Will the 'Mini Factory' Revolution by UK Arrival, Also Invested in by Hyundai, Succeed? [Hidden Industry Story]

Established in 2015, UK Electric Vehicle Manufacturer
CEO Denis Sverdlov, Former Russian Minister
Became a 'Unicorn' Startup Last Year with Hyundai Investment
Betting on 'Microfactory' with Much Lower Costs than Existing Plants
Bloomberg: "If Strategy Succeeds, Many Companies Will Imitate"

Electric van from the British electric vehicle manufacturer 'Arrival'. / Photo by Arrival website capture

[Asia Economy Reporter Lim Juhyung] British electric vehicle manufacturer 'Arrival' achieved a market capitalization of approximately $14 billion (15.8 trillion KRW) through its public listing on the New York over-the-counter securities market (Nasdaq) on the 26th (local time). This amount corresponds to about one-third of Hyundai Motor Group (approximately 47 trillion KRW), the largest automobile company in Korea, drawing global investors' attention to Arrival. Notably, Arrival is a startup only in its sixth year since its founding and plans to begin mass production next year. How did Arrival attract the world's manufacturing market's attention without a single functioning car?

◆From Russian Minister to British Entrepreneur

To understand the birth of Arrival, one must first know about its founder and CEO, Denis Sverdlov. CEO Sverdlov was born in 1978 in Georgia, then part of the former Soviet Union, later moving to Russia to study electronic engineering. In 2006, he founded 'Yota,' a mobile telecommunications company and mobile phone manufacturer in Russia, and later served as its CEO.

Having gained fame in the Russian business world, he entered politics in 2012. He was appointed Deputy Minister of Communications in the newly elected Vladimir Putin government. During his tenure, his main tasks were rebuilding Russia's outdated communication infrastructure and reforming regulations in the Russian mobile telecommunications industry to facilitate the smooth introduction of next-generation communication technologies such as Long Term Evolution (LTE).

However, Sverdlov faced an unexpected barrier on his path to success. In 2013, the Putin government passed a security-related law prohibiting high-ranking officials working in Russia from opening overseas accounts. This was a devastating blow to Sverdlov, who was involved in investment projects in several countries. Ultimately, he resigned from his position as Deputy Minister of Communications and left Russia for the UK, where he could conduct business freely.

◆Founding of Electric Vehicle Company 'Arrival'

In 2015, CEO Sverdlov established an electric vehicle company named 'Arrival' in the UK. Based on initial investments from early investors, he set up a small research and development (R&D) center in Oxford, a hub of advanced industry and academia in the UK. For about five years, Arrival quietly focused solely on research and development without much publicity. Sverdlov insisted that instead of wasting time on disputes with investors, all efforts should be devoted to achieving the roadmap.

In January last year, Dennis Sverdlov (left), CEO of Arrival, poses for a commemorative photo after signing a contract with Hyundai Motor Group. / Photo by Yonhap News

Arrival again made headlines last January when it secured a massive investment of 150 billion KRW from Hyundai and Kia Motors. This investment instantly elevated Arrival to 'unicorn' startup status with a corporate value exceeding $1 billion (approximately 1.13 trillion KRW). This year, it was listed on the New York Nasdaq, achieving a market capitalization exceeding $10 billion (about 11 trillion KRW).

◆Aiming to Revolutionize the Automotive Market with 'Microfactory'

Arrival, which has attracted significant interest from global giants such as Hyundai Motor Company and BlackRock, an asset management firm managing assets exceeding $5 trillion (about 5661 trillion KRW), is promoting what kind of technology?

Recently, Arrival revealed in detail for the first time on its official YouTube channel its in-house developed solution called 'Microfactory.' The Microfactory is a small factory surrounded by multiple robots where Arrival manufactures electric vehicles.

Microfactory (top) and a typical automobile factory. / Photo by Arrival YouTube capture, Yonhap News

The Microfactory resembles a small logistics center more than a traditional automobile factory. According to Arrival, the factory is divided into 'cells' that actually build the cars and corridors that transport various parts. The cells use dozens of robotic arms to 'stack' cars like Lego blocks, and small robots transport the necessary parts through the corridors. Through this process, the Microfactory produces 10,000 Arrival electric vans annually.

The biggest difference between a traditional automobile factory and the Microfactory is cost. Traditional automobile factories are massive facilities costing at least several trillion KRW and can produce only one car model at a time. This is due to the so-called 'conveyor belt' manufacturing method, where robotic workers are placed along long belts or rails to sequentially produce vehicles. Connecting various robotic arms and electrical wiring along the belt increases costs accordingly.

In contrast, the Microfactory manufactures cars by stacking them in fixed locations without such belts. This significantly reduces the cost and time required to establish the factory, making the price of the produced electric vehicles much cheaper compared to competitors.

Arrival's skateboard platform. / Photo by Arrival website capture

Especially, CEO Sverdlov built Arrival's technological capabilities 'from the root up' to realize the Microfactory technology. The R&D facility in Oxford researched next-generation aluminum chassis to completely replace steel plates. Therefore, the Microfactory does not use expensive welding machines found in traditional automobile factories. Additionally, to create a virtually automated robotic factory, over 1,000 software engineers were employed over six years to implement everything from computer vision to automation in-house.

The 'Skateboard platform,' which attracted attention when Hyundai acquired a stake in Arrival last year, is also Arrival's proprietary electric vehicle platform designed to produce electric vehicles in tight spaces without conveyor belts. It can flexibly produce everything from vans to buses, trucks, and regular vehicles by connecting block-like platforms resembling skateboards.

◆Could It Replace the 'Conveyor Belt' That Has Lasted a Century?

According to the U.S. financial media 'Bloomberg,' Arrival recently announced to investors that it expects annual sales of $14 billion (about 15.85 trillion KRW) by 2024. The company plans to start full-scale mass production next year, ambitiously aiming to achieve sales of approximately 15 trillion KRW from virtually zero in about three years.

Arrival expects rapid growth through the Microfactory process. It plans to build a second U.S. factory in Charlotte, North Carolina, where its U.S. branch is located, and establish a new Microfactory at its headquarters in the UK.

If Arrival's Microfactory strategy succeeds significantly, there is speculation that the conveyor belt mass production process devised by Henry Ford, the 'King of Cars' in the U.S. about a century ago, could be completely overturned.

Bloomberg, in an article reporting Arrival's listing on the 3rd, evaluated, "If CEO Sverdlov's strategy succeeds, many entrepreneurs will start copying Arrival," adding, "Many 'hopes' are pinned on Arrival's future." It claims that the Microfactory has the potential to become the new standard for mass production manufacturing.