Arrival Termed One of the Best-Positioned Electrification Plays Currently in the Market as the Company Gears up To Merge With the SPAC CIIG Merger Corp. (NASDAQ: CIIC)
Arrival, the UK-based mobility startup that is upending the electric bus and van sphere through its ability to deploy low-CapEX microfactories, has been the subject of relentless interest from investors as the startup prepares to merge with the Special Purpose Acquisition Company (SPAC), CIIG Merger Corp. (NASDAQ:CIIC).
As an illustration of this elevated interest from investors, CIIG Merger shares have now registered gains of over 120 percent relative to the closing price of $13.36 per share on the 18th of November, when the impending merger with Arrival was first announced.
Now, it seems that Arrival is beginning to catch the interest of Wall Street analysts. To wit, Wolfe Research analyst, Scott Group, initiated the coverage on Arrival with an ‘Outperform’ rating today, while placing a $50 stock price target for CIIG Merger – the SPAC serves as the proxy for Arrival in the pre-merge phase. Crucially, Scott Group views Arrival as one of the best-positioned electrification plays currently on the market. Moreover, the analyst believes that Arrival’s use of microfactories could be a game-changer for the entire industry.
As a refresher, the combination of CIIG Merger and Arrival is expected to be worth around $5.4 billion, with the combined company having access to $660 million in cash – $260 million that CIIG Merger raised in its IPO as well as another $400 million in PIPE investment from institutional investors.
Of course, as stated earlier, the star attraction of Arrival is its ability to employ “low CapEx, rapidly scalable Microfactories that can be placed anywhere in the world” to manufacture affordable electric vans and buses. These microfactories can be established in existing warehouses, where the skateboard chassis is assembled from pre-fabricated Aluminum components and body panels, held together by powerful adhesives. Arrival uses an Aluminum chassis and composites to reduce the total weight of its vehicles, thereby precluding the need for heavier batteries and decreasing the overall cost in the process.
Arrival’s first manufacturing facility, located in South Carolina, is expected to be completed in Q2 2021 at the cost of $46 million. The facility will be capable of manufacturing around 1,000 electric buses or 10,000 battery-powered vans per year. Formal production is expected to commence in Q4 2021. Arrival also plans to construct another facility in the UK.
While still in the pre-revenue phase, Arrival has already secured an order of 10,000 electric vans from UPS, with the possibility of this order being doubled to 20,000. Crucially, the company expects to be cash-flow positive in 2023. The company also enjoys strong backing from major industry players. For instance, Hyundai and Kia have invested $110 million, while the financial behemoth Blackrock has injected $118 million in Arrival. BlackRock also owns a 7.5 percent stake in CIIG Merger.