London-based electric vehicle (EV) manufacturer Arrival Vault (NASDAQ:ARVL) stock is trading as a post-special purpose entity corporation (SPAC) reverse merged business combination. As is the normal sequence, shares collapsed after its reverse merger with CIIG Merger Corp. The SPAC boom came and went as EV leader Tesla (NASDAQ:TSLA) made a parabolic move into the $900s at the height of the EV and SPAC craze followed by the collapse into the $500s taking down the EV segment, a resurgence is awakening. This produced a lot of heartbreak and angry bagholders stuck in shares of heavily diluted EV stocks that promised high and have yet to deliver. However, Arrival seems to be a different kind of EV player that is redesigning the process of making EVs. It’s taking the concept of ghost kitchens for automobile manufacturing in the form of the Microfactory concept which completely reshapes the traditional production model of U.S. EV makers. These are pop-up fully automated facilities composed of robotic cells assembling up to 10,000 EVs a year. This is a revolutionary approach to cost-effective EV production that has a great narrative that lends to the eco-friendly tailwinds adopted by the Biden administration. Prudent and risk-tolerant investors looking for a rebound in the EV sector utilizing a different production model can watch for opportunistic pullback levels for exposure.
Arrival Microfactories
Arrival will produce its EVs at its Microfactories, not capital intensive serial assembly lines where traditional vehicles are made. They are reactive, flexible, adaptable, and reconfigurable. Microfactories, almost like ghost kitchens, utilize artificial intelligence (AI), automation and robotics that uses each piece of facility space (20 meters x 20 meters) as a “robotic cell”. The synergistic flow of each cell creates a cumulative effect of producing affordable, economical, local, and quality EVs. It alleviates stamping and painting and no welding. These Microfactories can be housed in existing warehouses (usually a few hundred thousand square feet) and can commence production immediately and deployed as needed all over the world to be created locally and used locally. Arrival plans to sell its EVs at costs that match diesel and gas-powered vehicles. The Microfactory concept enables much lower capex and lowered costs to produce EVs. Arrival vehicles are much lighter due to a proprietary composite which also enables for smaller and cheaper battery packs. The newest Microfactory is a $41.2 million facility in Charlotte, North Carolina. This is much cheaper than the $1 billion estimated costs of a traditional assembly line type of automobile factory. It will employ 250 workers able to produce 10,000 electric vans operating on two shifts annually when it commences operations in late 2022. The Company plans to roll out many Microfactories around the world as needed with fleet sales like UPS. It takes only six months to set-up and commences operations. Arrival CEO Michael Ableson stated:
“Our newest Microfactory will be producing two different classes of EV vans for our U.S. customers, expanding the zero-emission options for fleet operators and accelerating the mass adoption of electric vehicles.”
The Company plans to generate revenues and be cash flow positive in 2023.
UPS Validation
Delivery giant United Parcel Service (NYSE: UPS) pre-ordered 10,000 Gen 2 electric vans for delivery before 2024 valued at approximately $1.2 billion. It has also received a $100 million investment from both Hyundai Motors and Kia Motors. These three giants help to validate Arrival and its technology as a potential major player in the EV market. Unlike the hype surrounded by Lordstown Motors Corp (NASDAQ:RIDE) infamously claiming over 50,000 pre-orders, this is real. Arrival delivered an EV prototype to UPS as indicated in a social media post on Apr. 21, 2021.
News Events
On May 28, 2021, Arrival posted a short video clip demonstrating its autonomous driving technology in collaboration with Innovate UK. On May 4, 2021, rideshare leader Uber (NYSE:UBER) announced a collaboration to create affordable, purpose-built electric vehicles for the ride-hailing industry. The companies plan to develop an Arrival car for production in Q3 2023 to be rolled out in time to meet Uber’s commitment to an all-electric fleet in the UK by 2025. Prudent and risk-tolerant investors can utilize opportunistic pullbacks to gain exposure in shares of Arrival.
ARVL Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the landscape for ARVL stock. The weekly rifle chart bottomed off the $12.59 Fibonacci (fib) level and managed to make a strong rebound before another reversion back down. This quick rollercoaster action has caused the moving averages (MAs) to stall out with the weekly 5-period and 15-period MA overlapping flat around $19.18. The weekly stochastic has stalled after a bounce, setting up a make or break. The weekly formed a market structure high (MSH) sell trigger on the breakdown under $26.15, while also forming a market structure low (MSL) buy trigger above $19.95. The daily rifle chart has literally gone through a five point range in three-days. The daily 5-period and 15-period MA overlap at $19.88. The daily also formed a MSH sell trigger on a breakdown below $17.91 which also formed a daily MSL buy trigger on the breakout above $15. The daily stochastic has crossed back down under the 40-band. The daily lower Bollinger Bands (BBs) point to an expansion at the $17.44. Risk-tolerant investors can monitor opportunistic pullback levels at the $17.45 daily LBBs, $16.70 fib, $15.32 fib, $13.82 fib, $12.59 fib, $11.73 fib, and $10.61 stinky 5s level. Upside trajectories range from the $22.12 fib up towards the $30 fib.