Consumer acceptance of electric vehicles (EVs) has so far been slow partly due to their high cost, but Hyundai and Kia plan to soon make more affordable battery-powered cars.

The South Korean carmakers last week jointly invested €100m (R1.6bn)  in a London-based electric-vehicle startup Arrival to produce EVs that cost less than fossil fuel-powered cars. The five-year old company employs 800 people globally and has offices in Europe, the US, Israel and Russia.

Arrival said its models "are priced the same, or less than, current fossil fuel vehicles, making the decision to switch to electric inevitable".

The new partnership will co-develop eco-friendly vans and other products for logistics, on-demand ride-hailing, and shuttle service companies.

"The eco-friendly vehicle market in Europe is expected to grow rapidly due to reinforcement of environmental regulations," Hyundai's research and development department head Albert Biermann said.

"This strategic partnership will empower our companies to scale Generation 2 electric vehicles globally."

Cost savings will be achieved by building EVs at small footprint micro-factories, located in areas of demand and profitable at thousands of units, the three companies said in a joint statement.

A modular “skateboard” platform will allow a range of models to be built on one chassis, and Arrival prototypes are currently being trialled by global delivery companies such as DHL, UPS and Royal Mail.

“This investment is part of an open innovation strategy pursued by Hyundai and Kia,” Youngcho Chi, president and chief innovation officer at the Hyundai Motor Group, said.

“We will accelerate investment and co-operation with companies with advanced technology such as Arrival, to respond to the rapidly changing eco-friendly vehicle market,” he added.

Hyundai sells about 4.5-million vehicles a year worldwide and Kia about 3-million.

Hyundai Motor Group, which includes Kia, plans to launch 23 battery-electric vehicles over the next few years.

Just under 2-million electric cars were sold worldwide in 2018, representing a tiny percentage of the 95-million vehicles sold in total. However, the number is set to soar as auto companies boost their EV build volumes to meet ever more stringent antipollution laws.