EV Upstart Arrival Plans Nasdaq Listing That Will Lift Valuation To $5.4 Billion

Arrival, a fast-moving U.K. maker of affordable electric vans and buses backed by Hyundai Motor and BlackRock, is combining with special purpose acquisition company CIIG Merger Corp. for a Nasdaq listing in early 2021. The deal may boost its valuation to $5.4 billion and turn founder Denis Sverdlov into a billionaire. 

Founded in 2015, Arrival’s public listing plans come on the heels of a $118 million infusion from BlackRock in October and $110 million investment from Hyundai and Kia early this year, which together had raised its valuation to $3.5 billion, according to PitchBook. Joining with CIIG will generate $660 million of cash for the London-based company, including $260 million from the SPAC and $400 million raised from a private equity offering. Fidelity, Wellington Management, BNP Paribas and BlackRock participated in the offering.

Arrival is already building its first two $50 million “microfactories,” one in England and another in South Carolina, and the opportunity to go public in next year’s first quarter means it can focus on getting products to market on time rather than continuing to raise money. It will trade with the ticker ARVL.

“We’re going to be cash flow positive in 2023. The amount we’re raising right now is enough to support growth until we get profitable,” Sverdlov tells Forbes. “Actually having the secured funds and focusing on delivering is a better strategy than always choosing this path of getting more funds. It will allow us as management to be focused on the operations.”

The company is the latest EV or automotive tech startup to join 2020’s SPAC-funding wave that includes lidar makers Velodyne, Luminar and Aeva, hydrogen truckmaker Nikola and electric vehicle startups Fisker, Canoo and Lordstown Motors. And though Arrival isn’t yet generating revenue, it has orders for 10,000 battery-powered commercial vans from delivery giant UPS and expects to have customer announcements for electric transit buses that will be built at its South Carolina plant from late next year. 

What sets Arrival apart from Tesla and other electric vehicle makers is its intention to sell its products at prices matching those of diesel- and gasoline-powered vehicles. It says it can do that because Arrival vehicles are much lighter due to aggressive weight-saving from an aluminum chassis and body panels made of proprietary composites. That results in the smaller, cheaper batteries–the main expense for EVs. Battery vehicles already offer lower fuel and maintenance costs so a manufacturer that can sell them at price parity could see substantial demand. The incoming Biden Administration, which is prioritizing electric vehicles and transit to curb U.S. carbon emissions, could prove even more helpful for Arrival.

“We designed them to not require subsidies to generate the transition” to electricity

“We designed them to not require subsidies to generate the transition” to electricity, says Arrival President Avinash Rugoobur. “But when you add a supportive government for this, it’s obviously going to further enhance the speed that you transition.” 

The company’s vehicle lineup plans include small and large delivery vans, a 35-foot transit bus and small, multipurpose vehicle that can be outfitted to haul cargo or passengers. Each of its microfactories, which will be built relatively close to its customers, will be capable of producing 10,000 commercial vehicles or 1,000 buses annually.

Along with providing cash to fund operations for the next year or two, Arrival’s public listing will likely turn Sverdlov into a billionaire. The Russian-born entrepreneur, who also leads London venture firm Kinetik and previously cofounded and ran Russian mobile phone company Yota, will own approximately 75% of the merged company, according to a person familiar with the matter.

Assuming Arrival reaches an estimated valuation of $5.4 billion by going public with CIIG, his stake could be worth about $4 billion.

(For more on Arrival and Sverdlov, see Let Elon Musk Go Giga: A U.K. Upstart Says Microfactories Are The Profitable Way To Build Electric Vehicles )

Traditional auto plants require hundreds of acres of land and cost $1 billion or more to built. By comparison, 200,000-square-foot Arrival microfactories can be set up in a standard warehouse space in an industrial park. They can be operational in six months, compared to about two years for large-scale plants.

Arrival’s vehicles have a flat, easy-to-build skateboard undercarriage that contains the axles, battery and electric motors. Automated carriers transport sections to different workstations instead of assembly lines. Rather than stamping metal for the chassis, Arrival connects extruded aluminum parts—formed by injecting metal into dyes. It also reduced the number of chassis components needed for easier assembly. Composite body panels are joined with high-tech adhesives, as they are in the aerospace industry, instead of welding. Vehicles are colored with dyes and exterior wraps, so multimillion-dollar paint shops aren’t needed. Standard auto plants employ thousands of assembly workers. Arrival microfactories need about 200.