June 9, 2023

Arrival founder sells shares as e-van maker hunts for a lifeline

Arrival is, by its own admission, teetering on the edge of survival

London-based next-generation vehicle startup Arrival promised many things. Its electric vans were not only going to be greener than petrol and diesel, they were also going to be way less expensive. 

The futuristic vans would “be as easy to manufacture and as cheap to buy and run in Mumbai as Manchester,” Arrival’s enthusiastic founder, Russian (former) billionaire Denis Sverdlov once said. Its business model — which involved building pop-up "microfactories" around the world — would be “as scalable as McDonald’s or Starbucks”.

It was an idea that brought in $518m from the likes of BlackRock, BNP Paribas and Hyundai, before the company floated on the Nasdaq with a $13bn valuation in 2021, the largest ever listing for a UK tech company at the time. 


But, eight years after it was started out, Arrival is yet to put a van on the road. And today, the company is, by its own admission, teetering on the edge of survival. 

Sverdlov decreases his stake

In the last year, Arrival’s stock price has collapsed by 90%. At publication time its market cap stands at just $44m. This January, Arrival cut its headcount in half and, in November last year, warned it would struggle to remain afloat throughout 2023. 

As Arrival’s share price has slumped, Sverdlov — who made his money in telecoms before a stint as a Russian deputy minister — has been quietly selling his stake in the company. 

Sverdlov — who was also at the forefront of a radical dual-screen mobile phone that didn't work out — funded the company himself for its first five years, piling $500m into it. Then — seemingly out of nowhere — in 2020 he raised €100m from Korean auto giants Hyundai and Kia, at a head-turning €3bn valuation. Later that year, BlackRock also invested $118m. 

Denis Sverdlov, CEO and founder of electric trucks company Arrival
Denis Sverdlov

At the end of 2022, Sverdlov stood down as CEO — and, since then, Sifted has learnt, he’s been slowly selling off his shares bit by bit. 

Sverdlov’s stake in Arrival was held through a Luxembourg-headquartered investment firm called Kinetik, which he founded in 2015. SEC filings by Arrival and filings in Luxembourg by Kinetik show that Kinetik’s ownership of Arrival — while still substantial — is down from 61% in January this year to 35% at the beginning of June. 

Between January 3 and April 13 this year Kinetik sold 32.49m shares in Arrival for $7.8m. Those sales, according to the filings, were made at a staggering loss of €242m.

Each day between May 19 and May 23, Kinetik sold 10k shares. It sold 110k shares on May 30 and over 32k on May 31. This trend has continued into June and Kinetik’s ownership of Arrival now stands at 35%. 

Kinetik and Sverdlov did not respond to requests to comment. 

The hunt for cash

According to its most recent filing, Arrival’s cash balance is at $130m. That’s significantly lower than the $330m it had in the bank in Q3 last year when it warned it may not have enough cash to last beyond Q3 2023. 


In November last year, Arrival’s quarterly burn rate was $180m; it has since said it aims to cut that down to $35m a quarter by the second half of this year.

Between the last quarter of 2022 and the first quarter of 2023, Arrival burnt through $75m of cash, according to its last update. At that rate, it will soon run out of cash unless it can arrange an urgent injection of cash. 

A saviour SPAC?

That leaves Arrival on the hunt for a cash lifeline. 

The first attempt is in the form of a proposed merger with a special purpose acquisition company (SPAC) called Kensington Capital Acquisition Corporation — Arrival’s second SPAC in two years. The proposed merger would give the cash-starved Arrival access to up to $283m. 

But accessing the cash is contingent on a few factors. Arrival will only secure the money if Kensington’s shareholders don't choose to redeem their shares before the merger takes place.

For a SPAC deal to be completed and the money to move, the shareholders of the SPAC have to vote on the deal. At this point, they also have the option of redeeming their shares instead and pulling their money — in part or fully — out of the merger. 

In the Arrival case, SPAC analyst Julian Klymochko suspects Kensington shareholders — which include investors like Bank of Montreal and Westchester Capital Management — could end up choosing to redeem their shares. 

“I think investors would rather have the safety of their cash back. Look at the history of Arrival — its shares are down 99%, it seems to be in a difficult financial position, there is a lack of capital markets support,” he says. “The deal doesn't make a whole lot of sense.” 

Most SPAC deals have gone down the redemption route in recent times. On average, more than 80% of SPAC shareholders in the US redeemed their shares in 2022. 

The second uncertainty is the timeline. Given the cash crunch, Arrival’s proposed merger will need to happen quickly. In mid-May, CFO John Wozniak said that the merger was “top priority”. But he also said that the merger process could take “three months or more”.

Even if the SPAC shareholders chose to go ahead with the deal, it might not be quick enough for Arrival. The average time for a SPAC deal to close was seven months in 2022. When asked if it has enough cash to last until the merger, Arrival told Sifted it was unable to comment. 

What’s more, if the deal is not completed by August 17, Kensington would have to wind up, according to its most recent SEC filing. Kensington did not respond to request to comment.  

Klymochko is wary of re-SPAC deals (an industry term for a second SPACs). Another company, Wejo, a British-connected vehicle data startup, announced a proposed re-SPAC in January this year. Last week, it filed for bankruptcy, and its shares are due to be delisted from Nasdaq. 

“History often rhymes and the Arrival deal rhymes a lot with the Wejo deal,” says Klymochko. 

The missing 2022 accounts

Arrival’s got another problem on its hands. In May this year, Nasdaq told Arrival that, because it's yet to file its 2022 financial accounts, it’s no longer compliant with the stock exchange’s rules.

In response, Arrival said that it was unable to file the accounts because management attention was focused on fundraising and “business combination transactions”. In a note to the SEC in early May, Arrival also said it anticipated the accounts would report a greater loss for 2022 than 2021 — and that they would raise “significant doubt” over its ability to continue as a going concern for at least 12 months.

“The Nasdaq warning is not that we must have the financials published by July 3, but that we must have a plan to do so,” Arrival told Sifted. “Our intention is to regain compliance with Nasdaq’s listing requirements.”

The bind Arrival faces is that several of its potential funding lifelines rely on it filing those accounts. 

In March, Arrival put out a press release saying it had “established a $300m equity financing line” with New York-based investment bank Westwood Capital. 

That money is yet to hit Arrival’s balance sheet. It’s contingent, SEC filings show, on two conditions: filing its 2022 accounts and increasing the share price to $5 (today it’s at $3). A filing in May showed that the conditions are yet to be met. Westwood Capital declined to comment on the deal. 

An image of one of Arrivals van prototypes

Another deal contingent on the filing is a cash injection from US hedge fund Antara Capital. The fund owns part of Arrival’s debt — which, until this week, stood at $318m. 

This week, Arrival announced it had struck a deal to convert part of Antara’s stake, $20m in convertible notes, into equity. Antara will receive shares in Arrival in exchange for the debt, freeing up $25m for Arrival in the process. 

Arrival had previously said Antara had “committed” to put a further $25m into the company before June 30 but that, just like the Westwood funding, was contingent on Arrival filing complete financial accounts. The latest press release from Antara no longer mentions the proposed extra $25m. Antara declined to comment. 

Looking to the US

As well as hunting for cash, in January Arrival announced a change of strategy. It said it was moving its focus to the US, which would allow it to take advantage of Biden’s $369bn climate bill and the generous subsidies it offers to companies manufacturing green technology.  

Arrival has paused development on its L van — a smaller vehicle aimed at last-mile delivery — which was closest to being market ready, to instead focus on the XL van — a larger-load vehicle. Sifted understands the decision is partly based on the XL van receiving a higher level of tax credit from the IRA bill. The XL van has an average sale price of “over $100k”, Arrival tells Sifted, and the IRA will offer up to $40k for vehicles of that size. 

The company has also moved away from its plan to build all van components in-house. Arrival has now reverted to buying components from external suppliers. 

Despite the pivot, some industry commentators doubt that we’ll ever see Arrival vehicles on the road.

“I'm sceptical about whether it'll actually see it through to production, given its cash burn, and given these additional certainties,” says David Bailey, professor of business economics at the Birmingham Business School. “I'm not convinced it's going to carry on in its current form.  

“They thought they could manufacture in very low volumes in a distributed manufacturing setup, and not have cripplingly high costs. I think that has come back to bite them on the bottom, quite frankly.”

Freya Pratty

Freya Pratty is a senior reporter at Sifted. She covers climate tech, writes our weekly Climate Tech newsletter and works on investigations. Follow her on X and LinkedIn