Automotive giants Hyundai and Kia have announced they are investing €100m in UK electric car manufacturer Arrival.

As part of the partnership, Hyundai and Kia will be able to use Arrival technologies to develop electric vehicles.

Earlier this month, Hyundai Motor Group (which is made up of Hyundai, Kia and Genesis) announced plans to launch 44 electric vehicle models by 2025, and becoming one of the world’s top EV providers. According to Green Car Congress, the group will invest $87bn over the next five years in “vehicle electrification, autonomous driving and mobility services”.

Arrival is developing Generation 2 electric vehicles. These differ from Generation 1 vehicles, which are adapted from fossil fuel vehicles, and have been designed from scratch. They are more efficient in terms of “cost, design and efficiency”, according to Arrival.

They are assembled in micro factories, small factories that have a smaller footprint and are located near areas of demand, meaning they are less costly to run and are more energy efficient.

Arrival to disrupt electric vehicle market with Hyundai, Kia investment

The company has developed its own software, components, sustainable materials, focusing on disrupting the commercial vehicle market with its electric vehicles, which are at a similar price point as fossil fuel counterparts.

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By GlobalData

Hyundai and Kia will have access to Arrival’s microfactories and electric “skateboard” platform, while Arrival will benefit from the group’s “footprint and economies of scale” as it transitions from R&D to production.

Albert Biermann, President and Head of Research and Development Division at Hyundai Motor Group said:

“The eco-friendly vehicle market in Europe is expected to grow rapidly due to reinforcement of environmental regulations. Through the joint development of commercial electric vehicles with Arrival, we will be able to gain a competitive advantage and progressively establish our leadership in the global eco-friendly vehicle market.”

This funding boost will mean that Arrival will reach unicorn status, where a company that is valued at $1bn or more. There are currently 70 unicorn startups in the UK valued at over a billion, with Arrival now valued at £3bn, according to the Guardian.

As part of its ‘Road to Zero’ strategy, the UK will end the sale of new petrol and diesel vehicles by 2040. In order to achieve this goal, a thriving electric car sector is vital.

The UK electric vehicles market grew by 21% last year, according to Go Ultra Low, but the UK automotive industry is in the midst of a decline, with car production down 10% year on year in 2019. According to Wired, last year the UK government reduced subsidies for electric cars from £4,500 to £3,500, and cute the £2,500 grant for hybrid vehicles, and the country has been slower to adopt electric vehicles than some of its European counterparts.

However, significant investment in British startups such as Arrival could signify that electric vehicle manufacture could give the industry a much-needed boost.

Kevin Brundish, CEO and founder of AGM Batteries believes that funding from larger companies like Hyundai and Kia indicates that the UK automotive industry, particularly electric vehicles, is being recognised as a good investment:

“It’s great to see such a large financial backing in the sector, demonstrating that despite tough economic conditions, the UK automotive industry is still a good place for investment. Government figures predict the demand for electric vehicles, and for the lithium-ion batteries that power them, will surge 19 fold by 20301. We need investors, along with policy makers, to support the generation of a robust UK supply chain for electric vehicles and particularly lithium-ion batteries. This will not only boost the economy and create jobs, but will be a deciding factor in hitting the UK’s ambitious Road to Zero targets.”

Read more: Electric vehicles are key to meeting 2050 zero-carbon goal.