Russian-born entrepreneur Denis Sverdlov wants to revolutionize automaking, replacing Henry Ford's century-old conveyor-belt assembly lines with tiny factories that cost far less.
While most of the industry aims for big sales numbers that will keep huge plants busy, his Arrival, which will start producing electric buses and vans next year, is betting that doing just the opposite will help reduce production costs.
The company's microfactories need about $50 million in investment, compared with $1 billion for conventional ones, and 10 of them could make as many vehicles as a traditional outlet for half the capital expenditures and in a 10th of the space, Arrival says.
"Arrival has spent the last five years developing our unique model and proprietary technology and is now laser-focused on delivery," Sverdlov, who is founder and CEO, said in a Zoom interview. "We are not using metal stamping, welding and paint shops. Instead, we are using aluminum for chassis, proprietary composites for bodies and structural adhesive."
The company already has two microfactories -- one northwest of London in the town of Bicester, and the other in Rock Hill, South Carolina -- and aims to have 31 plants by 2024.
While EV startups commonly burn cash for years or never get in the black, Arrival said it hopes to start generating a profit by 2023.
Arrival's approach got backing from companies including Hyundai and BlackRock earlier this year, while United Parcel Service agreed to buy the first 10,000 vans equipped with advanced driver-assistance systems.
Arrival, which is combining with CIIG Merger to raise cash and get a Nasdaq listing, has an enterprise value of $5.4 billion. With more than 600 million outstanding shares after the tie-up, its valuation stands at about $15 billion, based on the trading of the blank-check firm since last month's announcement.
With a post-merger stake of 75 percent, Sverdlov's holding is worth about $11 billion. He declined to comment on his net worth.
Founded in 2015, Arrival now employs more than 1,400 people. It recruited top talent from the auto and tech industries including Avinash Rugoobur, its president, who used to be the head of strategy for General Motors' Cruise self-driving unit. Mike Ableson, the company's head of automotive business, was GM's vice president of EV infrastructure and global strategy. Some of the company's engineers previously worked at Tesla, Jaguar Land Rover, Apple and Google.
Thanks to the cheaper microfactories, the company is aiming to sell its electric vans and buses at about the same price as diesel equivalents. In the U.S., where Joe Biden's administration wants to fully switch to EVs by 2030 for buses built there, a vehicle that's 39 feet in length would cost less than $450,000, Sverdlov said in a conference call last month.