing plans to the US as a part of restructuring its entire business.

    That's right: Arrival is headed stateside, citing the Inflation Reduction Act (IRA), which is set to offer between $7500 and $40,000 in tax credits for commercial vehicles as one of the major factors in its decision.

    The startup indicated that the larger market size was another factor, along with substantially better margins in making the move stateside.

    "Although we have not yet achieved serial production, we are focused on making it happen. We will continue to produce vehicles in our Microfactory in order to master at-scale production," Denis Sverdlov, Arrival founder and CEO, said when the company built its first production verification vehicle in Bicester, UK, at the end of September. "It has been more difficult than we had initially imagined, and I thank the team for the immense amount of effort, technology, innovative breakthroughs, and problem solving."

    Just where will Arrival land?

    2023 arrival van
    Arrival designed the electric delivery Van starting from a clean slate, opting for a minimalist cabin design.

    The startup has already opened its HQ in Charlotte, North Carolina, with plans to launch its second microfactory in the US in 2023. The first one was planned for York County, South Carolina.

    Arrival says it will still complete a small number of Vans at its site in Bicester, UK, but large layoffs there are unavoidable.

    "Scaling production in the Bicester microfactory requires significant further investment in hard tooling and working capital and the Company has determined that the benefits of such an investment would be best directed to the US market," the company explained.

    Arrival won't be out of the woods for a while as it burns through cash ahead of the planned launch of its Charlotte microfactory, and reported to have $330 million cash on hand at the end of the third quarter. Just how much time this buys the startup is an open question, with Arrival indicating that it will explore all funding opportunities to bring the Van into production stateside in North Carolina in 2023.

    Arrival has built a large number of prototypes in a short span of time, but now appears to be at the mercy of its cash reserves as it stakes everything on electric delivery van demand in the US market—a segment in which it now faces no shortage of competitors.

    Developing and certifying the Bus model—which no doubt consumed a lot of time and funding to create from scratch—may have been a costly error, especially given the volumes of that industry.

    We would have liked to see Arrival's purpose-built Car for ride-hailing drivers make it into production, but alas, even that model is now expected to remain on the drawing board as the company focuses on delivery van customers.

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