South Korean carmakers Hyundai and Kia will pour €100 million ($A161 million) into UK electric vehicle startup Arrival to develop purpose-built zero emissions delivery vehicles.
The partnership will see Kia and Hyundai bring to market small and medium-sized electric delivery vans that compete well with fossil-fuelled equivalents on price, using Arrival’s adaptable and scalable electric skateboard platform.
The €100 million investment, to which Kia will contribute €20 million and Hyundai €80 million, into the 5-year-old startup means that Arrival is now valued nearly €4 billion ($A4.85 billion), according to data from CB Insights.
With just five other startups in the UK valued at over €3 billion in the UK , the investment makes Arrival the second most valuable startup after computer hardware startup Global Switch, and in the company of fintech startups Greensill and TransferWise.
President and head of R&D for Hyundai, Albert Biermann, says that with the increasing restrictions imposed by Europe’s fuel emissions regulations, the commercial electric vehicle market is expected to grow rapidly.
The European Union’s 2021 fuel emissions targets which are being phased in over the coming 12 months, will put further restrictions on emissions by vehicles built and sold by automakers, down to 95 grams per kilometre from the previous 201.5 gram average.
To avoid big fines for exceeding the targets, automakers are either doubling down to ensure they can reach the targets by selling more eco-friendly vehicles, or buying credits from other automakers such as in the case of Fiat-Chrysler and Tesla.
“Through the joint development of electric commercial vehicles with Arrival, we will be able to gain a competitive advantage and progressively establish our leadership in the global eco-friendly vehicle market, with Europe at the forefront,” Biermann said in a statement.
Arrival CEO Denis Sverdlov said in a statement that Arrival’s Generation 2 electric vehicles, which can be delivered at the same price as their petrol and diesel counterparts, are “game changing”.
“Kia and Hyundai make world-class vehicles with uncompromising quality. This strategic partnership will empower our companies to scale Generation 2 Electric Vehicles globally,” said Sverdlov.
Arrival, sister company to Charge which plans to convert nearly 500 classic Mustangs to electric drivetrain, currently has around 800 staff and by developing software, materials, components and scalable EV platforms in microfactories says it can create purpose-built vehicles adapted to any mobility ecosystem.
Both Kia and Hyundai have announced the intention to develop electric purpose-built vehicles (PBVs), with Hyundai sharing its latest PBV concept with ball-type wheels at the recent CES 2020 in Las Vegas.
Kia also recently announced a plan at its January 14 Investor day to develop PBVs for shared-service companies and logistics companies.
Youngcho Chi, president and chief innovation officer at Hyundai said in a statement: “This investment is part of an open innovation strategy pursued by Kia and Hyundai. We will accelerate investment and cooperation with companies with advanced technology such as Arrival, to respond to the rapidly changing eco-friendly vehicle market.”
“We are excited to come out of stealth mode with our partnership with Hyundai Motor Group, and our complementary expertise will allow us to rapidly design, build and roll out vehicles together. Accelerating electric vehicle adoption is good for everyone – for people, business and the planet and we are pleased to undertake this mission with our partners Kia and Hyundai”, said Avinash Rugoobur, chief strategy officer of Arrival.
Other companies are also introducing all-electric delivery solutions in Europe, an example being that of online retail giant Amazon which has recently deployed ten electric Mercedes-Benz eVito vans in Munich.