I don’t think there’s a product on the planet that’s as good value for money as the modern motor car. But being less unsustainable is still unsustainable – we need to do more. Hugo Spowers, Riversimple
Hugo Spowers explains how Riversimple designed a completely new car, and a completely new kind of business to go with it.
Read the transcript below or find out more about what it takes to develop and produce a car in our introduction to automotive design.
Hugo Spowers, Partner, Riversimple
Good morning. I’m an engineer and I spent 15 years in motor sport, designing and building racing cars, and I got out not knowing what I was going to do, except it was going to be nothing to do with cars, and I’ve now spent about ten years working on the commercialisation of hydrogen fuel cell vehicle technology.
But I’d like to say up front that we don’t consider Riversimple ourselves to be a car manufacturer. The principle barriers to commercialisation lie not in the technology – it’s all available – but in people, politics and business. So the most interesting aspect of the business are not in the technology but in the business strategies, and probably more importantly even the way in which they’re integrated.
So, rather than being a new entrant, competing on technology, we see ourselves as providing an alternative, a substitute, for meeting personal mobility needs.
This is a reality that faces all of us, and the constraints on the left are generically applicable, but obviously the auto sector is particularly oil dependant, and so they’re particularly pertinent to the industry. But the funnel on the right, principally from resource depletion, the pressures of resource depletion, and increasing regulatory pressure, are completely new and aren’t what shaped the last, the industrial revolution – the last 200 years of industry – and the level of change that we’re going to see, and we need to see, is much more profound than I think is generally appreciated.
So, for instance, resource efficiency, which has been discussed already this morning, is very good and very important, but it’s not enough. We can do most things, as Steve Evans, who is a partner of Riversimple, by the way was explaining this morning. Even Toyota found a fourfold improvement in resource consumption. And there are very few things that we can’t find that scale of improvement.
There are some things we can do ten times more efficiently, but being less unsustainable is still unsustainable, and we need to do more than just that. So I think it’s worth pointing out that probably the most profound invention of mankind is the linear system, where we have extraction, manufacture, use and disposal, with no plan to get that waste product back to the beginning of the cycle, because all ecosystems are built on cyclical principles, and we’ve got to develop completely cyclical systems as well as being resource efficient.
The auto sector really finds itself in a very major bind at the moment, but I’d like to say up front that I don’t think that there’s a product on the planet that’s remotely as good value for money as a modern motor car, with all its complexity and refinement. But unfortunately it’s not fit for purpose anymore, and the industry was shaped by the constraints of the last century and – as I’ve pointed out – the constraints we face now are completely different. This requires a step change in constraints, which requires a step change in solutions, both in technology and in business models, but unfortunately the industry has got to where it is today by doing what it does very well indeed.
It’s extremely mature, it’s extremely technology specific, and that makes it ill suited to making a step change. And necessarily and understandably the response has been incremental and very slow. And achieving a step change incrementally is something that creates a huge number of technological and commercial barriers, and so the barriers that we hear talked about, I don’t believe are true in any absolute sense. They are understandably the consequences of the strategies that a mature industry has to adopt.
This is an example of progress on what I believe is the key metric in this century, energy efficiency for vehicles. You might think that MPG hasn’t been, fuel consumption hasn’t been a major driver in the past, and it certainly doesn’t appear to have been, but you’ve got to remember that less than halfway through those 60 years was the oil shock in 1973. So it’s clearly not as an industry responding to our current needs.
This is a diagram to explain our key seven strategies, and we’ve developed vehicle technology through what Steve also referred to of whole system design. It’s an approach where you evaluate the effect on the performance of the whole system when you’re making choices. You don’t compare alternatives at the level of the element or a subsystem, because if you optimise all the elements of a system, you end up with a pessimised whole. We’re trying to optimise the whole system, and not only have we done that with the vehicle, but we’ve done it with the business strategies. So all these strategies are interconnected, mutually reinforcing. We believe they, in concert, reduce rather than increase business risk, and so they must be taken as a whole, rather than on a pick and mix basis.
The vehicle technology... the auto industry agrees on very little at the moment, but one thing it does agree about is that we’re going to move from mechanical to electrical platforms. Now, that doesn’t mean batteries necessarily but an electrical platform can harness any prime mover, and I don’t believe that hydrogen in the fuel cells will ever be as dominant as petrol in combustion engines. We need a much more complex mix of fuels and power trains in the future to meet all our needs, but nonetheless, we’re working on the hydrogen fuel cells, because for ranges of over 200 miles, there’s nothing that can be remotely as efficient as a fuel cell vehicle.
The platform on the left isn’t technology specific. You can take out the fuel cell and put a battery in or a diesel gen set. But whichever it uses, it will be much more efficient than a conventional linear power train. And everything... there are four motors in the four wheels, every component is connected to every other, and energy can flow in either direction on any path, except back into the fuel cell.
The vehicle on the right is a technology demonstrator that we built recently, and when we first started working on it. We benchmarked against the current basic Smart, it has slightly better acceleration to 50 miles an hour, and it can cruise there. It simply can’t go any faster than 50. It’s about six times as energy efficient – in energy consumption about 300 mpg, compared with a Smart 47 mpg in the urban duty cycle. That’s not the current Smart, by the way, which is slightly better. And it does so with less than a sixth of the power. The fuel cell is only six kilowatts, as opposed to the Smart’s 37 kilowatts. And crucially, the CO2 emissions are only 31 grams per kilometre, if you use hydrogen from natural gas. It comes down to about three, if we electrolyse water with wind electricity.
One of the key features of the business, which is drilled right the way through the business model is that we’re selling a mobility service, rather than a car as a product. Now, this is not to be confused with leasing, where the auto industry will lease a car at the moment, but they’ll only lease it for a maximum of four years, because after that it’s uneconomic to support in the marketplace. If you sell cars, you make more money by selling more cars, is the fundamental reality, and so the financial drivers are for the car to be as expensive as possible, high maintenance, and unreliable as possible, for the customer to keep it as short a time as possible, and the vehicle to have as short a life as possible afterwards. No interest in energy efficiency.
If you move to a model where you sell the service, you want the car to be as cheap as possible, reliable and low maintenance as possible because we pay for that. We want the customer to keep it as long as possible, and when he’s bored with it, he comes back to us, and we want it to have as long a life as possible, because we want to lease it into the second-hand market. The longer we can generate revenue from that car, the more money we make.
We also want it to be as efficient as possible, because we pay for the fuel, and it’s more like a mobile phone contract, where you pay a £200 per month fixed fee, and then 15p a mile, and that comes through as a monthly direct debit. But when you fill up with fuel, the bill comes to us, you don’t pay for it. And this constantly gives us a driver to improve energy efficiency.
Now, that not only aligns the interest of the manufacturer and the consumer, but it also rewards resource minimisation, rather than resource maximisation. And if we’re trying to wring the maximum utility out of every resource that we need to do, that we can possibly do, we’re hardly likely to get there by rewarding the opposite and then regulating. And I actually don’t believe that we can have a sustainable industrial society, whilst it’s based on the sale of product.
This is the strategy for rolling out vehicles. We often hear about hydrogen and electric charging infrastructure as being major hurdles, and of course, if you’ve got a car that can drive on the motorway, the critical scale of an infrastructure before you have a commercial market is the scale of a nation. I am often worried about the hydrogen highway concept, that’s recently been talked about the M4 in South Wales, because although it’s a good PR exercise, if you’ve got a car that can go on a motorway, you are not going to buy one if you can only drive on the M4.
If you’ve got an urban car or a local car, effectively tethered to a central point, either a city or a region without many motorways – I live in Herefordshire, for instance, it would be ideal up there – the critical scale of infrastructure is the scale of that city. And putting it, going to small to medium sized cities, you can put in one refuelling station. Our car has got a range of nearly 250 miles, that’s more than a week’s use of fuel. And you can then launch that car, and you have a commercial market of the scale of the city. If you then roll that out to other cities and other regions, you can incrementally build a nationwide network. But each step is commercially viable.
We’re open sourcing all the design technology and the open source licence is similar to the GPL used in software. The principal term in it is not about money. It’s not public domain. It is a licence – a legally binding licence – but the key term is a copy left term, so that if you, you can download it, you can do whatever you like, change anything you like, and use it for any purpose you like. But when you sell a car, it has to be under the same licence terms, so any derived work effectively is fed back into the system.
Now, this essentially buys a huge amount of support for developing new standards, and we are very clear that we want to get these standards rolled out widely as soon as possible, because we don’t want to find that we have Ford Focus with a steel body that’s using four times as much hydrogen, because once that happens, a commercially viable product – it will happen ultimately – it’s going to be very much harder to really tackle the energy efficiency issues.
And that’s the seven strategies, the only ones I haven’t mentioned are the small scale manufacturing, that is an inevitable consequence of going from steel to composites. Steel is really the defining issue that’s forced a huge aglomeration of the industry into huge plants and the appropriate scale for these sort of companies will be much smaller. The sale of service, we’re moving upstream, so we’re leasing components from our suppliers rather than buying them. And we’ve got a shared ownership model, rather than pursuing the interest of one stakeholder group, all the stakeholder groups who have a vested interest in the success of the business and who tangibly contribute to the success of the business have a voice in the governance of the business. The idea is that if everybody is on the same page, rather than having a confrontational relationship, you have a collaborative, cooperative relationship, and a more profitable business.
And, that’s the benefit. Most businesses at the moment are designed for yesterday’s constraints, the constraints are different and they find themselves bumping along the walls. It’s a very painful place to be. We’ve designed a business not only to get away from the walls, but to profit from being as close to the mainstream as we possibly can. So, that’s the vehicles we’ve been building, and where we plan to go. We hope to have a pilot of 60 to 100 vehicles running in 2012. Thank you very much.