BICESTER, England, Aug 17 (Reuters) - Electric car and van startups racing to become the next Tesla Inc (TSLA.O) all want to avoid Elon Musk"s journey through "manufacturing hell." But electric vehicle firms such as UK van company Arrival SA (47K.F) and Fisker Inc (FSR.N) are taking very different roads to overcome the challenges of profitable mass production that almost broke Tesla. A few have found investors willing to hand over billions to fund their journey. Rivian has raised around $10.5 billion from Amazon.com Inc (AMZN.O), Ford Motor Co (F.N) and others as it ramps up production to build electric vans, pickups and SUVs. Startups lacking Rivian"s wads of cash need cheaper paths to mass production or risk failing in the EV arms race - a danger Musk highlighted repeatedly on Tesla"s July 26 earnings call. "The thing that"s remarkable is that Tesla didn"t go bankrupt in reaching volume production," Musk said. During 2017 and 2018, Tesla struggled to ramp up volume production of the Model 3 sedan, with the then loss-making automaker burning through cash as it contended with an over-reliance on automation, battery issues and other bottlenecks. It even built a new line in just two weeks in a huge tent outside its Fremont, California, factory to meet its production targets. The traditional approach taken by many automakers over the years has been to spend above $2 billion on a factory big enough to build 240,000 vehicles or more annually. Arrival has opted instead to build electric van and bus "microfactories" - small plants costing $50 million that are light on expensive equipment. Arrival does not need paint shops - which can cost hundreds of millions of dollars - because its vans are made of lightweight coloured plastic composite. Arrival plans microfactories close to major customers around the world, cutting shipping costs and hiring local workers. "You have to raise so much money to do this the traditional way that it keeps startups from coming forward with new ideas," said North American head Mike Abelson - a former General Motors Co (GM.N) executive. Arrival raised about $660 million from its March public offering and is building two U.S. plants: one in North Carolina making vans for United Parcel Service Inc (UPS.N), its largest customer to date, plus another in South Carolina that will make buses. In addition, it is building a factory in Spain. Abelson said Arrival will announce more plants later this year. Arrival"s first microfactory in Bicester, England, will serve as the blueprint for other plants. The lack of a paint shop is just one of the ways in which the company will steer clear of big-ticket items that traditionally have defined automotive production. The startup"s engineers have built moulds for plastic body panels costing thousands of dollars versus the millions of dollars needed for a traditional metal die. Arrival"s engineers have also designed their own moulding machines. Abelson said Arrival needs around 70 robots per microfactory and the startup is buying only commonly used, generic robots from long-time auto industry suppliers Kuka AG (KU2G.DE) and Italy"s Comau - eschewing expensive made-to-order robots. Comau is owned by automaker Stellantis NV (STLA.MI). Robots are programmed to do double or triple duty. In a large traditional car plant, if you need to apply adhesive at different points during assembly you add more adhesive stations along the line to churn out a vehicle per minute. But in Arrival"s microfactory there will be one adhesive station and autonomous wheeled robots, designed in-house, will carry a chassis back and forth throughout the assembly process. Going small means that Arrival can commit to 10,000 vans annually per plant rather than 100,000, Abelson says. Each microfactory will create around 250 jobs, nowhere near the many thousands created by a large auto plant in the past. "That means if a plant doesn"t work out, it"s not a disaster for a local economy," Abelson said. "A major car plant closing is a big hole to fill." "WORK OUR WAY BACKWARDS" Electric vehicle maker Canoo Inc (GOEV.O) has adopted a similar strategy to Arrival"s. But CEO Tony Aquila said Canoo will build a "mega-microfactory" to serve as a hub for smaller future factories. Electric Last Mile Solutions (ELMS.O) plans to launch a small electric van in the United States later this year and at first will reassemble prefinished vehicles made in China at a former GM plant in Mishawaka, Indiana, adding new seatbelts and other safety features to meet U.S. regulations. CEO James Taylor said this will initially save hundreds of millions of dollars on stamping dies and body shop welding equipment. As revenue grows it will incorporate more American parts over time. "We"ll work our way backwards, adding more and more local content as we go," Taylor said. Other startups are outsourcing manufacturing to cut costs. Tel Aviv-based REE Automotive Holding Inc (REE.O) is leaning in to agreements with American Axle (AXL.N) and Mitsubishi Motors Corp (7211.T) to help build its electric platforms for delivery vehicles and people movers at scale. "The biggest challenge for new players like us is at the end of the day you need to manufacture at automotive grade and automotive scale," said REE Automotive CEO Daniel Barel. "With us, everything already comes at automotive scale because it"s American Axle or Mitsubishi." REE and Fisker also have both teamed up with Canadian auto supplier Magna International Inc (MG.TO) to build their EVs, while Fisker has a similar agreement with Taiwan"s Foxconn Technology Co Ltd (2354.TW). Contract manufacturing deals reduce upfront costs, in return for Magna or Foxconn taking a cut of revenue and potential profits. Henrik Fisker, chief executive of the EV startup that bears his name, said the alliances should also help secure equipment and parts at a time when supply chains are snarled. "Foxconn and Magna, they will get all the equipment they need," said Fisker. "They have the capital. They have the reputation. We are not here to set up our own factory in the desert."