Via Yahoo Finance

The UK-based electric van maker Arrival has secured an £85m investment from South Korean car firms Hyundai and Kia – a cash injection which values the business at £3bn, defying the struggles of the British automotive industry.

The money will be used by Arrival to fund the next stage of its development as it prepares to scale up production of an electric van it hopes will rival those from more established manufacturers. The Korean companies will work with Arrival to develop new commercial vehicles with zero exhaust emissions.

The £3bn valuation means Arrival has achieved “unicorn” status, a new company valued at more than $1bn (£770m). This is a rare feat with British manufacturing.

The company was founded in 2015 by Denis Sverdlov, a Russian entrepreneur who sold Yota, a telecoms firm and smartphone manufacturer, in 2013. Arrival has since grown rapidly, expanding its UK and global workforce from 600 people in September to 800.

It has a factory in Banbury, but it has plans to build “microfactories” near major markets such as Los Angeles and New York. The company says those plants would be profitable producing only a few thousands vans a year.

Arrival’s first product is a battery-powered electric van, priced at the same level as comparable petrol or diesel vehicles. The van is targeted at urban delivery, which does not have long range requirements that would be limited by today’s battery technology. Prototype vans have already been trialled by delivery companies including Royal Mail, DHL and DPD, as well as BT.

Arrival’s rapid expansion is being watched with interest by other carmakers. Rather than emulate traditional assembly line processes, the company says its modular design means robots can assemble the vans in a single location. While designing and building a new vehicle platform is thought to cost traditional carmakers about £1bn, Arrival says it could do so for £100m.

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Arrival has developed most of the vehicle itself, including software, components, materials and a modular “skateboard” platform. The company also has a longer-term ambition to enter the more competitive market for passenger cars.

The investment will also give Kia and Hyundai access to Arrival’s manufacturing technology, underlining the pressure more established automotive players are experiencing as the industry begins to move away from fossil fuels.

Youngcho Chi, Hyundai’s head of innovation, said: “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.”

Sverdlov described Arrival’s offering as “generation two electric vehicles” and said the £85m investment would allow global expansion.

The cash injection is a welcome piece of news at a time when the British automotive industry is earmarking factories for closure and investment has for the most part stalled. Ford’s Bridgend engine plant will shut by September, while Honda’s Swindon factory will close in 2021.