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The race has just started in the commercial electric vehicle space, and today we will break down, Arrival ($ARVL). The company is planning to become public through a reverse merger (SPAC) with CIIG Merger Group ($CIIC). I actually interviewed the CFO, Tim Holbrow, to also get some additional insights!
If you want to read the full breakdown, click here ➡️ Arrival Breakdown Substack
If you want to download my pdf report, you can click below ➡️
📖What is Arrival?
Arrival is aiming to revolutionize the electric vehicle industry with the production of commercial electric vans and buses. The company was founded in 2015 and personally funded by founder and CEO, Denis Sverdlov to transform the automotive industry. In stealth mode, the company patiently focused on amassing top tier human capital and building layers of intellectual properties across the manufacturing process. Fundamentally, leadership is focused in creating an ecosystem that transforms the design, assembly, and scale distribution of the electric vehicle industry.
📈Market Opportunity
The share of electric vehicle sales is expanding from 2.7% to 58% by 2040. This movement is accelerated by the advancement of technology, unit-economics, climate change commitments from automakers, and rising government policy pressures.
Arrival has decided to focus its business strategy within the commercial vehicle space in the EV industry. This focus is driven by two key variables that are impacting commerce: the rise of e-commerce and the willingness of large fleet owners such as UPS, Amazon, or governments to reduce carbon emissions and adopt vehicle electrification.
Digital Commerce 360 has reported that e-commerce accounted for 21% of retail sales in 2020 and 37% by 2024, making vans a critical component. Additionally, logistic based companies, governments, and other corporations have put policies in place to transform their fleets and reduce carbon emissions. The U.S. government has confirmed that they will transition all their fleet to electric. Additionally, cost will play a critical role in the transition of these fleets.
Realizing these trends, Arrival has positioned itself with three key components to lead the commercial vehicle market.
- New advanced manufacturing of EV vans and buses
- Total cost of ownership
- Top-Tier user experience and quality
Beyond the passenger vehicles race, the fastest tipping points will be in commercial vans and public transit such as buses. In the electric commercial vehicle market, Arrival believes the TAM is ~$70 billion for vans and ~$40 billion for buses. If you include fossil fuel commercial vehicles, the TAM expands to ~$280 billion for vans and $154 billion for buses.
🤯Key Insights for Time Investors:
- Demand for vans and buses is expected to rise substantially due to the rise of e-commerce and government climate change policies. Arrival is positioned to deliver products that minimize the total cost of ownership with superior technology that is proven and tested.
- Microfactories are the companies most critical asset to ensure flexible, scalable, and local production of their commercial electric vehicles. The factories are 50% cheaper from a CAPEX and OPEX relative to traditional factories and can be installed in existing spaces, in local communities, and in under 6 months.
- “You can build vehicles in New York with the unit economics of China,” Sverdlov says. – Forbes reporter
- They have partnered with UPS from the beginning securing 10k vans and a $1.2 billion order backlog.
- “There are a lot of startups with EV ideas. Unfortunately, we’ve not seen a lot of that materialize in terms of products that come to the market,” says Luke Wake, UPS’s international director of automotive engineering and advanced technology. “What helps set Arrival apart is the way that they were well funded to actually turn some of these ideas and visions into a reality.” – Forbes reporter
- The company has 1.4k employees with 85% focused on research and development. They have secured talents across `1,000 engineers and have built a leadership team with top-tier talent in their respective fields
Investor Lineup:
- ~$1.2 billion investment and signed purchase agreement with UPS in 2020
- ~$150 million euros led by BlackRock in Nov 2020
- ~$100 million euros investment by Hyundai Motor Company and Kia Motors Corporation in Q4 2019
- Post SPAC merger with CIIG, ~88% ownership will remain with existing Arrival shareholders
YouTube
A Radical Approach to Making Electric Vehicles | The New Method | Arrival
Reimagining the products. Reinventing the process. Revolutionising the industry.Arrival is challenging the 100 year old automotive production process, by pro...
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