Weekly Brief: EV Start-Ups Scrambling for Investment

Denis Sverdlov, founder of electric vehicle start-up Arrival, stepped down as the company’s CEO.

The move comes at the end of a tumultuous year for the company, which slashed its workforce in the UK as it shuttered both its EV bus and EV rideshare car divisions. In the process, Sverdlov watched his net worth plummet 94% from what was once more than $11Bn at its peak in April 2021. Now, he’s out of the billionaire’s club and out of a day job.

Stepping in as the new CEO is Peter Cuneo, who previously served as the chairman of the board at Arrival and before that helmed the ship at Marvel Entertainment leading up to its lucrative acquisition by the Walt Disney Company. Sverdlov will take over Cuneo’s role as chairman of the board. Cuneo’s first order of business will be to raise the hundreds of millions of dollars that Arrival needs to keep the lights on. The company has tightened its focus to bringing electric vans to market in the US but, even with this narrower scope, it needs to fundraise and fundraise fast.

That’s no sure thing in the present market. Last week Faraday Future, which was part of the ill-fated crop of EV start-ups to go public via reverse mergers during the pandemic, delayed deliveries of its FF 91 luxury EVs into 2023 and perhaps indefinitely. The company may collapse completely if it can’t raise funds quickly. A regulatory filing revealed that Faraday Future’s cash reserves dwindled to a measly $31.76M at the end of the third quarter. That’s hardly anything for a company that’s losing $90M a quarter. It’s possible that Faraday Future and Arrival both could be history before 2023 rolls around.

If Arrival manages to survive, it’s a loss for the UK anyway. The company’s new US-only focus is driven in large part by the EV tax credits that the US government codified under President Biden’s Inflation Reduction Act. That Act stipulated that if carmakers want to qualify for tax credits, their cars and the parts within them must be mostly manufactured in the US, which has led to a flurry of companies rushing to invest in US-based operations. Meanwhile the UK is headed in the opposite direction, placing a tax hike on EVs instead. The UK’s new budget is an apparent attempt to brace for recession but is hugely shortsighted when you look at the job creation and economic stimulation that comes when governments incentivize the EV revolution.

In other news last week, Elon Musk announced that all Tesla drivers in North America can now download the beta version of Full Self Driving into their vehicles for $15,000. Tesla itself has not confirmed the news, which means that this may or may not be news at all, especially since Musk made the announcement via Twitter, a platform where it’s increasingly hard to say what is fact and what is fiction since he took over.

That being said, sleuthing through online Tesla chat rooms seems to suggest that the rollout is happening. If so, Tesla drivers will be able to upgrade their Autopilot systems with new features under the FSD suite, like automatic braking, auto parking, assisted steering in most urban and highway driving environments and traffic light recognition. Tesla drivers are encouraged to keep their hands on the wheel while the vehicle is in motion but encouragement via small print on a website hasn’t worked to date with Autopilot use cited in 273 accidents in the past 12 months, five of them fatal, according to data released by the National Highway Traffic Safety Administration. That makes up 70% of all accidents involving advanced driver assistance systems in the US. Tesla is currently under criminal investigation by the US Department of Justice for falsely advertising Autopilot’s capabilities.

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