The EV industry is headed for wave of consolidation in 2021

  • 2020 was a great year for electric-vehicle startups looking for funding.
  • But Arrival’s president told Insider he believes the EV industry will begin to consolidate in 2021.
  • The gap between the strongest and weakest players will become bigger and clearer this year, he said.
  • Visit the Business section of Insider for more stories.

Funding for autonomous-vehicle startups has become concentrated in a smaller group of companies in recent years as auto and tech firms have made a series of acquisitions and investments. Last year, Amazon bought the robotaxi startup Zoox, while Hyundai formed a joint venture with automotive-tech company Aptiv.

The electric-vehicle industry is set to begin a similar process this year, Avinash Rugoobur, president of the electric van and bus startup Arrival, told Insider.

“There’s going to be a consolidation,” he said.

Over the past year, Wall Street’s special-purpose acquisition company (SPAC) frenzy has taken over this business, with more than a dozen EV-related startups striking deals to go public. 

Not all of them will be winners. Most EV companies don’t have intellectual property that distinguishes them from their competitors, said Michael Ableson, Arrival’s CEO of North America. And while it’s difficult to pinpoint the strongest and weakest players from the outside, Rugoobur said, the gap between them will become bigger and clearer this year.

Rugoobur believes the EV industry’s consolidation will include a combination of acquisitions and bankruptcies. He pointed to the autonomous-vehicle industry as an example, citing Google’s decision to fund a self-driving-car project and General Motors’ move to buy Cruise. A lot of the startups that didn’t stand out enough to attract a buyer or raise the necessary funding disappeared, Rugoobur said.

Avinash Rugoobur

Arrival president Avinash Rugoobur.

Arrival


In the EV world, companies that have compelling, attractively priced vehicles underpinned by strong technology, as well as talented employees and a healthy culture, will be in the best position to succeed, Rugoobur said. From his perspective, Arrival has all of those qualities.

“I think that’s what really differentiates us,” Rugoobur said.

Read more: Arrival’s president reveals how his electric-van startup landed an order from UPS worth up to $1 billion

Arrival is betting that an innovative approach to manufacturing will allow it to become more profitable than its competitors while building electric vans and buses that are lighter, more spacious, and cheaper to own than the top gas- and diesel-powered alternatives. The keys to that strategy are a proprietary composite material Arrival will use instead of steel, plus a plan to build factories that are smaller than traditional auto plants but less expensive to build and operate.

There’s no guarantee Arrival’s plan will work — Tesla has shown how manufacturing ideas that sound coming out of the CEO’s mouth can fall apart in the real world — but there have been signs that outsiders are also excited by its potential. In early 2020, UPS announced an order for 10,000 Arrival delivery vans, with the option to buy 10,000 more, that could be worth $1 billion. Later in the year, the SPAC CIIG Merger Corp. reached an agreement to take Arrival public, likely this year.

Arrival’s moment of truth will come in the fourth quarter, when it plans to start building buses. By then, it will become clearer whether the company has what it takes to stand out from the pack. 

Are you a current or former Arrival employee? Do you have a news tip or opinion you’d like to share? Contact this reporter at mmatousek@businessinsider.com, on Signal at 646-768-4712, or via his encrypted email address mmatousek@protonmail.com.

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