Key points:
- Arrival stock rallied 15.4% after manufacturing its first electric van.
- The company manufactured the van at its UK micro-factory.
- The electric van will be used for testing and validation purposes.
The Arrival SA (NASDAQ: ARVL) price rallied 15.46% after the manufacturer of the electric vans announced that it had manufactured its first electric van at its first Microfactory in Bicester, UK. investors cheered the news that proves it is possible to manufacture EVs at micro-factories, a concept that multiple EV startups have embraced in a bid to cut costs.
As investor sentiment toward cash-burning EV startups changed, more companies have had to rein in runaway costs. Investors have become impatient with unprofitable companies as they struggle to lower their operating costs.
Also read: Five Best Green Energy Stocks In 2022.
As Tesla has proven, manufacturing EVsat scale can be profitable. However, the journey to profitability is riddled with challenges and not every startup will make it to the other side. Some EV startups have already been liquidated or sold to other investors after failing to raise additional capital to keep funding their operations.
Startups like Arrival have chosen to build and operate micro-factories with lower fixed costs but have the potential to be scaled up in future as demand for the company’s EVs increases. The company noted that it had produced its first van using in-house technologies.
Some technologies included autonomous mobile robots, composite materials, a software-defined factory and in-house components. In addition, the firm revealed that it would use the van for testing, quality control and validation purposes.
Investors cheered the significant milestone achieved by Arrival as the company promised to provide further details about its next steps during its Q3 earnings webinar scheduled for November 8, 2022.
While today’s milestone is admirable, Arrival still has a long way to go before it can scale up its manufacturing activities and produce its vans at a profit. So the question remains, will its bakers be patient enough with the company to continue funding it until it can profit?
There is no straightforward answer here. Arrival’s future will depend mainly on what the company tells investors on November 8 and how they will receive the information. Meanwhile, I will be waiting for that meeting.
*This is not investment advice.
Arrival stock price.
The Arrival stock price surged 15.46% to trade at $0.9094, rising from Thursday’s closing price of $0.7876.
