Words by Jeffrey Arthur
With a $118 million backing from investment heavyweight BlackRock, Arrival may just be about to change the way we travel.
Electric cars and renewable energies have become part of the conversation surrounding markets, investment strategies and the health economies at large. An anticipated shift towards the green economy – which we think is already here – and talk of a green recovery following the global pandemic has accelerated what was a rapidly growing market.
The auto industry is changing. And whilst Tesla and Elon Musk might have stolen the headlines with soaring stock prices and eye-watering market capitalisations, other companies have been quietly building up interest. Their name might not always appear on the frontpage of financial newspapers, but Arrival has quietly been going about the business of changing the way we travel to better suit the environment.
For starters, they’re an electric vehicle maker backed by large car companies Kia and Hyundai. Their main area of focus is vans and buses, explaining, perhaps, the lack of attention they receive. But make no mistake, they’re no less important. With plans to build electric delivery vans for UPS, and by raising $118 million to fund factories in the UK, they’re on track to gain an advantage over other like-minded companies.
The company’s mission might be clear, but its beginnings are slightly unusual. It was founded in 2015 by Sverdlov, an entrepreneur who found success by selling a Russian cell phone company, Yota, for an undisclosed amount. By making commercial vans and buses, Sverdlov and the company hope to capitalise on the increasing demand for emission-free vehicles which are cost-effective to run and profitable.
By normal standards, the business has been in existence for a short amount of time; its growth, however, has been fairly rapid. Aside from the capital secured from BlackRock, it plans on building a $46 million pound “microfactory” in South Carolina, enabling it to make 1,000 buses a year by next year.
“With our new micro-factory in South Carolina, we are looking forward to partnering with more cities and companies to create a sustainable future.”
Denis Sverdlov
Aside from the factories the company plans to build in England and the United States, it has also has plans for global expansion: “This additional capital will be invested into Arrival’s growth, as we deepen and expand our presence in the U.S. and other new markets globally”, Sverdlov said. Those unfamiliar with the company might find its rapid growth puzzling, but a closer look at Arrival’s backers, and more importantly, the company’s CEO, and it all starts to make sense.
Sverdlov’s fairly young (he’s in his early 40s) and is incredibly ambitious. So far, by backing the company, he’s been able to raise finance and get some of the world’s biggest car companies and finance firms on his side.
Earlier this year, interest in the company piqued when it was announced that Hyundai and Kia bought a $110 million stake in the business. As a result, its valuation shot up to $3 billion and potential customers began ordering in their droves. UPS confirmed they were to buy 1,000 Arrival fans for its fleet, making their deliveries significantly more eco-friendly. The deal is worth $500 million. It’s worth mentioning that UPS, now one of Arrival’s biggest customers, is also an investor in the company. The deal struck between the two companies includes an option for UPS to purchase an additional 10,000 vans for its fleet.
For Arrival, things couldn’t be going any better.
In the electric vehicle market, cost is key, and Arrival knows it. To gain an advantage over rivals, the company plans on keeping costs down for customers by using lighter weight materials such as aluminium instead of steel.
When it comes to buses, the company has the same ambition: build a fleet that is cost-effective and expand globally. The buses the company says it will make in its South Carolina factory will cost a lot less than their closest rivals’ alternative.
As they expand, and with plans to invest in cost-effective battery production and weight reduction, Arrival’s mission to change the way we travel might soon be a huge success.