(Reuters) -Cash-strapped British electric vehicle startup Arrival SA said on Monday it would terminate plans to merge with special purpose acquisition company (SPAC) Kensington Capital Acquisition Corp V.
Arrival, whose shares fell more than 2% in extended trading, had said in April it would merge with Kensington Capital Acquisition Corp V to raise cash.
The blank-check firm did not immediately respond to a request for comment.
The news follows another EV startup, Lordstown Motors, filing for bankruptcy protection nearly a week ago.
Arrival had in April bet that the second reverse merger would release $283 million of cash held in trust before redemptions. In early 2021, the company had merged with CIIG Merger Corp.
EV firms have been experiencing dwindling cash reserves over the past few months on high costs related to production ramp-ups and soaring inflation.
The EV startup in May reported a 37% slump in cash and cash equivalent at the end of the first three months of the year, from the preceding quarter.
The startup warned in November it would run out of cash before the end of 2023. The company has cut staff almost 75% to 750 employees in a bid to conserve cash.
Arrival said in May it aimed to begin producing its medium-duty XL Van at a “microfactory” in Charlotte, North Carolina, by late 2024.
The company’s early investor United Parcel Service is still an anchor customer and it has ordered up to 10,000 vans.
Arrival has so far made three prototypes of its smaller L Van at its Bicester plant in the United Kingdom, which are being road-tested to aid development of the larger, more expensive model.
In May, the company said it expects to report one or more material weakness in internal control over financial reporting.
(Reporting by Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila)
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