Arrival is a UK company dedicated to building electric delivery vans, the kind of vehicles that typically feature a diesel engine. And while replacing all those clattering vehicles with zero emissions alternatives is appealing, the real news about Arrival is that it says it will manufacture its electric vans in local microfactories close to its customers. According to the company, those small manufacturing facilities could be profitable even with production runs of a few thousand vehicles a year.
Executives at Hyundai and KIA must like what they see from Arrival. Last week, the two companies invested $110 million in the company. The two South Korean companies will work with Arrival to further develop zero emissions electric vehicles that cater to commercial customers. With the money coming in from Hyundai and KIA, the UK firm is now valued at £3 billion and is a bright spot in an otherwise dismal manufacturing sector in that country.
Youngcho Chi, Hyundai’s president and chief innovation officer, said in a press statement, “This investment is part of an open innovation strategy pursued by Hyundai and KIA. We will accelerate investment and cooperation with companies with advanced technology such as Arrival, to respond to the rapidly changing eco-friendly vehicle market.”
According to The Guardian, Arrival was founded in 2015 by Denis Sverdlov, a Russian entrepreneur who sold Yota, a telecoms firm and smartphone manufacturer, in 2013. It now has 800 employees in the UK, Europe, and the United States. It has developed the skateboard that serves as a foundation for its vehicles in-house and says it can design new models for as little as £100 million whereas other companies require an investment of £1 billion or more to do the same thing. Gaining access to the manufacturing technology is one of the benefits Hyundai and KIA will get from their investment.
Such low cost strategies have gotten the attention of other manufacturers paying close attention to what Arrival is doing. Prototypes of the Arrival electric vans have already been tested by a number of potential customers, including Royal Mail, DHL, and BT.
Delivery vans do not typically require long range capability, which means the selling price of its vans can be competitive with conventional delivery vehicles with gasoline or diesel engines. Price parity could prove to be a powerful marketing tool for the company especially when significantly lower operating costs are factored in to the equation.
Sverdlov says the money from the two South Korean companies will help his company expand their focus to markets outside the UK. He also says he has ambitions to enter the passenger car market eventually. That’s an area Hyundai and KIA definitely know a thing or two about.