The partnership will see Kia and Hyundai bring to market small and medium-sized electric delivery vans that compete well with fossil-fuelled equivalents on price, using Arrival's adaptable and scalable electric skateboard platform.
Last year Hyundai announced a $35 billion commitment to develop self-driving technology and electric vehicles.
Both companies manufacture a range of hybrid and electric models.
The vehicles are created to sell for the same price as similar models powered by internal combustion engines and to be built in small "microfactories".
Rivian is backed by Ford Motor Co and Amazon, and has a contract to build 100,000 electric delivery vans for the e-commerce giant, starting in 2021.
"The partnership with Arrival will help Hyundai and Kia meet the rapidly growing demand in Europe for eco-friendly commercial vehicles, and accelerate the brands' transformation from auto makers to clean-mobility providers", it said.
Arrival CEO Denis Sverdlov said in a statement that Arrival's Generation 2 electric vehicles, which can be delivered at the same price as their petrol and diesel counterparts, are "game changing".
"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.
Through the partnership with Arrival, Hyundai Motor Group will be able to gain a competitive edge and make its presence felt in the global eco-friendly vehicle market, with Europe at the forefront, he said.
To ensure a smooth transition, Arrival also tailored their EVs to the expectations of ICE drivers, pricing their vehicles either in the same area as their ICE counterparts, or even below an internal combustion vehicle.
Youngcho Chi, president and chief innovation officer at Hyundai said in a statement: "This investment is part of an open innovation strategy pursued by Kia and Hyundai".
It is approximated that Hyundai sells 4.5 million automobiles on a per year basis whereas KIA sells more than 3 million cars.
Electric vehicles integrate within commercial fleets effectively as they benefit from predictable routes and overnight depot charging.
As Arrival transitions from R&D to full scale production, Hyundai and Kia offer Arrival their combined expertise in mass manufacturing and vehicle launches, underpinning Arrival's ambition of scaling rapidly around the world. Hyundai presented its PBV concept as one of the smart mobility solutions at CES 2020 earlier this month.
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