Ally Winning, European Editor, PSD
One great thing about watching new industries emerge is the battle between the traditional companies that previously “owned” the space trying to adapt and the new usurpers causing the market disruption and tackling the issue in unique ways. The current movement from ICE vehicles to electric power has been particularly captivating. It has seen companies like Tesla emerge to challenge the industry giants, some who initially ignored the potential of electric vehicles and some like Nissan who made early attempts to join the party with its Leaf vehicle. The resistance didn’t last for long and now almost all of the traditional car makers are invested in electric or hybrid electrical vehicles. And yet, many of these seem to be traditional designs with an electric drive.
Now another start-up has emerged from stealth to try challenge the big boys, but this one is a little different. We only know the details of the company because of an investment from carmakers Kia and Hyundai. The two Korean firms made investments totalling $110m into Arrival, which values the company around $3 bn, making it one of the UK’s biggest start-ups at a stroke.
What is unusual about Arrival is that has decided to target delivery vehicles and not the larger consumer market. When you think about it, it makes sense. Consumers are much more distrustful of electric vehicles at present, especially the vehicle’s range. Business users are much more pragmatic. The people running delivery fleets look for reliability, low cost of ownership, safety and easy maintenance. Many delivery vehicles operate within cities, where a maximum range of 200 miles would not be a disadvantage. Also, with the rise of Amazon and other online shopping outlets, the number of commercial delivery vehicles has risen dramatically.
Arrival has set a target to produce vans that cost the same a combustion-powered ones, but have a working lifetime that is over six times that of traditional delivery vans and run at half the cost. To achieve this, the company started with a blank sheet of paper. It looked to differentiate in design, materials and manufacture from normal practices. The vehicles are designed in a modular fashion that allows easy differentiation, maintenance, repair and allows the vehicles to be built in non-traditional micro-factories. The micro-factories will use lightweight polypropylene as the main material for construction of the vehicles for easy replacement and customisation. Arrival hopes the new van will be profitable at volumes of thousands, rather than hundreds of thousands.
The electric delivery van is expected to hit the market next year. Arrival has already conducted tests with Royal Mail and has also been working with DHL and UPS. The company currently employs 800 people, with around half the engineers at the company work on software, and many of these are already working on making the vehicles autonomous.