Tesla vs Arrival: Who Will Become The Most Circular Auto Brand This Century?

‍We unpack how two growing electric vehicle (EV) mobility companies are going to market with very different operating models. Who will be more sustainable and deliver greater positive environmental and social impact to the planet is to be seen.

Setting the Scene

For more than 150 years, the automobile industry has been one of the growth engines for economic prosperity to many countries, cities, local regions. Close to 100 years ago there was a plethora of auto brands battling to grow and deliver freedom to millions yet to subsequently be left with a handful of large global multinational players dominating the market globally. At a macro level, design and process innovation took over the industry driving bigger and more mega factories and global supply chains producing automobiles ‘just in time’.

COVID has demonstrated to us all how fragile this operating model has become with vehicles taking many more months to be delivered (due to supply chain and logistics bottlenecks). The climate crisis has forced the industry to evolve with new technologies and capabilities towards electrification and digitizing process flows and customer experiences.

Improving recycling, reducing waste and shifting towards reuse, recycling and remaking of materials together with an electrification is the next big frontier in the 21st century for this industry.

Check out the links below for industry reference reports which dig deeper into the shift towards a cleaner more sustainable mobility sector:

The circular economy could forever change how cars are made – here’s how

World Economic Forum, December 2020

https://www.weforum.org/agenda/2020/12/how-the-circular-economy-could-forever-change-how-cars-are-made/

Forging Ahead A materials roadmap for the zero-carbon car

McKinsey, December 2020

https://www.weforum.org/reports/forging-ahead-a-materials-roadmap-for-the-zero-carbon-car

Scaleups vs Transformers: A new battleground has emerged as we shift towards a cleaner, electrified future.

Thanks to digital technologies over the last few decades, whole industries with old, existing incumbents (‘transformers’) have been forced to rethink their value in market as younger, faster, and more nimble companies (‘scaleups’) have entered markets with a more customer focused approach.

The automobile industry has not escaped this and some of the ‘older, established brands like VW, Ford, GM, Toyota to name a few are being challenged by younger, fast growing brands like Tesla, Rivian, Lucid, Arrival to name a few which are proactively shifting the global market towards greener, electrified products and capabilities. Not incumbent by operating processes, systems, and stakeholders, the scaleups are shaping new operating models and capabilities to accelerate the shift to a more decarbonised and energy hungry world.

Tesla vs Arrival - Vertically Integrated Operating Models Which Are Similar Yet Very Different.

Based on countless articles, posts, conversations about these two companies in market, it’s evident to me both Tesla and Arrival have been in existing for several years (Tesla more) a ‘vertically integrated’ business GTM model is the best pathway towards achieving competitive advantage, defensibility, brand affinity, and operational excellence all in a 21st century approach.

Let’s look at three key areas across an operating model and how Tesla and Arrival compare:

Production & Distribution

When it comes to production and distribution of EVs, Tesla and Arrival are far apart in their approach and value in market. Mega vs micro factories, global supply chains and logistics vs local circular production and service, city by city around the world. Let’s watch several explainer videos on how this is the case below.

Tesla - Gigafactories and Giga Press
‍Tesla has been executing their large Gigafactories operating model to production, where thousands of Tesla EV models are being produced in several geographic locations globally and shipped to their target consumer markets.

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Tesla has eliminated many parts and supply chain challenges by installing the world’s leading 430-tonne Gigapress.

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‍Arrival - micro factory network

‍Arrival’s operating model of building a distributed network of micro factories, city by city around the world, has come from ripping out the 20th century model of linear production lines and reimagined how to assemble and service EVs local for local economies. Robot cells in their micro factories have multiple functions, enabling a flexible and agile workspace environment which may exist in each local economy.

Reimagining production and service with the micro factory network model for the 21st century:

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Materials

When it comes to materials, deep innovation is driving many organisations to both maximise performance range of EVs and the sustainable, closed loop nature of them. Both Tesla and Arrival are taking a first principles approach in tackling this yet are operationalising it quite differently. Large, mega factories with global supply chains vs distributed network of micro factories aiming to recycle locally, city by city.

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Tesla

Tesla is known for leading in EV battery technology development.

Arrival

With advances in today’s materials, Arrival have designed, engineered, and produced lighter, less expensive, and fully recyclable materials. By doing this, they’re on the pathway to becoming a circulist level 5 organisation which in today’s market can be seen as exemplars in ‘reimagining products for good.’
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Charge Cars

One example Arrival has taken their vertically integrated operating model to market is by partnering with Charge Cars and becoming their core components including motors, power electronics, and battery systems, enabling Charge Cars to bring to market such a unique automobile experience for Mustang enthusiasts.

Here’s a preview of Charge Car’s electric Mustang:

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Sales & Marketing - Tesla DTC and Arrival more B2B

Tesla and it’s Direct to Consumer (DTC) model

Tesla’s DTC model has modernised, and some would say, revolutionised the car purchase experience servicing many passionate EV consumers globally. Taking from Apple’s proven retail model, Tesla rolled premier retail store experiences around the world as a way for consumers to get to feel both the brand and the cars in one location.

[add Tesla Store photo here.]

Arrival core focus is on B2B

Arrival is taken a different GTM approach and is focused on serving the needs of logistics providers and local / state governments with their EV courier vans and EV buses respectively. UPS is an example of this early success for Arrival with an order for 10,000 EV courier vans for the US market alone. The City of Charlotte in the USA has established and strategic partnership with Arrival, establishing Arrival’s first micro factory location in Charlotte, enabling the local city to accelerate their shift to EV mobility with Arrival’s EV buses.

Here are UPS drivers in the UK and sharing what they think about Arrival’s EV courier vans:

Circulist seems high value in mobility market

The Circulist Imperative recognises that ‘before we get to 100% circular systems eliminating waste and pollution locally, manufacturing will first have to progress through five levels of technology, organisation, product dematerialisation and build world advancements.’

So, put simply, well designed does not typically mean designed for disassembly therefore producing a growing amount of e-waste globally. Tackling this challenge with a closed loop mindset, placing materials at the centre of the customer cycle is critical. Tesla and Arrival are successfully tackling the complexity of operating in the EV automobile market yet there are many other subsegments such as e-scooters, e-bikes, bikes, EV charging infrastructure that need to also get onto this pathway to solving for the looming climate crisis upon us all.

The BIG Question. Who Is More Circulist?

You be the judge. Who has the best chance of becoming the most circular auto brand of this century?

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