British start-up Arrival has ‘best claim to be the son of Tesla’

Business


CNBC’s Jim Cramer on Thursday endorsed CIIG Merger, the U.S. blank-check company set to take U.K. electric-vehicle maker Arrival public next year, as a speculative stock for investors to play.

“As much as I like this story, I think you can be patient,” the “Mad Money” host said. “But given how much this one already pulled back this week, I’m giving you my blessing to start picking at it tomorrow. Then I want you to wait for maybe a better pitch.”

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CIIG shares are down from a late-November peak, when the stock more than tripled in value in a matter of six trading days. The stock is down about 20% to $23.74 since Nov. 24.

Cramer said he would be more bullish on the stock if it comes down roughly $6 from its current level, likening Arrival to the hottest electric-car name on Wall Street.

“If it comes down below $17.50, you can buy it hand over fist, because this one has the best claim to be the son of Tesla — or daughter, to break the tyranny of that awful cliche,” he said.

Arrival, which reportedly had a $5.4 billion valuation in November, is the latest of a surge in special purpose acquisition companies taking private business public this year. SPACs raise money to fund an acquisition, taking the target firm to public markets.

American businessman Peter Cuneo, former CEO of Remington Products and Marvel Comics, set up CIIG Merger. Denis Sverdlov, who founded Arrival, will stay on as CEO of the carmaker.

Arrival plans to manufacture electrified buses and vans, rivaling the likes of Rivian.

“We’re still in the early innings of this story, but it’s much more compelling than some of these other small-time electric-vehicle start-ups,” Cramer said.

Cramer likes that Arrival, which plans to start production in the fourth quarter of 2021, aims to reinvent the manufacturing process with what the company calls “microfactories.” These plants can be built in existing warehouses, a fraction of the size of traditional auto plants, the company said.

Arrival has backing from UPS, Hyundai and BlackRock.

“They’re revolutionizing the entire auto industry, and they own a ton of intellectual property,” Cramer said. “They make all their own components, they’ll be cost competitive with gasoline and diesel, and that’s why Arrival got that $5 billion valuation from the get-go.”

Arrival expects to produce $1 billion in revenue in 2022, $5.1 billion in 2023 and more than $14 billion in 2024.

“The whole microfactory concept could revolutionize manufacturing, not just the auto industry, assuming it works as intended,” Cramer said. “If they can make an electric van or truck with a lower cost of ownership than the fossil fuel-powered alternatives, that’s a whole new ballgame.”



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