Subtotal: $00.00


Your cart is empty

The 11-Horsepower Juggernaut

I’m here to meet Hugo Spowers, the founder of Riversimple, the world’s first independent hydrogen fuel cell car company. Since 2001, Spowers, a race car designer and engineer, has been working on a revolutionary system of sustainable mobility that upends the conventions of the auto industry.

A 58-year-old with the layered locks of a ’70s pop idol greets me warmly. It is Spowers. He takes me on a “tour” of the modest office before we go outside for a test drive of the Rasa: his low-slung, first-generation hydrogen fuel cell car. I hinge myself into the car through one of the sexy, levitating door panels, and Spowers drives us around a few roundabouts at what feels like a very aggressive speed, at least for a Welsh office park. The car feels velcroed to the ground as it zips around corners.

Back in the office, Spowers treats me to a crash course in hydrogen fuel cell technology, outlining the history of Riversimple and explaining how his vision for its circular economy business model has evolved over the last 17 years. “The breakthrough is not basic science or better fuel cells,” he says. “The breakthrough is the network or system of relationships. It couldn’t have happened unless we changed everything at the same time.”

To begin, Spowers tells me that the Rasa is powered by the same 8.5 kilowatt /11 horsepower fuel cell used by Walmart and Amazon in their forklifts. (Very few cars today are less than 100 horsepower.) In short, the Rasa is not based on breakthrough hydrogen fuel-cell technology but existing, off-the-shelf componentry. It is the Rasa’s super-light composite carbon fiber shell, combined with its distributed power system, that enable the car to achieve such a nippy performance from a small fuel cell.

Spowers’ motor racing heritage heavily influenced the car’s design. “We put a lot more into chassis rigidity and suspension geometry to make the car feel more nimble, direct, engaging, and precise,” he explains. Which is not to say that the Rasa boasts a performance equivalent to a conventional petrol sports car. Its top speed is 60 miles per hour, and its tank capacity is limited to 300 miles. This renders it unsuitable for long-distance, inter- city driving. Instead, the car has been designed for local use within a 25-mile radius of locales such as Oxford, England: “the car has a week’s worth of fuel, a generous week’s worth, for a local car,” says Spowers. “So, it means you can have customers who only need to come into Oxford once a week, maybe for the big Saturday shop at the grocery store. That way, they can refuel once a week.”

“I was certainly the bugbear of the director of the MBA. When I made another comment in his lectures, he’d say, ‘Back in your box, Hugo!’”

As far back as 1999, Spowers was influenced by the progressive, even radical economic and environmental ideas of theorists like Fritjof Capra, Amory Lovins, Ray Anderson, Paul Hawken, E.F. Schumacher, and Clayton Christensen. To have environmentally conscious decision-making in business at that time was considered a pipe dream. Spowers’ embrace of these theories didn’t prevent him from being practical. He decided to get an MBA. “I knew I was going to disagree with most of what I was taught, and I did, but I thought it was important to master the language of business.” Fundamentally at odds with mainstream business thinking, Spowers became the bête noire of several professors because of his incessant questioning of conventional assumptions.

“A lot of people at Cranfield had no time for it or me,” says Spowers. “I was certainly the bugbear of the director of the MBA. When I made another comment in his lectures, he’d say, ‘Back in your box, Hugo!’”

For his final project, Spowers chose to do a feasibility study on the commercial barriers to bringing hydrogen fuel cell cars to market. “Since the early ’90s, all the big companies, especially Toyota, had been doing research to develop a fuel cell that could produce the same power as the engine in a petrol car,” he says.“But [hydrogen] fuel cells have rubbish power density, and petrol engines have fantastic power density. Thus, the main barriers have always been perceived to be at the basic technology level. I said, let’s throw away the rule book, build the car in a completely different pattern of relationships, and get the same acceleration (but not top speed) with a fifth of the power.”

Spowers proposed a dramatic reconfiguration of the relationships between the stakeholders in the ecosystem of vehicle use, ownership, and manufacturing. The groundbreaking elements of that MBA project—open-source technology, distributed manufacturing, selling a service rather than a product, and putting the environment at the cutting edge of the business—continue to be the guiding principles of Riversimple today.

Unlike conventional automakers, Riversimple doesn’t sell the cars it makes. It sells “mobility as a service” or mileage (inclusive of maintenance, insurance, and VAT) based on a fixed fee plus mileage rate, akin to mobile phone service. “The product must stay on the balance sheet of the company which designed it and all the operating costs must be internalized on that same P&L. Anything less is a pale shade of the circular economy,” explains Spowers. Under such a system, the less it costs to drive a mile and the longer the use-life of the car, the higher the car’s profitability per mile and the more positive the car’s overall ROI at the end of its lifetime. In comparison, the business model of traditional automakers, selling new cars and spare parts, favors early obsolescence and high running costs.

When you combine the poor unit economics of new car sales with the fact that one set of pressed steel construction tooling for a new model costs upwards of $1 billion, you can understand the intense pressure to sell as many new cars as possible. This competitive pressure is further magnified by the maturity of the industry’s technology, leading automakers to pursue meaningless incremental improvements regardless of consumer demand.

Says Spowers: “these days, every car is incredibly well-made but hopelessly, ludicrously overcomplicated. No one actually uses more than 10 percent of the functionality of their car. But companies want to differentiate themselves. A modern luxury limo has upwards of 60 electric motors in the seat and weighs between 80 to 90 kilograms. Our seats weigh 7.5 kilograms… Our motto is, ‘Everything you need and nothing you don’t.’ Believe it or not, that was Porsche’s advertising slogan in the 1980s, but of course they don’t use that today.”

As opposed to the conventional dynamics of “buy low, sell high,” Riversimple’s business model encourages the company to invest in making each car as fuel-efficient and durable as possible. Since the company receives 100 percent of the revenue generated by the car during its lifetime (rather than the 40 percent received by a traditional automaker), the initial cost of the build can be recouped over a much longer period (rather than through a single purchase transaction). That enables the company to spend much more on the car in the first place: “The Rasa’s carbon fiber body is the single biggest investment, vis-à-vis conventional autos,” says Spowers.“Carbon fiber is much stronger than steel per unit weight, which is why Formula One uses it. But it’s more complex to design with it, and much more expensive than steel.

“But we’re not competing on cost price,” he continues. “We want long-term fuel savings based on lightness of the car’s materials.”

Unlike conventional automakers, Riversimple doesn’t sell the cars it makes. It sells “mobility as a service” or mileage, akin to mobile phone service.

The complex engineering entailed by the Rasa’s heterogeneous carbon fiber panels means that the cars cannot be assembled at the same clip as a steel car, but the less-automated manufacturing process allows Riversimple’s facilities to break even on a much lower scale of output, giving the company enormous flexibility to adapt and iterate their cars: “The optimal scale will be 5,000 units per year with one set of tooling costing £15 million, based on three shifts going 24 hours a day,” says Spowers. “Compare that with taking 10 years to set up a factory based on 300,000 units per year, massive infrastructure, and betting on what people will want in 10 years.”

In April 2018, Riversimple concluded a second round of public crowdfunding (matched by an EU grant of €2 million) to finance the production of 10 beta cars. The company is set to commence its first “real world” test this fall, in Abergavenny, Wales. The main objectives of this beta test will be to refine the customer proposition (in other words, the car, maintenance, and service support) and to determine the break-even economics of each filling station (estimated to be 50-100 cars by British Oxygen). If all goes well, Riversimple will commence volume production in 2020.

Spowers is clear in the case that he makes: “When you’re facing a steep change, it’s lower risk to change everything at once. The auto industry is trying to put hydrogen technology into the sort of cars they make. Toyota has spent $8 billion to develop a hydrogen car that can be made in its existing plants—the Mirai. Even if our car isn’t a four- seater [like the Mirai], we have the same acceleration, 9.5 seconds to 60 mph, with less than one- thirteenth of the power. We use less than one- third of the hydrogen per mile, so it’s over three times more efficient. We’ve spent less money in the last 18 years than Tesla is losing every two days, about £14 million over 18 years, and we’ve got a car that is road-legal. And yet none of this has been through focus on the fundamental technology. It’s been through system-level change.”

And, at the end of four hours, he has won me over: small is beautiful. Is it beautiful enough to inspire the auto industry to consider a new paradigm of profitability, one based on sustainable resource allocation? Only time will tell, but my money’s on the man who knows not to cross a chasm in two leaps.

→ This article was first published in Hacking Finance No.1: Movement, pick up your copy

Read More