“The devil might be in the detail – but God is in the system.” Dr Paul Stead interviews Hugo Spowers, founder and CEO of Riversimple Movement - the 18 year-old Anglo-Welsh mobility start-up with ambitious plans to change the world.
There is something very, very British about Hugo the maverick inventor and entrepreneur and visionary taking on the world to demonstrate what can be achieved with few resources but with big ideals, absolute commitment, and a passion to creating a sustainable, planet friendly business.
This is environmental design thinking on a whole new paradigm and if you wish to discover more I strongly suggest you visit www.riversimple.com
By way of background, Hugo started his engineering career in the motor racing industry, but as time passed he became increasingly interested in the theory and practicalities of environmentally conscious decision making.
In 1999 this led to a life shift by enrolling to do an MBA at Cranfield University, where his final project was a feasibility study on the commercial barriers of bringing hydrogen fuel cells to the mainstream automotive market.
“What became apparent very quickly was that putting hydrogen technology into a pre-existing business, and business model, means you’re trying to persuade the fuel cell to behave like a petrol engine, which really doesn’t work,” Hugo said.
“The more you increase the power and the power density of fuel cells, the more the cost goes up, just as at the same time as you’re trying to make the cost come down. It’s a permanent tug of war!
This article first appeared in the October issue of The Manufacturer magazine. Click here to subscribe
“I realised that the real barriers weren’t technical but to do with people, politics and business inertia. I don’t want to be seen as in any way criticising the industry because I don’t think there’s a product on the planet that’s remotely as good value for money as a modern motorcar,”
“However, I do think it’s completely unfit for purpose in the 21st century. The industry can’t throw the baby out with the bathwater, because it would be commercial suicide. But I came to the conclusion that we had to build a completely different sort of car, we had to change multiple things simultaneously – the breakthrough was at a system level.”
So, what does “breakthrough at a system level” actually mean?
For the car, it means a different pattern of relationships between components in the car. For the business, it starts top down with aligning the interests of all the actors in the system. That includes Industry, Commence, Society and The Planet.
Riversimple is set up with an environmental purpose, it’s hardwired into our constitution. It’s in our Articles of Association that the Purpose of the company is “To pursue systematically the elimination of the environmental impact of personal transport”, doing so in a way that increases profit rather than increases costs.
I believe, if you design a business to deliver environmental and social return as well as financial, it can improve the profitability and resilience of the company rather than compete with profit. If you design companies, as all companies hitherto have been, to maximise shareholder value, you’re designing it to deliver financial return. Maximum financial return.
When you then ask that business to deliver some environmental and social return, inevitably it adds costs to the bottom line and it’s in competition with the profit. But if you design the business to deliver environmental and social return, as well as financial, there shouldn’t be any competition between them.
Our corporate governance model means the voting shares are held by six companies limited by guarantee that represent six stakeholder groups: investors, environment, staff, customers, commercial partners such as suppliers, and the community. All of those stakeholders are critical to the success of the business, and we want to maximise the goodwill of all of them.
I don’t see how you can ever maximise the goodwill of five of them if their interests are subordinated to the sixth. By generating a greater level of goodwill, we believe we’ll have a more successful company, a more profitable company, a more resilient company.
It’s not a coincidence that the business model that has dropped out of this sense of purpose is one that actually becomes more profitable the more sustainable we are. The standard industry model of selling product means you make more money by selling more cars: your reward is for maximising resource consumption.
If you sold the car as a service, as we do, we actually are rewarded for maximising resource conservation: the fewer cars we have to make to keep our customers moving, and the longer they last and the more efficient they are, the more profitable we are.
So, we’ve turned these costs of limiting environmental damage into sources of competitive advantage. We shy away from ever being described as a social enterprise because a social enterprise is one in which investors accept the fact that they will take a reduced return because they’re delivering some environmental and social return.
We’re not in that mould. We are a for-profit company that aims to make more profit by delivering the environmental and social return.
So, with this BIG vision how has the funding to date been achieved?
In 2005 we had a grant of almost £1m from the Technology Programme to create the Morgan LIFECar. From 2013 to 2018, we had funding from the EU in a 17 partner pan European project which allowed us to develop the technology and the platform for our first car designed for type approval.
Critically, we then received a £2m grant in 2015 from the Welsh government that allowed us to really crystalise the prototype.
Finally, earlier this year we won our first grant in over 10 years from Westminster, from OLEV under the HTP (Hydrogen Transport Programme). It’s a £1.25m grant, going towards building a fleet of 20 cars for customer trials.
We’ve a soft start next month with one car, then three cars, but it won’t really be publicly open until March next year when we’ll have five cars initially. That is truly a beta test.
The Technology behind the RASA Car
Yes, the auto industry won’t let anyone near a car until it’s very close to production, by which time everything’s cast in stone. Whereas we expect to co-develop our production car with our customers, another two and a half years to get to a vehicle ready for volume production.
It’ll look pretty much the same but virtually everything will change in detail AND it will be much cheaper to build and more robust than the cars we’re doing at the moment.
And what about the car itself …The RASA?
We want people to take our car because they want it, because it’s really efficient, because it’s cool (designed by Chris Reitz – one of the designers who worked on the Fiat 500 ), because it’s techy, fun to drive and ultimately because it’s a more convenient way of acquiring usership of a car.
It accelerates from 0>60 in nine and a half seconds, which isn’t neck snapping, but the closest car to this that I’ve driven is a Lotus Elan. We run out of puff at 60 mph… but on the other hand the Lotus didn’t do the equivalent of 250 mpg!
From a component perspective, we’re using existing, available, off-the-shelf technology. We’re the systems integrator really. We’re picking and mixing technologies from around the world and building an entirely different car with an entirely different architecture and pattern of relationships to a conventional car.
Our fuel cell is only eight and a half kilowatts, originally made for forklifts for Walmart warehouses. It’s an available production item. I mean, there’s no trick about it. As I say, it’s almost true that we’re using existing, off-the-shelf technology, in that we do have to design electric motors but that’s not pushing the boundaries of electric motor design and technology.
It’s just a packaging exercise to fit it into the right volume and integrate it with our brakes and suspension pickups and keep the weight down below 650kg.
So, what will this eventually mean for the customer / user?
Firstly, we aren’t proposing selling cars, we are offering a fully bundled service, which isn’t a lease. It’s a performance contract and the direct debit will have a fixed element and a mileage element.
It can still be the customer’s car, sit on their drive or in their garage but they will have only one transaction which covers all the costs… that means fuel, insurance, road tax, tyres, service, you name it!
We are aiming at matching the total cost of ownership of a bottom of the range diesel Golf, which currently runs at between £490 > £550 per month for three years at 10,000 miles a year.
But that’s not the cost the customer usually sees when buying a car?
No, a PCP for a Golf lease usually runs at £192 per month, and that’s the headline number people remember. Ask an accountant and they’ll tell you the true cost of ownership. However, you’re right, and one of the things we are trying to refine is how we communicate the billing, so that customers can see that the cost of ownership is no higher.
And I guess that next question potential customers will want to know is how many hydrogen fuel stations are out there?
Currently there are 17 fuel stations in the UK, however we aiming to be a Local Car, one which operates within a 25mile radius of home / a hydrogen fuel station. We haven’t got the hard numbers, but we believe that there are somewhere between 3 > 5 million cars in the UK that never go outside that patch.
That’s a big market for a start-up company like us, but critically it means that you can create a commercially viable market with just one hydrogen fuel station. We like to talk about small cities like Oxford with a population of circa 200,000 people. You put one filling station there and anybody with a reason to come into Oxford once a week is a potential customer.
That’s why we’ve got a 300-mile range. It’s not for a 300-mile journey. It’s to be at least a week’s use of fuel for a local car. By doing it this way, you concentrate the market and that’s hugely important in getting the initial traction.
So, are you partnering with a Shell or a BOC to deliver on the hydrogen promise?
We’re not in volume production yet but we are in communication with both, and will be working with them over the next couple of years planning where it is we should have our launch market.
What’s certain is it won’t be launched on a pan-UK basis: we will launch in specific target markets. We have however put a filling station in Abergavenny for our beta test, which is principally to test and refine the customer proposition but it’s also to demonstrate the economics of the local refuelling strategy.
Shell have been very supportive of our program to a point of coming to interviews for government grants with us. They’ve also put in three filling stations over the last couple of years despite the fact there are only 150 cars.
Going back to the question of ownership, how do you intend to fund the business going forward? VW make their profit when they sell the car, but you have to fund the car for years before it will start making money?
Yes, but we get over three-times as much revenue per car as a manufacturer does from a conventional car! And 90% of cars are financed so the money is available, it’s just that the relationship will be between the finance house and us as a manufacturer rather than the finance house and the end user.
Having said that, I’m not trying to be glib about it. I’m not pretending it’s going to be easy. But we do know things are changing rapidly. The World Economic Forum has launched an initiative called PACE, The Platform for Accelerating the Circular Economy.
They’ve talked to us about piloting on that platform because they recognise that the circular economy has very different banking requirements.