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Electric carmaker charges to unicorn status with boost from Hyundai, Kia

Just a couple of weeks into the new year, Europe has minted its first unicorn of the decade.

Electric vehicle startup

Arrival has received a €100 million (around $111 million) investment from car giants

Hyundai and

Kia, giving it a reported valuation of €3 billion. In one fell swoop, the British carmaker has become one of the continent's most valuable billion-dollar companies, just behind Swiss biopharma business

Roivant Sciences and German mobile bank

N26, according to PitchBook data.

The investment was made as part of a strategic partnership between the three companies to promote the adoption of commercial electric vehicles. Arrival will use the funds to develop its Generation 2 commercial van. This would be in contrast with the business' first product, which uses existing fossil fuels and is retrofitted with electric power trains. In a statement, Arrival wrote that its new vans have "been designed from a blank sheet and surpass traditional vehicles in cost, design and efficiency."

Access to Arrival's technology will put Hyundai and Kia in a position to compete with rivals as car manufacturers ramp up efforts to distance themselves from gas and diesel. In the midst of the climate crisis, consumers are becoming more environmentally conscious, which is in turn affecting their transportation decisions. The global electric vehicle market is expected to grow at a compound annual growth rate of 25.6% over the 2019 to 2026 period to top $567.2 billion by the latter year, according to a report from

Acumen Research and Consulting.

While electric vehicles may be cleaner over their lifetime—such cars using average European electricity are nearly 30% cleaner than cars with the most efficient internal combustion engines, according to the International Council on Clean Transportation—the batteries require more energy to make and produce more emissions.

This is perhaps the main draw of Arrival's Generation 2 product: the vehicles will be assembled using low footprint microfactories in high-demand locations to achieve profitability at thousands of units; and they are priced the same, or less than, current fossil fuel vehicles.

Arrival's fundraise picks up where the electric vehicle space left off in 2019. European startups in the industry raised a record $860 million in venture capital financing last year, according to PitchBook data, miles ahead from 2018's $340 million. Globally, VC-backed electric vehicle companies managed to amass $6.6 billion—around half of the decade's $13 billion peak the year prior. Despite the YoY decrease in deal value, deal count hit an all-time high of 208.

Featured image via Richard Newstead/Moment/Getty Images