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Arrival: A Radical Plan To Manufacture Electric Vehicles With Microfactories

Apr. 03, 2021 9:35 AM ETArrival (ARVL)34 Comments
Pacifica Yield profile picture
Pacifica Yield


  • Arrival plans to ride the decarbonisation wave with its all-electric van and bus.
  • The company plans to use a distributed production network of small low-cost Microfactories.
  • The plan could see 1,000 buses or 10,000 vans produced per Microfactory every year closer to the locations they are used.

Charging Electric Car with view of Los Angeles, California
Photo by stellalevi/iStock via Getty Images

London-based commercial electric vehicle producer Arrival (NASDAQ:NASDAQ:ARVL) has finally gone public on NASDAQ after completing its merger with blank check company CIIG Merger Corp. The merger saw Arrival raise $660 million in gross proceeds, including

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Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

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Comments (34)

Preserve & Prosper profile picture
Boy, talk about speculative. A $9 billion market cap for a start-up with an unproven business model, propelled by a dream-sheet predicting insane growth from $0 in 2021 to $1 billion in 2022 then $5 billion in 2023 tripling to $14 billion in 2024. And this is in a crowded market.

I'll stay on the sidelines for this one. Or maybe even short a few shares.
charly333 profile picture
@Preserve & Prosper they have "non-binding orders and LOIs". This is just hot air. The stock has a long way to fall. They have nice pictures but no vehicles. It's not wrong to short some. Just keep it tiny.
Interesting concept, but I'll stick with BYD Company (OTCPK:BYDDY) (OTCPK:BYDDF).
The real deal, still under everyone's radar.
pat45 profile picture
any idea when any of the micro factories will be operational?
gametv profile picture
Arrival has been holding up pretty well against the carnage in SPAC and BEV companies, but I think the valuation needs to move back down to 12-13 and put in a double bottom. The valuation is pretty high for a company that hasnt produced a single vehicle through the microfactory concept yet.

I like them long-term, but just think the valuation needs to come back down here.
charly333 profile picture
Microfactory is nonsense. They want to fool you. Don't buy this stuff.
@charly333 very solid argument
gametv profile picture
The volatility in Arrival is pretty insane. It falls 9% one day then rebounds 4% in a few minutes on hardly any trades.

Is there any lockup on shares? I looked at the registration statement and it looks like there was no lockup period at all for shares. If that is true, it would make sense that anyone who wanted to lock in their gains would be selling and there would be immediate pressure on the shares after consummating the transaction.
@gametv Well that makes sense then. So theory is then that ARVL sold a ton of shares or warrants to the SPAC backers (at what price we don't know but will be below current market price). No IPO lockup so they can all sell once the new ticker is in play and *probably* those same backers go short the stock knowing there will be huge downward pressure. A double kick in teeth for us. Nice. Really f*****g nice.
@debaron Reminds me of what $TOPS and Kalani did several years back.
lsmtihcom profile picture
@debaron one of the interesting things about arrival is that the founder owns 70% of the company through some type of trust (I forget the name, but you can see it in the filings). so if he doesnt liquidate shares, then alot of the stock is tied up by just one guy, which means if the stock gets some institutional support, there will just not be alot of stock available for them to buy. but right now is the worst possible environment for ARVL - SPACs are crashing down to $10 or under, EV stocks are crashing down from a bubble, companies with sales and profits in the distant future are crashing as interest rates moved higher last quarter.

remember the valuation as a private company was $3 billion a year ago, the SPAC valuation was $5.6 billion and today we are at 7-8 billion, so it could move down here.

but none of this really dims the upside potential. ARVL is really all about execution. if they can prove that the microfactory model really works and the financial metrics they have built in their financial model are real, then the stock will skyrocket. or we could find out that there are fundamental roadblocks to the actual production process and there will be lots of downside.

i have bought a small amount and just looking to kind of average in over time.

i think that announcement that they are ahead of schedule on production is what could drive a price increase, but who knows if that happens?
The pretty much endless selloff in the stock since the ticker change seems suspect to me. Does anyone know if there is a PIPE scheme in place to get around an IPO lockup? This seems like it goes beyond just straight short selling...
Semi-Tough profile picture
@debaron I don't know, but as I mentioned elsewhere in the comments, I allow my broker to lend my ARVL shares to be shorted and we split the interest. The latest rate they are paying me is 22%, which means someone is paying them 44% to short the stock. Seems nuts to me, but the stock keeps dropping. I just keep buying more...
gametv profile picture
@debaron I am having trouble finding a lockup period on the vast majority of shares. It looks to me like it says that 570 million of the 600ish million shares can be sold without any lockup. Is that right?
@Semi-Tough Yes it's around 48% on Interactive Brokers....I should probably do the same
pat45 profile picture
are these working prototypes?? Any sales or production dates?
Pacifica Yield profile picture
@pat45 Yes these are still being tested for sale later this year and in 2022.
gametv profile picture
I would be inclined to buy here, except the whole EV sector looks to me to have another downward flush coming. Hard to tell, but alot of the companies have been forced back down to a region of support, but I think they need to break this support to finally clear out all the excess and start over again.
Semi-Tough profile picture
With Arrival, the first thing you hear about usually is the microfactories, but I think the proprietary composite panels distinguishes them even more from other EV companies. Here's the link to one of their videos showing how the composite panels are made and recycled. I love that you can strip the panels off an old Arrival van, then shred and recycle them into new panels. https://youtu.be/2aIYGrrKTaI
gametv profile picture
I am so conflicted about where we stand with EV stock valuations right now. Tesla is going to have a good earnings report, so will that spike the price higher in the short term? or have investors finally woke up to the fact that the company is highly over-valued in the long term and the whole EV sector faces massive competition?

My guess is that all EV stocks are being valued relative to Tesla right now, so if Tesla market cap falls dramatically it wipes out billions in market cap off every EV maker. including arrival.

But at the same time, this valuation for Arrival is decent. Could it take one more downturn? absolutely. so I just cant back up the trucks on buying the stock at this time...but I want to.
Semi-Tough profile picture
I like Arrival a lot (and have a lot invested in them, both the warrants and the stock). What I found interesting was the 60 Minutes segment a few weeks ago on Boston Dynamics. Besides the $111M investment Hyundai made in Arrival, they also invested $1.1B in Boston Dynamics, and now have controlling interest. I wonder if there's a connection because robotics is the key to Arrival's micro-factories success. This article refers to Hyundai leveraging Arrival's micro-factories as well: electrek.co/...

It's a nice package - Arrival leverages Hyundai's expertise, Hyundai leverages Arrival's micro-factories, both leverage Boston Dynamics robotics.
lsmtihcom profile picture
@Semi-Tough so the question is whether Arrival is actually a play on passenger vehicles as well as industrial transport? what type of deal does Arrival have with Hyundai. I notice that Arrival has a small passenger category listing in its financial documents, but it appears that it is modelling financial projections off the truck/bus business only and that passenger cars or any partnerships on passenger cars would be incremental.
Semi-Tough profile picture
@lsmtihcom I would say Arrival is not a play on passenger vehicles, though the prospectus does say they will develop vehicles jointly. Here's the actual wording:

Hyundai Motor Company and Kia Motors Corporation (“HKMC”). On November 4, 2019, Arrival entered into an agreement with HKMC to jointly develop vehicles using Arrival’s technologies. Through this agreement, Arrival has access to HKMC’s engineering expertise and supply chain. This partnership will leverage the use of Arrival’s microfactories and software innovation. Arrival will benefit from HKMC’s global footprint and economies of scale with the aim to reduce the cost of components. The joint development agreement will expire on November 3, 2024. This development agreement prevents Arrival from developing EVs with other traditional OEMs until November 3, 2022.
lsmtihcom profile picture
@Semi-Tough You can also google an article about this partnership. Hyundai/Kia specifically talk about leveraging Arrival tech to create a new type of EV. I think that they see that with EV propulsion the need for a complex steel frame and engine compartment are gone.

What I cant figure out is how this economic relationship works. Does Arrival plan to market cars under its own label, or get contracts to build the vehicles for Hyundai/Kia or get some other profit share?

I've started to buy shares, but going to accumulate slowly, as we might not have reached bottom yet. I view this as a long-term play. At some point I expect there to be a big shake-out of market caps for EV companies, as the glut of product in the area creates fierce competition. But Arrival seems to have manufacturing tech that is far different and will give it a few year head-start.
Just wait and watch in a few weeks or a few months
You will see it over 30
Semi-Tough profile picture
@Addy1992 I agree. Here's something that makes me wonder to what extent shorts are driving down the price. ARVL stock is considered "hard-to-borrow", so I entered into a securities lending agreement with my broker. They lend out the shares to the shorts, charge interest, and split it with me. I figure I'm holding it for the long term, so in the short term, I'll get interest and if the shorts do drive down the price, that's just an opportunity to buy more (which I've done). So the interest rate they paid me starting out was 8% meaning a short was paying them 16%. The interest rate increased multiple times until finally last Thursday they were paying me 18.5%, meaning they were collecting 37% from someone??? Suddenly yesterday, after a few positive articles on ARVL, the broker returned all my shares. Today, it's finally trending up. :)
@Semi-Tough you know what I’m holding over 300 stocks and most of it people were selling I was buying
I’m mad lol
I always do opposite
I buy when blood 🩸 on the street
SA-NJ52 profile picture
There were dozens of car companies at the turn of the last century. Now there are three in North America and a handful across the world.

Autos, even EVs, require a back of the house infrastructure to service and maintain these vehicles.

Perhaps if the cars could be 3-D printed, this microfactory model might make sense.

I will come back in 100 years to check this out.

@gandc These are buses and vans. Try reading
So, i guess that the question is, can the new arrivals compete with the entrenched manufacturers?
NestEgg Research profile picture
Nice summary! We agree that this is one of the more interesting EV names with lots of IP, much like Canoo.
lsmtihcom profile picture
@NestEgg Research Actually Canoo is not interesting at all. It doesnt have a plan that revolutionizes the production process. It merely has some interesting ideas on the design of a certain type of all-purpose vehicle. Canoo doesnt have a well-defined customer segment or any compelling value proposition. The fall in Canoo share prices is probably what has caused Arrival stock to tank after the SPAC closing.

I'm looking for Tesla stock to reverse lower. Shanghai Auto Show will feature alot of new Chinese EV competition and will demonstrate that Tesla is going to be in the middle of a hugely competitive situation in China by 2022.
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