British electric vehicle maker Arrival’s gamble to transform car production

On the factory floor, four two-metre tall robotic arms are being put through their paces, whirring back and forth to assemble a phantom electric vehicle. A dozen similar stations are spread across the warehouse just outside of Bicester, Oxfordshire. Between them, four-wheeled robots trundle back and forth.

The bots can carry 1,000kg each or nuzzle together to share even heavier loads.  “We can turn any warehouse into a production facility for around £50m (GBP37m), and we can do it all over the world,”  says Avinash Rugoobur, president of Arrival. Founded in 2015, Arrival may be little known outside the world of electric vehicles but it has big ambitions.

The London-headquartered company has signed a £1.2bn deal to supply electric vans to UPS, is designing a car with Uber to be launched in 2023 and is working on an all-electric bus: tackling the commercial segment where Tesla has conquered the consumer. It earlier trialled branded electric vans for Royal Mail. It has operations in the US, Russia and the “motorsport valley” of Oxfordshire, where it plans to roll out 10,000 electric vans per year from its new factory – the first of many. 

Arrival aims to set up these mini production lines across Europe and the US, with four currently in the works. The plan secured the company a £13bn valuation – larger than many FTSE 100 firms – when it went public in New York after a takeover by a special purpose acquisition company (SPAC) in March. But momentum has faltered.

Shares have plummeted 70pc since its debut amid questions over the performance of SPAC companies, leaving its market cap hovering at around £5bn. Its latest results caused another wobble, after the vehicle maker pushed back some production timelines before tapping the market for £320m in senior notes.

Arrival has signed a £1.2bn deal to supply electric vans to UPS

Arrival was launched by Russian entrepreneur Denis Sverdlov and was largely self-funded from his personal £500m venture fund Kinetik until investment in 2020 by BlackRock and Fidelity. Sverdlov had founded several internet companies in the 2000s, before briefly becoming deputy communications minister under Vladimir Putin’s prime minister Dmitry Medvedev in 2012.

He is now based in London. At its Bicester facility, Rugoobur, who joined in 2019 from General Motors’ self-driving Cruise division, is keen to impress that Arrival is on the brink of rolling hundreds of snub-nosed electric vans to Britain’s roads at a fraction of the price of a traditional assembly line.  “Look at how the automotive industry is currently operating.

You have these large factories out in the middle of nowhere producing 100,000 to 200,000 units per year and shipping them all over the world,” he says. “We thought there has to be a better way to do it. The production line is a 100 year old technology.

As we move to EVs, is that how you would build a vehicle today?” One of its solutions is to reinvent the assembly line: Arrival uses modular cells for putting vans together, as opposed to lines that can stretch to more than a kilometre long. It has also developed a novel fibre, a polypropylene glass weave, used for the bodywork of its vans as opposed to steel. 

“When you talk about metal bodies you need painting lines, welding lines, the way the car is manufactured is tailored towards these huge centralised plants,” says Rob Thompson, Arrival’s head of materials. “We wanted to approach the materials manufacturing in a decentralised way, utilising all the technology that has become available.” “Denis one day asked us to show how strong the panel is, so we started driving over them with an eight-tonne truck.”

Arrival uses modular cells for putting vans together, as opposed to long assembly lines

What will ultimately become the bodywork of its vans, cars and bus starts as a weave similar to that used in clothing, which is mixed with glass fibre and compressed. It is then moulded into sturdy panels, to be embedded with colour pigments.

This cuts out the paint shop and the need for metal stamping: two of the most expensive sections of a normal production line. But the concept is as yet unproven. Arrival will not begin rolling vans out of its Bicester site until the latter part of 2022.

UBS analyst Steven Fisher argues in a note that “the timing of the ramp up looks a bit too optimistic” and the company will likely need to initiate further debt or equity offerings.  With so much to prove its stock price has reacted with volatility at the slightest hint things could be delayed. In November Arrival pushed back the start date of its factory in Rockhill, South Carolina and admitted its Bicester factory would cost £75m.

Shares dropped by almost a third. Rugoobur insists the commentators have “misunderstood” its efforts, insisting that “in the fundamentals of the business nothing has changed”. Electric car company investors are understandably jittery.

While everyone is hunting for the next Telsa, those targeting zero emission vehicles have been stung by much-hyped rivals in the past. In November, US electric truck maker Nikola agreed to pay the US Securities and Exchange Commission £125m after its founder was charged with fraud. Its misrepresentations included rolling a truck down an incline in a promotional video, passing it off as moving under its own power. 

The US regulator is also investigating two other electric vehicle companies, Lordstown Motors and Lucid. The former has said it is conducting an internal review, while Saudi-owned Lucid said it is “fully cooperating”. While these cases may make investors cast a sceptical eye over challengers, other rivals present a different challenge.

Amazon-backed Rivian, which secured a £100bn valuation on the back of its November float, is one such rival in the commercial vehicle segment. “Arrival will have a tough time going up against new upstarts like Rivian,” says Matthias Schmidt, an independent automotive analyst. He argues it is “amassing huge confidence from investors” and “will be able to scale and plough out plenty of test miles through Amazon’s fleet.”

At a nearby facility in Banbury, Arrival displays its van which is being developed for UPS, and its car – designed for ride-hailing app Uber. Many of its commercial deals are, so far, letters of intent and could therefore change.  Overturning the car production line that has been in use since the time of Henry Ford is undoubtedly ambitious.

In a few months, it will become apparent whether Sverdlov’s mighty gamble and personal investment has paid off.