Arrival Says Limit To Revenue Based On How Quickly It Can Put Microfactories In Place

United Kingdom-based electric vehicle maker Arrival SA ARVL on Wednesday reiterated plans to have 31 microfactories by the end of 2024 and may add more if the demand is high.

What Happened: The low CapEx, rapidly scalable electric vehicle startup is deploying four microfactories to roll out electric buses, vans, trucks and cars. The company has two microfactories in South Carolina, one of which is in Rock Hill and scheduled to start bus production later this year. The other two factories are planned in the U.K. and are scheduled to go on production next year. 

“We have got about 70% of equipment for the Rock Hill microfactory where we intend to start production of the bus and we will spend the rest of the year installing the equipment. The plant is moving along well,” Arrival Automotive North America CEO Mike Ableson told investors at the Deutsche Bank’s Global Auto Industry Conference held virtually.

Traditional automakers usually deploy large CapEx and have huge factories that are used to build a large scale of vehicles. Arrival is however attempting to disrupt the industry with its microfactory strategy that includes building small units that can be easily controlled.

“Based on all our discussions with bus and van customers, we believe the limit to our revenue is based on how quickly we are able to put these microfactories in place,” Arrival founder and CEO,  Denis Sverdlov said. 

“Every place that we set up a microfactory, we are confident there is demand for at least 10,000 units just naturally. We may build more factories if the demand is high.”

Sverdlov said Arrival is aiming at a $45-$50M capital investment per factory and each microfactory can achieve an annual gross margin of $100 million per year, assuming either 10,000 vans or 1,000 buses are manufactured and sold per year.

See Also: Why Arrival Stock Jumped 10% Today

Why It Matters: The commercial electric vehicle category is currently underserved and players such as Tesla Inc TSLA, Arrival and TuSimple Holdings TSP are betting on the space. 

Arrival believes the commercial vehicle segment will quickly adopt the electric vehicle shift worldwide, helped by local, state, and national government policies that either encourage electric vehicle usage via subsidies or enact usage taxes on fleet operators who continue to operate fossil fuel vehicles. 

Arrival has a purchase agreement for 10,000 electric vans, with an option to buy 10,000 more, with package delivery giant United Parcel Service Inc UPS.

Price Action: Arrival shares closed X% lower at $Y on Thursday.

Read Next: Is Arrival Becoming A Short Squeeze Target? WallStreetBets Post Sends Shares Soaring

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Photo: Courtesy of Arrival