Hyundai And Kia Charge Up The UK Electric Car Industry With Investment Of €100M In Arrival

  • Jan 16, 2020 GMT
  • Team Kalkine
Hyundai And Kia Charge Up The UK Electric Car Industry With Investment Of €100M In Arrival

Electric Vehicles Sector Background In The UK

In the last half decade gone by, there has been a constant push from governments, ecological institutions as well as other organisations around the globe, to move from being carbon-producing entities to turn out to be carbon neutral, a move that has been basically determined by pressures emanating around the globe to control environmental change. This move has also influenced the world's biggest car organisations as well as the luxury carmakers, who are currently in the process of transforming their processes to move their technology and innovation towards producing or outsourcing batteries for the purpose of creating electric vehicles. These are extremely environment- friendly from their current fleet of fossil-fuel-based vehicles running on diesel and petrol, which have an adverse effect on the environment. This strategy will be extremely important for these companies in trying to become carbon neutral. The electric vehicle market is expected to reach US $1.5 trillion by the year 2025, translating into a sale of 97 million vehicles by 2025.

In terms of numbers in the United Kingdom, Battery Electric Vehicles (BEV), Plug-in hybrid electric vehicles (PHEV), Hybrid Electric Vehicles (HEV) and Mild Hybrid Electric Vehicles (MHEV) registrations have seen a sharp rise in the last 3 to 4 years, especially in the passing year. In the month of December 2019, the diesel vehicle registration went down by around 19 per cent as compared to December 2018. Even though the petrol vehicle registrations went up by 2.6 per cent in December 2019 as opposed to December 2018, the market share of the petrol vehicles went down to 63.3 per cent in December 2019 as opposed to 63.8 per cent in December 2018. This explains how the number of electric vehicle registrations has increased, which has led the market share for those vehicles to increase in the month of December as well as for the whole year.

BEV registrations went up by 220.7 per cent year on year for the month of December, and the market share for BEVs jumped significantly from 1.1 per cent to 3.3 per cent. Similarly, PHEV registrations were up by 21.8 per cent year on year, HEV registrations surged 34.4 per cent year on year. The biggest surprise came from Mild Hybrid Electric Vehicles, for which, MHEV diesel registrations were up significantly by 438.4 per cent, and MHEV petrol registrations were up by 265.9 per cent.

Innovations in the EV space

Some of the biggest innovations in the electric vehicle space are coming in terms of the lithium-ion batteries that are used to fuel these vehicles. In case of the United Kingdom, it is expected that to support the reputedly growing demand of EVs, the UK government will need to attract capital to build at least two Gigafactories by the year 2025, and at least eight by the year 2040, when the demand is expected to reach 130 GWh per annum. Another factor is the cost-effectiveness of these batteries as it has been observed that price of these batteries has gone down by around 80 per cent since the year 2010 and will probably drop another 45 per cent by the next year. This could be a significant boost in terms of generating demand for EVs by reducing costs. Another requirement that is coming into the picture is the development of infrastructure by the governments that can support the usage of EVs. This infrastructure primarily includes Charging stations, for which the UK government has already started looking for capital, so that these hi-tech charging stations could be made available around public areas, just like the petrol and gas pumps, which can support the smooth operation of EVs.

How does Hyundai and Kia’s investment impact the industry?

On 16th January 2020, UK based Generation 2 Electric Vehicle developer, Arrival, issued a press release to announce that Hyundai and Kia, the two South Korean automotive giants, made an investment worth € 100 million in the company, making it one of the United Kingdom’s most valuable Unicorn start-ups.

Arrival, which is a technology company, focused on the development of Generation 2 electric vehicles, have specialisation in surpassing the legacy technology, a technology which can develop high power vehicles at the same cost as that of traditional fossil fuel-powered vehicles. The company is in the business of developing software, materials as well as components. The company operates through its micro factories (a smaller version of Gigafactories), that allow the company to build multi-purpose vehicles, that can have the capability to adapt to any kind of mobility ecosystem. The company has a strength of over 800 people in terms of human resource, who have expertise in areas such as software, technology, design, product as well as automotive.

The investment marks the beginning of a key association between the automakers to mutually fast track the commercialisation as well as adoption of electric vehicles all around the world. Hyundai and Kia will utilise key Arrival tech to help accomplish their recently declared objective to create mobility services and change their approaches towards building cleaner fuelled power cars. Through the course of the association, Arrival, Hyundai and Kia will utilise the company's adaptable skateboard platforms and tech to make new purpose-built electric vehicles (PBVs) across a wide range of vehicle classes. Hyundai and Kia will use Arrival's micro-factories and programming capabilities while Arrival will profit by the Original Equipment Manufacturers (OWM’s) worldwide partnerships and global presence as well as their economies of scale. This will help speed up the 'Two Track' policy Hyundai has adopted to bring carbon-neutral battery and power technologies to the commercial vehicle markets.

In terms of the current strategy of Arrival, the company wants to enter the commercial vehicle segment, as the research done by them suggests that this space has grown the most in the recent past and hence is also the largest contributor to the carbon emissions. As per the company, their EVs would be a great fit for this area because of the benefits provided like the predictable routes, and overnight depot charging. It will allow smooth functioning of these vehicles as commercial fleets. The commercial vehicle stands at around 300 million globally, and hence the development will have a cascading impact on the global emission.

This partnership is also relevant to the company in terms of their business life cycle, as Arrival is currently in transition from the Research and Development phase to full-scale production, where the two Auto giants can help the company in terms of mass-scale production, as well as global vehicle launches, which will fall in line with the strategy of the company to scale rapidly around the world.

This move by Kia and Hyundai has come after significant development was made by other car makers across the world in transition to the Electric Vehicle space, as recently, in the United States of America, Ford Motor Company, announced a partnership with Rivian which is an electric pick-up truck company, with an  investment worth US $500 million. Tesla has also launched a premium “Cybertruck’, an all-electric battery-powered light commercial vehicle which has already received a large number of pre-orders.

Conclusion

The electric vehicle space has seen some major developments in last some years, especially in the battery segment, which has led some of the biggest car makers in the world to move their focus from traditional vehicles to EVs. Though, these moves are not only environmentally driven but political as well. However, most importantly, with the dawn of this new decade, this has also started a transition in consumer demand. Though the moves in this space have been extremely positive and motivating on both ends of the spectrum for producers and consumers alike; there is still a long way to go as the global geo-political environment provides a major hindrance in terms of this market excelling to its full potential.

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