Fairly sure he draws them in pencil and pen, has them scanned and converted to digital images and colours them with a computer.
Backgrounds and things would be cell-shaded by computer but probably also drawn by hand and scanned/converted to digital.
Could be wrong.
As for equipment, you could do it from home with a good scanner and cheap old version of photoshop - however most of the difficulty is skill. Technical stuff aids and to a small amount compensates - but if you want to start messing around with digital compositing you probably want to take a course or something.
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