Uber's business model is that drivers are self-employed and so buy their own cars, meaning they look for the best deal. Uber’s UK website even recommends that drivers do that on its vehicle requirement web page. “Remember that you’ll make more money if you keep your costs low,” it states.
Arrival has promised a competitive price, but building cars using the same small-scale ‘micro-factory’ model means it cannot tap into the same scale that global automakers enjoy.
Arrival’s car will not just compete with new electric vehicles such as the Volkswagen ID3 or or Kia e-Niro, but also with used versions of the same cars. Uber said that “most ride-hail drivers drive second-hand” vehicles in its paper published last year called “Partnering to electrifying in Europe.”
Uber helps out
Uber has given Arrival a helping hand by promising that all journeys booked through its app in London will be electric only by 2025, meaning Uber’s drivers must switch wholesale to EVs. In other parts of Europe it has promised that 50 percent of all journeys will be electric in six additional cities, including Berlin, Brussels, Amsterdam, Paris and Madrid.
To help drivers switch, Uber has instigated a clean-air fee for riders choosing the “Uber Green’ electric car option, which then is handed back to the driver in form of money off leasing a car. For example, a Nissan Leaf from taxi-focused lease company Otto falls from 229 pounds ($323) a week to 206 pounds with the clean-air bonus.
Arrival, however, will still have to compete with global automakers, all of which are looking for new customers for their rapidly expanding line up of battery-powered cars. That list could include newcomers from China, who might find cost-conscious taxi drivers a less demanding route to market than trying to win over private customers who are more inclined to stick with traditional, well-known brands.
For example ride-share leasing specialist Splend this month announced a deal with Australia’s importer of China’s BYD brand to bring 3,000 electric cars to both Australia and the UK. Imports start to Splend’s UK and Australia operations in early 2022, it said.
Arrival will not have the advantages of LEVC, a company owned by China’s Geely that sells its purpose-built extended-range plug-in hybrid black cab to drivers in London. LEVC’s TX1 is expensive at 55,599 pounds, but the taxi is regulated by the UK’s ‘hackney carriage’ regime, which gives it more operational freedom - for example licensed black cabs can use bus lanes.
Of course, Arrival has similar problems competing against the established players in the electric van market and it has convinced a lot of key investors, including Hyundai, that it can overcome those ahead of the van’s production start in late 2022.
But unless it can offer something no-one else has, for example battery-swapping, selling cars to Uber drivers could be a leap too far.
