Analysis: Inside Arrival, the £4bn UK start-up

However, Arrival says it has kept a lid on costs thanks to its ‘micro-factory’ production plan. Essentially, it plans to set up a network of small factories globally optimised to produce around 10,000 vans a year each, or 2000 buses.

“It means van factories can be profitable with thousands of vehicles rather than hundreds of thousands. It’s a different payback model,” Rugoobur said.

This gives Arrival adaptability in a way that huge plants with a single line can’t, he said. The polypropylene body panels are moulded in the required colours on site, removing the need for expensive paint shops or stamping machines. ‘Cells’ in the plant assemble different elements that plug into the skateboard chassis.

Small plants can be set up and making vehicles in around six months and their size means they can be built near smaller cities, bringing employment but not demanding thousands of workers. The first two will be a van plant near Bicester, starting in 2022, and a bus plant in Rock Hill, South Carolina, starting this year.

This low-expenditure approach is similar to the way electrified taxi and van maker LEVC operates in Coventry, but it most closely resembles a concept created in 2000 by two professors working at the Centre for Automotive Industry Research in Cardiff, Paul Nieuwenhuis and Peter Wells. Their Micro Factory Retailing idea called for the same network of small, low-investment factories assembling vehicles on nontraditional bodies to reduce the stratospheric costs borne by traditional manufacturers.

“The mass-production car industry overproduces to meet its minimum economies of scale. It is at this point that most economists stop thinking,” Nieuwenhuis told Autocar. “I have no evidence Arrival have seen any of our stuff, but it all fits.”

Whether this system would still work when (or if) Arrival produces vehicles in the quantities suggested by its $5.4bn valuation is up for debate, but at least it offers a gentler path into the industry than Tesla’s ‘production hell’ at its initial single Californian plant. “My suspicion is that in a good year, it will be less profitable, but also much more resilient when demand gets lower,” Nieuwenhuis said.

Arrival will have plenty of competition for its vans when they appear, not least market leader Ford, which will launch an electric Transit in 2022. Rugoobur said he welcomes competition but reckons Arrivals’ clean-sheet design will mean it has the edge – for example, on driver usability.

“No one has really thought about designing around the driver. So if the driver’s holding a box, they will be able to use their elbow or facial recognition to open a door,” he said. “That can only be done if you’re designing from the ground up.”

Why Arrival has chosen the UK

Arrival is based in Banbury, Oxfordshire. President Avinash Rugoobur explains why this global business is sticking to the UK.

“The UK has had a really incredible run of automotive engineering, for generations. Where the limitations are is that traditional automotive industry is slow moving. But if you de-shackle the engineers [90% of Arrival’s employees are engineers] and let people create something new, now you have inventive types connecting with experienced automotive types and also a bunch of other talent in the UK – software talent, robotics talent, composites talent. We’ve got all that – and when you combine it all, you create something new.