Hyundai Motor Company and Kia Motors Corporation today made a strategic investment of €100 million (US $110 million) in a new partnership with Arrival, a UK-based electric vehicle startup (earlier post). Of the total investment, Hyundai will contribute €80 million; Kia €20 million.

Through the partnership, Hyundai and Kia plan to introduce competitively priced small and medium-sized electric vans and other products for logistics, on-demand ride-hailing and shuttle service companies. Arrival’s scalable electric platform can be adapted for multiple vehicle categories and types which Arrival, Hyundai and Kia will explore for the development of a range of Purpose Built Vehicles (PBV).

The partnership with Arrival will help Hyundai and Kia meet the rapidly growing demand in Europe for eco-friendly commercial vehicles, and accelerate the brands’ transformation from car makers to clean-mobility providers.

Founded in 2015, Arrival has production plants and R&D centers in the US, Germany, Tel Aviv, Russia and the UK. The company’s strength lies in its skateboard vehicle platform with a modular component structure, a cost-effective base which incorporates a battery pack, electric motor and driveline components.

Fully-scalable to accommodate multiple vehicle types, the platform can be used to accelerate vehicle development to meet diverse customer needs. Currently, Arrival is carrying out pilot projects with multiple logistics companies in Europe using cargo vans manufactured with the technology.

With the rapid global growth in online shopping, the volume of light commercial vehicles in urban areas has increased. The demand for eco-friendly commercial vehicles is expected to continue growing as environmental regulations tighten. From 2021, the EU will introduce the world’s most stringent vehicle emission regulations, limiting each automaker’s fleet-wide average CO2 emissions by around 27%, from 130 g/km to 95 g/km.

By working with Arrival, Hyundai and Kia plan to supply eco-friendly vans and other commercial vehicles—built in volume and based on Arrival’s platform —to European logistics companies and mobility companies that provide on-demand ride-hailing and shuttle services.

Hyundai and Kia recently announced the development of fully-electric Purpose Built Vehicles (PBVs). Hyundai presented its PBV concept as one of the smart mobility solutions at CES 2020 earlier this month. At its CEO Investor Day on 14 January, Kia also announced its plan to develop PBVs for shared-service companies and logistics companies.

The partnership with Arrival enables Hyundai to accelerate its two-track strategy to deliver battery electric and hydrogen fuel cell solutions for the European commercial vehicle market. To further support that strategy, Hyundai recently established Hyundai Hydrogen Mobility (HHM), the joint venture between Hyundai and Swiss hydrogen energy company H2 Energy. It aims to export 1,600 hydrogen fuel cell trucks to Europe by 2025, following the first export to Europe on 3 January as part of a pilot program.

Hyundai and Kia are exploring partnerships with various businesses to build a leadership position in the rapidly expanding global EV market. In May 2019, Hyundai and Kia invested KRW 100 billion (US $90 million) in Rimac, a Croatian high-performance electric vehicle company, focusing on collaborative research to secure capabilities to lead the global high-performance electric vehicle market.

In September 2019, Hyundai and Kia also invested in IONITY, Europe’s largest high-power electric vehicle charging network, and set the stage for sales expansion of EVs within Europe.