UPS-backed electric vehicle startup Arrival built its first delivery van last week — a significant milestone, considering the challenges it and other upstart EV makers like it are facing.
Why it matters: Arrival and other fledgling commercial EV companies are struggling to launch production as funding dwindles and bigger rivals like GM and Ford start to crank out electric trucks and vans of their own.
- Some newbies have already collapsed, like Electric Last Mile Solutions, which went bankrupt in June.
- For the rest, the goal is to at least show progress to investors — which is why Arrival made such a big deal about producing a single van on what happened to be the last day of the third quarter.
Driving the news: Arrival said Friday it had missed its third-quarter target to start serial production, but celebrated the fact that it produced its first "production verification vehicle" — in other words, an early prototype.
- "Although we have not yet achieved serial production, we are focused on making it happen," founder and CEO Denis Sverdlov said in a statement.
- Scaling is more difficult than he imagined, Sverdlov told Reuters. "We are going through our own production hell," he said, echoing Tesla CEO Elon Musk's comments during the troubled launch of the Model 3.
Arrival's challenge is doubly hard: It's trying to produce an innovative electric vehicle while simultaneously pioneering a radically new manufacturing process.
- Instead of a giant factory with traditional assembly lines, Arrival's EVs are to be built in "microfactories" at a fraction of the cost.
- So far, Arrival has just one microfactory, in the United Kingdom. It plans to open a second site in Charlotte, North Carolina, in 2023 — a year behind schedule due to cash woes that also led to staffing cuts.
How it works: Instead of a moving assembly line, automated mobility robots carry unfinished vehicles to different stations, where other robots are assigned a series of assembly tasks.
- Instead of steel, many of the van's body panels are made of a proprietary polypropylene and fiberglass composite fabric.
- Robots cut the fabric into desired shapes, which are heat-molded and then joined to other panels or the van's aluminum frame using structural adhesives instead of metal welds.
The process saves a fortune on traditional processes like stamping, welding and painting, but it's difficult to master, Mike Abelson, CEO of Arrival's U.S. operations, tells Axios.
- "It's a Catch-22," says Abelson, a former GM executive. "The innovative things that make Arrival unique are things nobody has done before, so they create the most challenges."
- "We have a lot more work to do over the next several months as we work on quality and throughput. You've got to start somewhere."
- Here's a video of how Arrival's microfactory works.
What to watch: Arrival, which delayed an electric bus project and laid off some employees to conserve cash in August, now says it needs to raise more capital.
- The company will announce third-quarter results in November.
The big picture: Other struggling EV manufacturers face similar challenges as financing options tighten.
- Lordstown Motors last week said it began production of the Endurance, an electric pickup truck for businesses. So far, it has built a grand total of two and aims to build 50 by year-end. It too is looking to raise more cash.
- Faraday Future said it will start production of its long-delayed FF 91 sports car by the end of 2022 with $100 million in new financing after resolving an investor dispute.
- Canoo, which is also struggling to start production, has decided to outsource manufacturing to a third party.
- Rivian is leaning on a lucrative Amazon contract while it boosts consumer production — but it too recently laid off 6% of its workforce.
