Interview— Hugo Spowers
Future Guardians with Hugo Spowers
A new kind of business model for anyone
Riversimple is a hydrogen car company with a new profit model for business and engineering that could change the world. This conversation with Riversimple's CEO Hugo Spowers and philosopher Andrea Hiott presents a new take on transforming mobility and car usage. Featuring insights from Hugo Spowers leadership in creating hydrogen cars, it delves into the company's groundbreaking hydrogen fuel cell car technology and the Future Guardians business model, which seeks to realign the car industry's focus toward sustainability, reducing environmental impact, and community wellness by selling mobility as a service. Andrea and Hugo discuss the systems and ecological thinkers (Paul Hawken, Fritjof Capra, Hunter and Amory Lovins) that turned him from internal combustion engines towards creating a new model for movement. Additionally, it addresses the broader challenges of urban mobility, highlighting the issues of car overpopulation and issues of weight, and advocating for reduced vehicle numbers through improved mass transport and shared car systems in cities. The discussion is framed around the need for a shift in societal attitudes, politics, and overcoming system inertia to truly reinvent how we think about and use cars, aiming for a future where transportation is efficient, sustainable, less congested, and still human. #hydrogen #riversimple #hugospowers #andreahiott #aikido #desirableunknown 00:00 Embracing the Aikido Approach in Business and Engineering 00:40 Introducing Riversimple's Unique Business Model 01:01 Rethinking Business Goals: Profit vs. Ecological Health 01:33 The Future Guardian Model: A New Paradigm for Business 03:02 The Service Model: A Revolutionary Approach to Car Ownership 05:04 The Journey from Racing to Sustainable Transport 21:05 The Philosophical Shift: From Reductionism to Systems Thinking (leading into a discussion of Paul Hawken, Fritjof Capra, Hunter and Amory Lovins, Buckminster Fuller) 24:52 Aligning Business with Ecosystem Laws for Sustainable Success 38:28 Rethinking Profit and Capitalism in Business 38:47 Designing for Financial, Environmental, and Social Returns 40:52 The Three Levels of Design: Product, System, and Purpose 44:19 Resilience and Profitability: Aligning Interests for a Sustainable Future 47:04 The Guardian Governance Model: A Multi-Stakeholder Approach 01:01:53 The Role of Hydrogen and Electric Vehicles 01:10:41 Corporate Governance & Infrastructure: Paving Sustainable Ways 01:15:19 Envisioning the Future of Motoring: Fewer Cars, Better Systems Riversimple: https://www.riversimple.com/ Building Tomorrow by Paddy LeFlufy: https://paddyleflufy.com/building-tom... Instagram, Twitter, Newsletter
Transcript:
Hugo Spowers Andrea
[00:00:00]
Hugo Spowers: I'd far prefer what what I call an Aikido approach, both to business and to, to engineering. And you work with the forces around you., the laws of the ecosystem are much more powerful than the laws of Washington or London or Brussels. We've just got to learn to work with the laws of the ecosystem around us, it supports us, we're a tiny subset of that ecosystem and not playing within those rules means we, effectively are destroying our host. The principle thread that runs through all our business models and strategies is to align interests with every stakeholder in every relationship we build
Hello, everyone. Today we are talking with Hugo Spowers of Riversimple it's a hydrogen fuel cell car company based in Wales. And it has a very special business model. Future guardians. Which many are saying might be the business model of the future. A different way of thinking about business as you'll hear. [00:01:00] in this conversation when we hear about businesses and business models, we seem to
assume the goal must be profit. But what if everyone imagined or assumed that the goal of business was also to generate meaning and connection, and. Perhaps even ecological health. Obviously, we all want to move through our environments.
That's part of being alive. We want to find ways we can do this that are good for us. And also good for those around us. Is that possible? Future guardians. Offers another way of thinking about it, an alternative. More of a win-win situation or a win, win, win win-win because it's sort of a dynamical systems approach, looking at the world, not as linear, but as nested. That's the approach that Riversimple and Hugo Spowers and the Future Guardian model that he developed there with his colleagues, Is offering. It's written into their legal documents. This [00:02:00] vision to build and operate vehicles while systematically pursuing elimination of the environmental impact caused by personal transport. So that it, isn't only about making money.
It is about making money. They do make money. That's part of it. Profit is important as you'll hear Hugo say, but it's not the main aim. It's not the focus. Not what the whole company is built around and it's not what they want to be judged by.
The Future Guardian model, which we discuss here and which, I also point. You to a book That explains it very well by Paddy who's another guest on the show later, is looking to realign all these relationships that we think of as the business in a way that's beneficial for those who are invested in the company for those who are using the company. And for the space in which the company is operating, it's a different relationship with the people who are selling the cars. It's a different relationship with customers.
I've probably already made the mistake here of saying, they sell the cars, but actually they don't sell the [00:03:00] cars. The whole thing is built on the service model. So imagine, you have this car it's an object. That's beautiful. It's delightful. It becomes part of your life. It's fun. In the same way cars are now, but you you just pay a monthly fee. it's based on miles. It covers everything about the car from the fuel. to the insurance, to the maintenance. The company Riversimple assumes the responsibility for the car. It will eventually go back to them. And this means that all the financial incentives are aligned. Your financial incentives, but also there's also those of the environment. Because they'll want to create a car that lasts longer. That the parts that can be reused. That's fuel efficient. All of these become loops that. The better it is for you, the better it is for them. As a service model, but also the way the company is set up with the stakeholders and shareholders and so on. There's also a stewards board. There are custodians. They're representations for the environment, that are part of the company. And it's all designed in a way that's very practical. And still geared toward profit. It [00:04:00] took over 20 years for them to come up with this and to build it and get it to the point where it actually is a practical business model. But people are starting to notice. People have found that, it's free for them to use this model and implement it and modify it so that it fits to their country and company.
It's very exciting. It's changing the future. It's shifting our orientation. The more people who find out about it. I imagine the more people will use it. That's what Hugo and I talk about. We talk about what motoring means and also how it can shift and still have meaning. I hope you enjoy this conversation and check out all these resources and start to learn. about what's really out there.
I was surprised to find how many alternatives already exist. People have already done so much work. and have really been at this for a long time. It's a matter now of spreading the information, changing our habits. Starting to look and use and adapt and align differently. And I hope this conversation plays some part in helping someone somewhere began to do that. It [00:05:00] certainly helped me. All right, let's go.
Andrea Hiott: Hello, Hugo, it's great to see you. Thank you for being on Forever Motoring.
Hugo Spowers: Well, very nice to be here. for
Andrea Hiott: inviting me, Andrea. So I often start with this question about, what's moved you? What's an early moment in your life when you remember being moved?
Hugo Spowers: Well, no sort of seminal moment really, but I. From a very early age, I, I'm afraid I always just wanted to go faster. Speed. I remember taking the mud guards and brakes off my
Andrea Hiott: bicycle.
Hugo Spowers: It was lighter weight and so on. And I learned to drive on a dumper truck, rear wheel, steer, steer, dumper truck, gearbox and top gear probably got me to 10 miles an hour, but it felt like a Ferrari at the time.
Andrea Hiott: How old were you then?
Hugo Spowers: I was probably about 10 years old.
Andrea Hiott: That's quite a giant machine to be your first experience of powering.
Hugo Spowers: It was a small dumper truck, but it wasn't a child's dump truck, or anything like [00:06:00] that
Andrea Hiott: but I've never driven a dumper truck, but okay. Were you also interested in, in the environment early on?
Do you remember when that started for you? Because that's a huge concern now as we'll
Hugo Spowers: get to. Yes. I was interested in the environment really long before I was seriously interested in anything to do with cars. Um, from as early age as I can remember, I was, interested in bugs, beetles, butterflies, birds, reptiles, snakes, and amphibians. When I was 10 or 11 years old. I can remember. Yeah. Knowing what an ecosystem was, which most adults didn't at the time. Um, and I read widely about it. And, uh, until I was about sort of 14, 15, I wanted to make natural history documentaries. That was an ambition when I was, growing up, but, uh, then I caught the motor racing bug.
Andrea Hiott: When did that happen? How did [00:07:00] you find that experience of
Hugo Spowers: speed?
Well, I suppose initially through books, I am reading the books of the history of motorsport and land speed records and, all the great characters and, very quickly got interested in the engineering side of it as well.
The designers certainly by the time I was 16 or so, designing, Racing cars was of as great an interest to me as driving them, not that driving had become any less interesting, but I had an equal ambition to design cars as well.
Andrea Hiott: What do you think interested you in that early
Hugo Spowers: on?
Oh, well, I I suppose what you do with the car has a key element of what makes the engineering challenge so fascinating, but, uh, from an engineering point of view, I think it's, it's a fact that motorsport is a fantastically complex challenge. Uh, you have to, [00:08:00] um, mix ability to go around corners and go into a straight line, you want sort of low drag in a straight line and downforce in corners.
You want. Corners that go left and right with different cameras, different radii, expanding radii, all sorts of things. , the cars has got a, has got to be fantastically capable across a range of different, demands. And you don't have the accountant saying, only can't do that because the widgets too expensive or the, the, marketing department wanting to put a chrome strip down the side or whatever.
It's a very pure engineering exercise. Um, unlike, building road cars. And the measure of your success is pretty immediate. And, demonstrable. So, uh, as an engineering scientific exercise, I think it's fascinating. It still is. Um, although, I might as well mention it now I, I have, Uh, I, I lost interest really in motorsport over a period of time because I saw the regulation, I [00:09:00] mean, it's held up as the pinnacle of, of automotive engineering.
But the regulations are so tightly crafted now to prevent any innovation and it drives all the focus onto incrementalism and incrementalism doesn't really interest me very much. It's the quantum leaps, the sort of system level change is always, um, the big innovations, a bit, the bit that always attracted me rather than incrementally making slightly better.
Andrea Hiott: It's the bigger picture. But you got really into racing. You were actually building, Cars, and racing them, I think, right? You had a company building race cars, and it sounds to me like you sort of noticed that that whole model itself, wasn't going to the place that you wanted to go anymore.
Hugo Spowers: I think the, the, the regulations, the complete loss of integrity on the track, um, ultimately through safety, it's not a matter of money, money doesn't really, I don't think is the root cause.
But I do think the loss of integrity where people [00:10:00] drive into each other for championship points reasons, has proliferated in the last 30, 40 years because cars are safe. I mean, when they weren't safe, you, it was an utterly clean sport when I first got involved, because if you touch another car, you probably got hurt.
So you didn't do it. It's a completely self regulating loop. I mean, it's not for anybody wants anybody to get hurt. But it was what , kept it such a pure sport at the time. I mean, the Sterling Moss always used to say, uh, you can get, uh, get, uh, if you have a tightrope walker, who's. On tightrope 300 feet above the ground, no safety net, you'll get people to come and pay bums on seats to watch.
Um, but who's going to come and watch if the tightrope three feet above the ground, it's just just as difficult, but he's going to watch. And, and so it's, it's wanting to, to, to, to see people doing [00:11:00] things that, you know, you couldn't and wouldn't couldn't do and wouldn't try. And, uh, and, and that, um, element of danger in, in, in that respect is also.
Critical. And another, another, um, reason why it's so critical is it really, uh, um, brings a healthier balance between the, the, the attributes of the man and the machine. Um, if you have, um, a stone wall or trees around the outside of 150 mile an hour corner, um, uh, as you did back in the sort of fifties and sixties, um, and you could just take that corner flat without lifting.
Stirling Moss would do that. Nobody else would because they didn't have the skill and self belief. To do that. Um, if you put a great big runoff area, everybody will have a go and after a few spins, they'll get it right. And so, and if you lift in a, before a quarter at [00:12:00] 150, um, compared with somebody who doesn't lift, that's probably a second a lap.
And that advantage that Moss had, that second, is now gone. And it loads ever more the, the, um, uh, the, the, the import on the, on the qualities of the car, not the driver. And I think that's, uh, a third downside. I mean, it's absolutely not about wanting, People to get hurt. But all I'm saying is that the fact that it was dangerous was a fairly integral part to, to, um, to what made it so fascinating.
Andrea Hiott: But you're not saying it's not dangerous now. It's just dangerous in a different way now.
Hugo Spowers: Oh, it's orders of magnitude safer than it was it really was dangerous. And, um, sort of, two out of 25 drivers at the top, in the top levels, in 50s and 60s, would get killed each year.
Andrea Hiott: But is that [00:13:00] why you got out of racing?
Hugo Spowers: Or? No, no. I got out of mate racing really because of, uh, I was, you need a lot of motivation. I mean, you need to be pretty passionate about it. And, um, And that was, was waning the other aspect was that I, I felt that it was, um, but odds with, with my interest in sustainability and concern for, and I'd, I'd always defended my involvement in motorsport with friends over dinner, if you like, um, on the basis that motorsports the quickest and cheapest way to make money.
Combustion engines more efficient. And I still believe that's true. Um, I mean, motorsport is like a bit like a war zone. Um, people are absolutely focused on, on winning. They're not clock watching for five o'clock so they can go home. [00:14:00] And, when you have that degree of, of commitment and engagement with the task, your creativity doesn't go up by sort of 10%, it goes up 10 times.
When you're that engaged. , so you really do get fantastic progress very quickly and we, for relatively small sums of money. Um, but I reached the conclusion and we needed to get rid of combustion engines altogether. And so prolonging their tenure, uh, didn't really stack up as an excuse for staying in motorsport.
And, uh, so that's really when I got out.
Andrea Hiott: That's what I was trying to say by the model is different. I guess, I mean, that whole path of internal combustion or everything that the inertia that all that whole system is geared towards seems not to be at all what you're now doing and interested in.
Um, but did you think you were going to get out of racing and go into this new, more sustainable, [00:15:00] uh,
Hugo Spowers: I didn't, I really did not know what I was going to do, Andrea, at all, um, I mean, I, I sort of, I think I spent two, a couple of years really going back to university or in my, in my mind, you know, I didn't go to university, but I, I did, uh, read widely and I traveled a lot and met a lot of interesting people, a lot of, went on a lot of, you know, Um, very unusual, uh, courses, uh, partly to meet some of these, the great thinkers from around the world and in systems thinking and so on and sustainability and, I did an MBA, part time MBA, um, because I knew I wanted to stay in the private sector.
I wasn't going into the voluntary sector and I thought I would speak the language, but I knew I'd disagree with most of what I got taught, which I did. Um, but it was. It was a useful experience. And through that period, I didn't know what I was going to do. I was just looking for [00:16:00] something to do with the world of sustainability or making the world a bit more sustainable.
And, uh, I just knew it was going to be nothing to do with cars because I thought the only future for sustainable transport was better batteries. And that's basic science, big labs, big corporations, um, not my sort of world at all. And. And in fact, on one of these courses, I did a three week course, one week of which was taught by somebody called Paul Hawken, who, I'd read a book by some years before called the ecology of commerce.
And, um, and he's a remarkable sort of, um, thinker in the sustainability field from the Bay area in the States. And actually I went, I went on the Saturday of the course, I went rock climbing on the coast in Devon with him. And he told me about fuel cells and I'd never heard of a fuel cell before.
And the name Ray Lovins at the Rocky Mountain Institute. [00:17:00] And it really got me thinking. And I sort of could see that the technology existed, but you needed to make an entirely different sort of car. And that sort of system, you can't just take a petrol engine and put a fuel cell in, um, you've got to really think it from the ground up.
And, and I realized that that, that levels of level of systems integration is exactly playing to my skills and what motorsport is all about. Um, and so I felt that this was something I could really get my teeth stuck into and I could, um, make a real contribution. So that was the start of it. It was all Paul Hawkins fault.
Andrea Hiott: Is that, is that connected to the natural capitalism and this kind of? Yes, yes,
Hugo Spowers: he, he wrote a book. It was 97. I met him. Natural capitalism came out in 99, which he wrote with. Amory Lovins and Hunter Lovins. Alright, so
Andrea Hiott: they did write that together, okay.
Hugo Spowers: Yes, they [00:18:00] did, yes. So, a lot of my thinking comes from that first time I met Paul in 97.
Oh, that's interesting. So, focus on selling service, for instance. Came from that time.
Andrea Hiott: Yeah. I'm very interested in the systems approach. You almost approached it in a philosophical or physics kind of way.
So I'm wondering, where you got that, that picture of it too.
Hugo Spowers: Wasn't quite that academic about it or philosophical, but, um, I suppose I'd, um, I got out of motor racing, uh, sold my, I had a business alongside restoring old racing cars because my motor racing business, designing and building racing cars reliably lost money.
And other business in the same workshops that restored old racing cars, wealthy customers, and that funded and, um,
so, so I, I, um, I actually sold the restoration business to the people who work there and, [00:19:00] I left it on the Friday and Sunday I was, uh, I
chose to go on a five week course. Um, and on the Sunday I went down to start the course and that was, and I knew if it didn't, if I didn't have an end date, I would just dribble on and so trickle along. So I, I gave myself a deadline. I went off and did this course for five weeks with, uh, Fitchoff Capra.
Andrea Hiott: Wow. That's kind of the, one of the paradigm books back then, but I guess it wasn't, that was in the 90s though. Didn't he write that like early 2000s?
Hugo Spowers: Um, the web of life was the book that I studied. He'd written the Tower of Physics back in the 1970s. Oh, okay. And that was, uh, that sort of slightly got him ostracized from the scientific community, I think.
Yeah, right. Web of Life, uh, uh, this five week course is studying the manuscript of the Web of Life, which came out a year or two
Andrea Hiott: ago. That's the one I was thinking of, because, uh, actually I, I, I will talk with a guy named Jeremy Lent soon, and he's using, yeah, he's using Web of Life a lot. And I [00:20:00] think even Fritz Capra wrote the preface to his book, so that's the one I, I have in my mind.
And that's the one that's very systems oriented.
Hugo Spowers: Absolutely. Absolutely. That's good thinking. And, and I did, I'd read, um, a sort of slightly autobiographical book called Uncommon Wisdom by Fritjof about five or six years before, um, I'd actually paradoxically been motor racing and I'd been at, uh, Laguna Seca and, Drove down drove down to LA overnight afterwards and got on the plane. Uh, um, I dunno why I was flying out of LA and, uh, um, I hadn't been to sleep all night. And, um, picked up this book that I'd been given to Read on the Tarmac before we took off just to fly to New York and actually ended up reading the book all the way to New York.
I thought it was most exciting. Oh, wonderful thing I read for years and then just Uncommon Wisdom. Uh, Meetings with Remarkable People and he, I mean, the people he's met, R. D. Laing and Indira Gandhi and Werner Heisenberg, I you name it, all sorts [00:21:00] of, um, people, disparate, um, characters. And, and so, That process was already starting, but really spending time with him on this course, um, completely changed the way in which I looked at things and thought about things and understood things.
Um, coming from a very sort of reductionist, uh, education in mass physics, chemistry at a level, and then engineering science. It is absolutely, uh, analytical, looking at bits, putting them together and building up a whole that way. And, and his whole worldview is looking, is that, uh, he's saying that's great and it's very powerful and it's what Newton has really, um, uh, allowed us to achieve a lot with that approach.
But it's a subset of understanding and it doesn't explain everything and there, and when you look at a whole system, there are [00:22:00] emergent properties and they are, uh, things that, um, behaviors, uh, that are exhibited that cannot be explained from understanding the components of the system. you've got to understand the system as well.
And, um, uh, so it, there's a, a very simple example that we're all taught. It's sort of early chemistry, um, um, learning at school where, you know, You are told that, uh, a,, a compound bears no relationship to the, um, uh, characteristics of the elements from which it's composed. So salt is a mineral that we need for, uh, healthy body in living on, uh, on this planet.
And yet, sodium is a phys is a very lightweight metal that floats and burns in water and chlorine's a poisonous gas. And, and this. Is an exception to analysis that is taught to us as an exception, but it [00:23:00] demonstrates that an analytical reductionist approach to things is not a comprehensive way of understanding the world.
And it changes the way I think about politics, about health, about food, and even about engineering and certainly about business.
Andrea Hiott: Absolutely. As a philosopher, this is one of the big problems, the idea of the part versus the whole or reduction in holism, it's a real important issue. And I think it relates very well to what you're doing now and this business model, what you're trying to do, because as you were just describing, a lot of it is just that People think things are linear and there's only this kind of one trajectory. So when you're looking from one position, you can only see it one way.
And I feel like what you're trying to do and what a lot of these people you've mentioned are trying to do is really zoom out and look at how everything is connected and how differently it can all align, depending on where you, you know, how you change your position, so to speak. But that sounds like a very exciting moment in your life where. You come across that book and [00:24:00] it's like really changing how you're interacting with the world.
Hugo Spowers: Yes, I'm a slow learner. So it was a slow process. It wasn't down the scene moment at all. Um, but over, over a period of a few years, it certainly, um, changed everything and certainly changed the way I, I look at business and, um, the analytical sort of approach leads to the sort of competitive mindset that over emphasis on, um, on survival of the fittest.
But if you read the origin of species, even Darwin was placed much more emphasis on cooperation and competition, but the only bit picked up by business world is competition and, and it's, it is not a very good way of doing business because you're setting yourself up to be in permanent state of conflict.
Um, and, I'd far prefer what I call, what I call an Aikido approach, both to business and to, to engineering. And you work with the forces around you. [00:25:00] Um, the, the laws of the ecosystem are much more powerful than the laws of Washington or London or Brussels. And, uh, we've just got to learn to work with the laws of the ecosystem around us, it supports us, we're a tiny subset of that ecosystem and, um, not playing within those rules means we, uh, effectively are destroying our host. And it's also much easier to work within those rules, because you're not constantly in conflict with nature and resources around you and, um, everything that's, is, is supporting us. So the principle, I thread that runs through all our Business models and strategies is to align our interests with every stakeholder in every relationship we build.
Um, and that, that's just makes for much easier life. You get a lot more, uh, goodwill from all those other stakeholders because you're, you're trying to do what [00:26:00] they want rather than the opposite of what they want. Uh, and, uh, yes, you build a more successful and more resilient business.
Andrea Hiott: Wonderful. You mentioned Aikido, , which is this way of feeling kind of the opposition and dancing with it, right?
not this contrast dichotomous model of only progress. Progress can only come through opposition and a winner. It's a very different mindset.
Hugo Spowers: Yes, certainly the Victorians had this, talked regularly about the war, war against nature. And, uh, and as E. F. Schumacher said, if you, if we win this war, we'll find we're on the losing side. Because actually we're utterly dependent on the ecosystem. I mean, we think of, uh, so much, so much of the thinking and talk in political terms is all about, uh, we've got to get the economy healthy before we're rich enough to start worrying about the ecosystem.
The ecosystem is a subset of the economy. It's not a subset of the ecosystem. And, and if we worry about the ecosystem [00:27:00] after we've got the economy healthy, there won't be an ecosystem around and there probably won't be much of an economy either. Um, so turning, turning that perspective round to seeing which is the subset of which is the whole, um, within which are embedded, um, should really make a difference to how we approach these issues.
Andrea Hiott: Absolutely. I really think that's, I wanted to ask you about it, but it's almost for me, it feels like, uh, Joanna Macy or there's a lot of writers who talk about, we need these kinds of shifts of consciousness or cognition. I mean, those words in philosophy are a little bit controversial, so I'll be careful just, but in general, it reminds me of what you've said about, it's not necessarily shifting our fuel source so much as shifting our overall understanding of what we're, our model or our governance or something like
Hugo Spowers: this. Oh, I think it's a much bigger issue than our fuel source. I mean, that's what everyone focuses on.
Absolutely. And we focus on net zero and clearly carbon is, is the [00:28:00] biggest and most urgent, Irreversible issue, but it's not the only one. And, and I think if we focus on net zero to exclusion of all else, it'll be a completely periodic victory. I think we still have complete collapse. Uh, but it's, and it sounds ambitious to think you've got to consider all sorts of other things at the same time, but actually I think it's easier.
And I think it's the only way we can approach the issues is by considering everything at once.
Andrea Hiott: Yeah, for me it's trying to figure out how to get us to understand the self and our body in a different way. In the system's way that we are, regardless which direction you want to go, it's not linear.
You can go to the cell or you can go to the social group or whatever that, we're, somehow it is all linear. The ecosystem, that word that you knew when you were 10 years old, that there's some way in which we need, our sense of self has to change. We need to feel responsible or liable for all these different scales and levels.
And there's actually something very exciting about that. There's what you were were [00:29:00] suggesting with Akido, like actually, once you start to realize that you can align in that way differently than this, like oneself, there's a whole new kind of motivation and power. But people are really caught up on the contrast version of motivation and power.
What
Hugo Spowers: do you think? Absolutely. I completely agree. And the, the, it's the reason I, I use, I mean, I don't know a great deal about the martial arts at all, but the reason I, um, talk about Aikido is because it's all about working with the forces around you rather than being stronger than the forces and overcoming them.
Uh, uh. You deflect and you, or you work with new harness that those forces. And its a much easier way to proceed in business than trying to constantly compete against. Everybody and everything. I guess
Andrea Hiott: I'd like to hear an example of how that's easier . Do you have any?
Hugo Spowers: Well, absolutely. Plenty.
Andrea Hiott: Plenty. I mean, your whole business is one, but how do we get into it?
Hugo Spowers: So we can talk [00:30:00] about technically all business level. I mean, the core, the core thing, I suppose, which sort of crops up in more than one place.
We can start with the relationship between the manufacturer and the customer. If you sell cars, our interests are obsolescence and high running costs. Obsolescence because, um, it, uh, the shorter the life of the car, the more cars the market can absorb.
Andrea Hiott: We're talking about the traditional car
Hugo Spowers: business now, not your, yeah.
No, no. If you sell, if you sell them, sell this as a product, which we don't, um, and, and high running costs because the average markup on the industry is about 1500 percent on spare parts. Those are the opposite of what the customer wants. And, and so. It's not a great basis for, uh, a good relationship with your customer base.
Andrea Hiott: It's almost like you're trying to win against your own customer or something. Yes.
Hugo Spowers: You don't want it to be much [00:31:00] shorter. You don't want it to be a shorter life than all your competitors cars, and you don't want it to be higher maintenance, your competitors cars. Um, but.
You certainly don't want to be twice the life. There's no incentive to be twice the life. There's no incentive to excel on the metrics the customer wants. Um, you want to be a little bit better, um, but there's no, no incentive to excel. And, and in fact, we even argue that there's a disincentive to be more efficient because it does cost more to make a more efficient car, but customers will never pay a premium for a more efficient car.
They always discount future savings almost to zero. And if they won't pay you more, but it costs you more to make, your margin is reduced. And so therein lies a disincentive to improve efficiency. And all those three things are the opposite of what the customer wants. If on the other hand, we sell the service, and we don't mean leasing or anything like that, that we're familiar with.
Um, we [00:32:00] are, I mean, this is a, um, Mobility as a service taken to its logical conclusion where the car, we design the car and we keep it on our balance sheet from the clean sheet of paper when we design it right through to end of life. And we internalize all the operating costs for the life of the car on our own profit and loss account.
And we supply a car to the customer typically under three year contracts. It's very like, um, a PCP or a lease for, um, how 90% of cars are bought today. in the UK anyway. But as well as a fixed monthly charge, there's a mileage rate, like a usage rate on a mobile phone. And between them that, uh, all those costs in the direct debit, cover all your costs of using the car.
So it includes not just the maintenance, but it includes insurance and most importantly, the fuel. And, um, at the end of the contract, the car [00:33:00] comes back to us. Um, and we provide the second, the third, a fourth hand customer. We don't sell it into the second hand trade, which is what happens after a lease.
And if that is the case, we are not building a product to sell. We're building a revenue generating asset for our balance sheet. And the longer it, uh, it generates revenue, the better because a hundred percent, the revenue. Um, generated by that car in its life comes to us. And so the longer the life of the car, the more profitable it is, the more we can, the longer we can amortize the car over.
So the cheaper it can be for the customer. We also pay for all the fuels. It's worth our while investing in energy efficiency, because we're the ones who are going to reap the direct benefit. Um, uh, we also designed to minimize all the maintenance costs because we're paying them. We're not making a profit on spare parts.
We also designed it. To turn that end of life liability, the industry regards as 200 euro [00:34:00] liability on, uh, in current legislation, we turn that into a credit because we know it's going to be ours at end of life. So we design it to recover as many materials as possible, but also components that can be refurbished and used again.
And so those three things, the end of life value recovery, longer operating, uh, longer revenue stream and lower operating costs can all offset a higher build cost. And the pricing to the customer is driven by that lifetime cost, not by the build cost. And it means we can bring the car to market at an equivalent price to the owner, as in total cost of ownership, long before it's as cheap for us to build, which gets over this premium that all zero emission cars have.
today. But crucially, it's about aligning our interests with our customers. We have a shared interest in longevity and low running costs and energy efficiency. It aligns our interests, of course, also with [00:35:00] policymakers who are also after the same sort of things. Um, and with the environment, because instead, if you sell cars, you, you're rewarded, you sell cars, you make more money by selling more cars.
So you're rewarded directly for maximizing resource consumption. And I don't see how we can ever have a sustainable industrial system based on rewarding industry for the opposite of what we're trying to achieve. But it's also not very smart business because it means you're betting your future profits against known trends.
I mean, we can argue about when these peak issues hit, whether it's peak oil, peak, copper, peak, peak, any resource, lithium, cobalt, whatever. Um, but you can't argue. about the direction of travel. They're finite resources. We're digging them up and we're getting to less and less, um, concentrated reserves because we used up the best ones first.
Um, so it is, it is a converging funnel of constraints. [00:36:00] And we are trying to bet against that converging funnel. If our profits are premised on consuming more and more resources. If on the other hand, we design the business to lock up all those things on our balance sheet. We gradually decouple our revenue from raw material extraction.
So we're rewarded for resource conservation rather than consumption. And it's just smart business because we future proof ourselves against commodity price shocks. Um, we future proof ourselves against regulation, which is all designed to, as a damage limitation exercise to rein in the externalities, which, which, um, uh, uh, furnish the profits of, of, of, of a linear model.
Andrea Hiott: Um, So that makes a lot of sense with the Aikido, because what you're doing is sort of, you're looking at the, this overall power or this overall kind of force and you're aligning The business with the customer in a way that I don't [00:37:00] think has ever been done before. I think that sounds like a very new thing, at least in automotive company.
Yeah, but I think it must be hard.
Hugo Spowers: It leads to you designing an entirely different sort of car. Yeah, right. The focus of the industry, understandably, today, um, they're very good at it, is minimizing unit cost, because that's what drives your competitive proposition. But in our case, um, the pricing of the customer is driven by lifetime costs, as I said just now.
And, and you don't minimize lifetime cost by minimizing build cost. Actually, um, as, um, we often say that in a complex system, you're trying to optimize the whole system. And the lifetime cost is the whole system of delivering, um, mobility to, to customers.
Andrea Hiott: So you're really creating a process that's going to create the right pattern. It's not these like static little things that you're going to set in place and they have to stay that [00:38:00] way, which is the current kind of model.
Hugo Spowers: That pattern is terribly important. There's a whole heap of feedback loops and everything affects everything else.
And, uh, and in fact, if you optimize all the bits. of a complex system. We argue that you pessimize the whole system. Absolutely, yeah. Optimize at the system level, and we're not used to that. Not at all. Falling into the trap of thinking that optimizing the bits leads to an optimal whole. Mm hmm. And that
Andrea Hiott: the bits must stay exactly as they are, you know, somehow, which
Hugo Spowers: can't really happen.
Andrea Hiott: I'm thinking of people listening to this who haven't heard of it. And I think it's very, very hard to understand how, because people, I mean, even me, it's like, we still think in this linear business model mindset. So it's almost like the first thing we want to say is like, how do you make profit? I mean, I think you talk about three levels of design. Maybe, we really have to rethink even these words.
What, What is profit? Is that part of this model?
Hugo Spowers: Um, I mean, it is, we actually, again, working [00:39:00] with the forces around us, um, I know there are many in the environmental movement who think that, um, profit and capitalism is a, is a real problem. We've got to move beyond that.
Realistically, I don't think we're going to do so very quickly. The vast majority of people are not. are not ready to do that. And so I think we are working in a capitalist, um framework, and we're trying to demonstrate that we can make more money by doing the right thing than business as usual makes from doing the wrong thing.
And I think it's entirely practical. Um, It does mean as though that you've got to go about it in a very different way, because if you design businesses to deliver financial return, and that's what businesses traditionally have been done to do to maximize financial return, and you then ask them to deliver environmental and social return, it's always a cost on the bottom line. And it reduces profits. And this is why we have social [00:40:00] enterprises. These are businesses where the, uh, the owners, the investors, uh, accept the fact that they will take a lower financial return because they're delivering environmental and social return. But to my mind, that's not a scalable model.
There's a limited amount of altruistic capital around that's prepared to do that. And we've got to, deliver, uh, come up with a model that, attracts capital on, on a much larger scale, if we're really going to have a sustainable industrial society. And I don't believe that environmental social return are fundamentally at odds with financial return, but you've got to design a business to deliver environmental and social return as well as financial return, rather than design it to deliver financial return and then ask it to do something it wasn't designed to do. So the three levels of design we talk about are designing the product, um, designing at the level of systems. And this, this actually corresponds to Joanna [00:41:00] Macy's, levels of intervention that you were talking about earlier design level of system and design at the level of purpose. So, for us that's governance and sustainability, and she talks about design sort of immediate remedies to problems, system level changes is the next level up, which is for us is the business model and business strategies.
And you talk to the third, the top level of changing shifting consciousness. And And we argue that all those three levels of design interact. And, um, and you've really got to think those through in a way that is compatible with the 21st century. Uh, which we didn't have to do a couple hundred years ago off the industrial revolution, when we were, uh, setting in train the business models that by and large we with we've run with for the last couple hundred years.
And, um, [00:42:00] And so, uh, um, the, the, the governance of the company, the, um, the mind of the company shapes how it does business. It shapes the business models and the business model hugely shapes the product that comes out of that business. And so the influence tends to work from the top down. And, uh, and it makes me realize just how powerful Einstein's Quote was that you can't solve a problem from the same consciousness that created it.
I do believe that we've got a, in terms of, um, rolling out, uh, uh, achieving a sustainable industrial society. We have a real problem, at the governance level with the primacy of, of shareholder value.
Andrea Hiott: Oh, there's so much in there that's also reminds me of another quote of, I think I've heard you say from Buckminster Fuller, but I can't think [00:43:00] of it exactly right now, but that you're not trying to tweak or, like, change, um, the system, the best way to
Hugo Spowers: Don't, um, to change things. Don't fight against the existing reality. Right. Build a new model that makes the existing model obsolete.
Andrea Hiott: Right. So this is great. And it reminds me of Joanna Macy, the change of consciousness too, because I guess what you're doing with the three designs, as I have noticed it, is you're doing them all at the same time.
You don't focus on just one. You see them as a system and yes, maybe it's often top down, but it's also bottom up and it's also left, right. And so you really have to think of it as an organic, ongoing thing. That whole change is kind of a change of cognition or consciousness in a way, in this kind of Einsteinian or Buckminster way. I mean, it's
Hugo Spowers: connected. Yes, it's, it's the consciousness of business, I mean, is, is the government and really it's how it's manifest and, and, uh, going back to the, The profit and we are [00:44:00] actually so unashamedly a for profit business. And we think that the model we've, we've developed is much more profitable than the current model of selling cars.
And its also much more resilient to, uh, economic cycles and, and future and, um, legislative and environmental trends that we know are in play.
Andrea Hiott: Resiliency is really something I wanted to ask you about, but it's very important what you're saying about that, you know, profit isn't the the bad thing.
And that actually making money is, can be part of this alignment. And in fact, that's part of, What you find, I guess, when you kind of align differently, that the money itself and the profit or whatever, it starts to mean something more. And actually it, it increases in that sense, so it's important that you've, you're, you're also trying to shift that that's connected to.
Hugo Spowers: Well, and I, and we feel we can do it unilaterally because it's more profitable. So then that's a metric that everybody understands and accepts. Um, so it's not as if we need the regulator environment to change or, or, um, all our competitors to adopt.[00:45:00]
Our model of doing business. Uh, we can do it. We can do it now. Um, and capital. I mean, there's a lovely line I first heard from Paul Hawking. I think it originally comes from Dee Hock. Who's the man who, who really created the modern Visa organization and which is hugely influenced our governance development of our corporate structure. But, um, he said that, um, capitalism is a very good system. We should try it sometime. You've got a system that only recognizes financial capital, but there's a whole heap of other capital ingredients that are necessary for business and society to flourish. There's human capital, social capital, natural capital, um, you can't just ignore them.
Um, it's very difficult to put a price on them. Um, whatever price you put on, it'll probably be wrong. But certainly zero is not the right answer. And that is how natural capital, um, is valued in our system today. We think we, we pay for oil [00:46:00] when we dig it out of the ground. All we're paying is, we're paying each other for the right to dig it up.
But there's nothing on our balance sheet As a society to reflect the loss of capital for the oil that is no longer underground.
Andrea Hiott: That gets to the governance, doesn't it? And the liability and the way that you've shifted that. And I think this is not the easiest thing to grasp completely. So maybe, I mean, at least the liability part and how, and how you've, how you're shifting that.
It's basically just trying to say, hey, we're responsible for what we do. For the actions, like we shouldn't get a free pass for, for doing this just because it's somehow business, I guess, but
Hugo Spowers: it's, it's, and we believe that it's actually in all parties interest, including the investors. And we have a few investors who've invested with no interesting cars, but because of our governance model now, uh, plenty of, There's probably far more investors who haven't invested because of our governance model.
Um, but, uh, essentially it's a multi [00:47:00] stakeholder model. Um, Future
Andrea Hiott: Guardian, is that what it's called? The Future Guardian's model. Yeah. Okay. Just want to go ahead
Hugo Spowers: and say that. Yes. So I should have, Should have said this future guardian governance model. It's a multi stakeholder model and it's absolutely a for profit model and the money flows in the same way as it would do in a normal business, equity investors buy shares and the dividends go to those, um, those shareholders.
There's any one class of equity shares. And, uh, but the, the control of the business. Is, uh, um, in the hands of, well, there's only six shareholders and there are six quite independent companies limited by guarantee that represent the critical stakeholders on whom the company depends. And that is the investors, the environment, the staff, The customers, the supply chain, and the community, which we define as all those bodies who have no commercial relationship with the company, [00:48:00] but are affected by our activities.
And those six companies each hold one voting share, and the board's duty is to those shareholders, and, um, and it's defined as to balance and protect the benefit streams of those six.
Andrea Hiott: It's, but it's very hard to understand, like, how does the environment vote, for example, I mean, we're seeing in law where the environment itself is becoming something that has rights.
But I think it's, you know, when you think about in a business model, it could be dismissed like, Oh, the environment, who's voting for the environment. So how does that work?
Hugo Spowers: They are, uh, appointed, uh, representatives. Um, the person who. Who's, uh, our environment custodian, the remarkable man who, um, Peter Lang, who has, uh, been environmental journalist and activist, um, for decades and organized the, um, has organized campaign for Caroline Lucas when she was standing, um, things like that.
And, um, so he speaks for the environment. He [00:49:00] doesn't speak for the, we're not, It's not the NGO world representing the environment where, uh, the vote is in, is cast, uh, for the non, non human world, basically. So I think
Andrea Hiott: that's a very important point because it's not that these, um, shareholders or stakeholders, uh, maybe I confuse those words sometimes, are coming from your business.
They're really outside the business, but they're part of the business at the same time. I mean, they really are, it really is this complex system of actually opening up that whole model.
Hugo Spowers: And they're not. They're not in the board. They're not in the boardroom. It's not a talking shop with a fight going on between six different stakeholders.
Um, uh, the board, um, is, has a fiduciary responsibility to them, but it has all the autonomy and agility of any board in any normal company. And, uh, and you need that in a private sector company. The shareholder shareholders have to approve the annual strategy at the [00:50:00] AGM as in a normal company. And the board has complete freedom to operate within what's agreed over the next year, if there's anything that comes up that goes beyond what's agreed.
Significantly beyond what's been agreed in the AGM, they have to go back to the custodians for an extraordinary general meeting or something like that to, to, uh, depending on what it is to, to clear, uh, the way forwards, but. Critically. Um, there is, the, the shareholders are these custodians.
Uh, they're the leg legislative group. If you think of it in terms of a democracy. We have a leg, legislative body, the upper house that decides the direction we should be going in. We have an executive body that actually runs the, the company. Or the country. So the lower house, or in our case, the operating board.
The third ingredient of a democracy is an independent judiciary. And, and that [00:51:00] independence is terribly important. So we have a second board, um, and it's sort of akin to the role of non execs, but without the conflicts of interest of non execs sitting on a unitary board. So the stewards board has, um, is effectively the independent judiciary.
They don't Uh, jointly vote with the board on anything. Uh, but they sit in on all board meetings and if any of the shareholders believe that the company is not balancing and protecting their benefit stream as they're, um, uh, bound to do, uh, they can't storm into the board meeting. They can, they can go to the stewards board and the stewards have to investigate it, work with the board and report back to the custodians.
Um, and they also, for instance, are responsible for appointing and signing off auditors rather than the board having any role in signing off marking exam papers. And then the fourth [00:52:00] principle of a democracy is, is a free press.
In our case, it's a principle of transparency, and it's defined as, um, on a need not to know basis. We're all familiar with a need to know basis. You can't know anything unless you need to know it. In our case, anybody in the company can, Has access to any information that they want to know, as long as there's no reason why they can't know it.
And there are things that of course, have competitive, um, concern that we can't make available to everybody because they would leak out of the company. Um, but within that fully open source, but it's, Not fully open because you, it will be commercially suicidal. Um, but as long as there's a commercial reason why they, anybody can't know it, anybody in the business is, is able to ask to see anything they want to see.
The only people to whom that, uh, need not to know basis doesn't apply are the stewards board. So the stewards [00:53:00] board have access to anything the board has if they want it. And, um, and that's akin to discovery in the, in the legal process.
Andrea Hiott: Okay. I love the name stewards board. That's really good. I was trying to think as you were talking, what's, um, concentrating the energy of all these people in a similar endeavor.
And I was I can't find it, but I remember you were saying you're trying to eliminate environmental impacts, of personal transport, maybe something like that. Does everyone kind of have a similar desire in that, in that direction?
Is that kind of the concentrating element to all of these things?
Hugo Spowers: Um, without wishing words in everybody's mouth, I think so. And I hope so. And it's in the articles association of the company. Okay.
Andrea Hiott: That's what I was wondering if there's an actual article that's laying this out and.
Hugo Spowers: It's not a fluffy PR line, that it's a responsibility and so, the Articles Association of the custodian companies, uh, they have to speak.
The truth for their community, but they equally have to [00:54:00] be cognizant of the, uh, the primacy of the whole over their own minority interests. So, um, so you need people who, not, yes, men, um, uh, people who will speak up for their community, but who recognize they can't have everything their own way. And this is a, an inherently collaborative.
Model, we, we sometimes been told it's similar to the mitbestimmung in Germany.
Andrea Hiott: No, not at all.
I wouldn't say this. You think so? I feel like that's a much more, that's a definite clashing kind of a
Hugo Spowers: model. is absolutely the opposite, opposite end of the spectrum as far as we're concerned. So 49 percent held by the unions, you set up confrontation as the fundamental dynamic.
Yes, each each custodian company has 17 percent of the voting rights. So there's no custodian company that can veto something. So it means that [00:55:00] You've embedded cooperation as a fundamental dynamic. Um, because if you try and dig your heels in, um, you'll be ignored by the other five custodians. The only way to get change is to collaborate. We believe that this brings, um, uh, one of the critical problems of our current stakeholder model, especially when you have, uh, listed, uh, stock, um, and highly liquid, therefore, highly liquid stock is a focus on the short term, the quarterly returns, because that's all that matters to shareholders who can get in and out on a whim and, um, and the short termism, um, taking decisions about on basis of the short term are necessarily at odds with decisions made in the long term.
And this model brings a much healthier balance between the short and long term in decision making. Because, uh, the short term, A decision [00:56:00] to maximize, returns, um uh this quarter to the shareholders, is essentially achieved by taking risks with the other five benefit streams of the other stakeholders.
And in our model, the other stakeholders won't, uh, wouldn't be prepared to tolerate that and have to tolerate that. So things like Deepwater Horizon or Dieselgate. absolutely examples of taking risks with five future benefit streams in in order to maximize the short term return. And
and when I say investors, investors who are partners with us in long term value creation. Um, it's, it is at odds with investors who are short term value capturers who want to, um, take advantage of volatility, get in and out quickly and capture some money without contributing any value. Um, but, , for investors who are interested in the longterm, things like pension funds, for instance, [00:57:00] who want long term and resilient, revenue streams, this is a much better model because, we are taking decisions in the company about the long term health of the company rather than being swayed by short term, uh, demands from transient investors.
That's
Andrea Hiott: wonderful. And there's two things in there. Uh, resiliency. I wanted to get to, you mentioned earlier and how , this is related to this weird way that it is a kind of shift of cognition or consciousness about time too. I don't know, in your experience, if you people see, it's very hard in a way to, to think about the longterm.
I mean, that's what you've done. It's a slow model in a sense. Um, and there is a kind of movement definitely towards that. I even think of like Aikido or meditation or There's a way in which we're really trying to notice more and slow down and look long term. And that definitely relates to this idea of the complex system that we were talking about looking from different positions. But how do we [00:58:00] motivate that? Is resilience one way to do that or what are your thoughts there?
Hugo Spowers: Well I think I think the fundamental is that it's, um, it's resilient revenues. It's more profitable and more resilient.
Andrea Hiott: The object itself is too, the actual product is resilient.
And
Hugo Spowers: of course, in. In the, the way in which, modern accounting systems work, the fact that we're taking a long term, um, view doesn't mean that profits are gonna take a long time to appear.
Mm, that's a
Andrea Hiott: good distinction.
Hugo Spowers: We capitalize all the cars that we make, they're revenue generating assets on our balance sheets, entirely appropriate. They're capitalized. So in accounting terms, we very quickly reach positive profit, EBIT DA as investors all talk about. And it's actually in second year of production in our financial model, where EBITDA are positive.
[00:59:00] No, we're not generating. surplus cash at that stage because we're building these cars with debt finance. So you've got cash coming in from, uh, uh, from, uh, debt finance houses and of course, it's a very, very interesting opportunity for the financial community. Um, I mean, it's new financial products, um, but it's, it's a It's akin to a mortgage, you're putting money into a car that's got a, uh, we're modeling on 20 year life and it spits out a revenue stream monthly for 20 years.
Uh, it's absolutely ideal opportunity. Once you, of course, get over the early, early stages of proving that the model is actually as good as it says on the tin. Um, so, we're not, we don't have a problem with, with the profit being way down the line. It's just that we're taking a, a long view and we want to make sure that profit keeps on coming in.
And, and then the this, [01:00:00] this influences the business model. So the business model, We're selling service. We're not selling cars. Uh, people ask what our break even volume of production is. Well, actually it's the wrong question because the cars we make this year, we're not selling our revenue comes from the cars we've made in the previous 20 years. Not the cars we make this year. And when you do have a downturn in the economy, as we saw in 2008, some car companies saw a 50 percent drop in sales, and that's a 50 percent drop in revenue. Because people do stop buying cars when the economy goes soft, but they don't stop driving them. No, there'll be a tiny blip because, people can't afford, a car. As much petrol, but it's, it, the, it bounces back from that historically very, very quickly. And it's only a minimal effect compared with the actual purchase of new cars. So our revenues are much more stable in economic cycles because we're selling the miles. We're not selling the cars. And, uh, and that again, [01:01:00] appeals to long term investors who want to, want a steady, uh, revenue stream from, from a subscription service effectively.
Andrea Hiott: Yeah. And again, that has to do with the alignment between the business and the customer and all these other different parts, because what's good for the customer is also good for the business model, right? You want the cars to last and the parts can be changed out and the whole, all these three levels of design, actually, the customer and the business are aligned in those ways, which is kind of the opposite of this planned obsolescence.
Hugo Spowers: Absolutely. Yes. It's a phrase that came from the auto industry. Gosh. Yes.
Andrea Hiott: Before we go, there's so many things I would want to talk to you about, but two, two, before we go really quick is the one is kind of the way that you're keeping it personal, in the sense of, you're not trying to use technology to transcend the position of the human in all of this.
And the second one is just that this is a company that's called, you know, it's a hydrogen car, but you're not also rejecting electric, and I don't know, maybe you are [01:02:00] rejecting combustion, but Part of the systems integration is also, you have electric wheel hubs, I think. Yeah. Um, so it's, it's, I also wanted to kind of open that up a little bit too, for people who are listening and let it, you're using a lot of different things in a very systems way at all levels
Hugo Spowers: um, I absolutely agree with you. Um, that, that there's a, there's an important role for battery electric vehicles. Uh, we don't argue about solar PV or wind turbines, which one's going to win the renewable energy race. They're just different and you need them both.
And the same's true. batteries and hydrogen. So we really shouldn't be having the war of words, between batteries and hydrogen. Um, however, I do believe that nothing can be as sustainable as a hydrogen car for the sort of range to which we've become accustomed. Battery cars are great at short range, but the efficiency of cars depends hugely on their mass and batteries are heavy.
And so as you design a battery car for longer and longer range, it becomes less and less efficient. And also it becomes [01:03:00] considerably more expensive because of the cost of the raw materials. And it always will be. And so battery cars really should be used in shorter range applications and hydrogen for long range. It's nothing to do with size. We need hydrant for HGVs, but it's not because they're large or heavy. It's because they do long range. And the only mature market for hydrogen today is pallet carriers and forklifts, tiny vehicles. Um, so clearly it's not size. It's again, uptime utilization. And the same applies across the board from the pallet carrier up to the HGV, including a lot of cars in between.
And interestingly, We often hear this 80 20 rule that 80 percent of journeys are less than 20 miles. And that's probably true. And, and I absolutely agree with using battery cars for that. But nobody ever points out the corollary of that. And that is that 80 percent of miles are driven in the other 20 percent of journeys.
And [01:04:00] that's where 80 percent of the problem is. And that's where we need hydrogen.
And
certainly, um, we, we really do stand for preserving the freedom and joy that cars have brought us,
the joy of motoring.
And so I have to say, um, uh, we're, we're, we're never saying never that we'll never. make an autonomous vehicle, but, but I have very little time for autonomous vehicles. We've got a lot of problems on our hands. And one of them is not people complaining about having to hold a steering wheel.
Actually, some people quite enjoy it. I mean, years ago, I remember seeing the, uh an editorial, uh, talking about the cars, the 20th century personal freedom machine, and it has got fantastic potential to really bring joy to our lives. And we don't want to lose that.
Andrea Hiott: No, and it's connected to so many bigger parts of our life, you know, the way we move through life, how we connect, what we can explore.
Hugo Spowers: Absolutely. And we're from a motor racing background, so we're not going to build boring cars. I mean, our car, [01:05:00] honestly, I think, is enormous fun to drive. it only does 60 miles an hour, but it gets there in, in nine and a half seconds. It's designed for local use, not for intercity motorway travel. This car, we can design cars that are faster, it's not a problem at all, but it's designed to be the most cost effective, fun, zero emission car, and most convenient.
Um, uh, , you can get, and, um, and so it's straight line acceleration to 60. I think it's 40 to 60 time, um, is slightly better than the old Lotus Elan, which is honestly the closest road car that I've ever driven to this. There's a lot
Andrea Hiott: of inspiration from Lotus in here. Yes. Yeah. And Porsche?
Is there anything from Porsche by chance? The electric wheel hubs, you know, for an early car.
Hugo Spowers: Yes, Lerner Porsche did do that. Um, we've got a couple of people who started under Colin Chapman. Oh, okay, that makes sense.
Andrea Hiott: Those [01:06:00] guiding principles, you've evolved those a bit.
Hugo Spowers: Yes, and certainly lightness, we wouldn't want to have, some of the negatives of Lotus where fragility and so on is, is also part of the reputation, but, it certainly, Absolutely critical that the cars get lighter.
In our view, this car the one we're doing at the moment is 660 kilos. It's got the very rich chassis, very good suspension. And because it's so light, it's got narrow tires. So you don't need power assisted steering systems or brakes. So it's a much more immediate and direct feel that you get engaging feel. Then you do from an ordinary, modern car today.
Andrea Hiott: And it feels like I haven't, I obviously haven't driven one yet, but just watching them and listening to people talk about them. Um, it feels like it becomes an extension of your body in a way like that you really want from your vehicle that kind of, it goes back to the beginning of cars in a way for me and the excitement of. Of feeling an extended power and when you couple [01:07:00] that with the sustainability, it's even more exciting.
Hugo Spowers: Extension of yourself too. I mean, I very much feel that a car that's fun to drive. It feels like an extension of yourself. And, and, uh, And it's absolutely the opposite of so much that I see around us in, in modern cars. it's all phrased as taming a beast. And things like that. That's absolutely the opposite of what I see. That's completely
Andrea Hiott: different than this organic, really extending the body. It's a really beautiful, way of thinking about it. And
Hugo Spowers: it comes across in the names of cars. I mean, all sorts of aggressive names. Venoms and vipers and true. It's, it's all wrong to my mind of what the joy of driving is all about, and, and going back to autonomous vehicles, I feel that, um, there's a false, uh, elision being made in people's minds between autonomous and sustainability.
[01:08:00] And there's no rational connection at all. Um, I believe it's actually a negative correlation between autonomous and, uh,
Andrea Hiott: sustainable. They do get lumped together. We don't even think about it. It's just like, Oh, it must be sustainable if it's, uh, I
Hugo Spowers: mean, we know from California that it increases mileage driven, and it's not really obvious what problem it's solving.
Also I've been on a government committee looking at infrastructure for vehicles for hydrogen and electric. And there's a body of opinion explicitly that has argued that we needn't worry about hydrogen refueling density because you'll be able to go to work and send your car off 25 miles out of town to get refueled and be back before the end of the working day.
We're worried about single occupancy journeys. We're not going to have a raft of zero occupancy journeys. And that's all extra congestion. It's extra energy consumption. It's extra tar particulates and things which are hugely damaging to human health in the air and in ground water. Um, [01:09:00] all these things as Wholly negative. But of course, who's going to ask the question of whether we should do it. Autonomous technology is an opportunity to make money. If you come up with a new technology, you can make money out of it. The deployment of that technology is always in the hands of people who are developing the technology.
And because it's down to make money out of it, they're not going to sit down and ask whether we should do it. Because nobody ever made any money from not doing something. So it's not a question that gets asked. And it ends up being in the hands of regulators as a damage limitation exercise after the event. Uh, to try and deal with the negative consequences, negative unintended consequences, I should say. And so, I think that we are focused much more on, on the sustainability issues, which I think are weight and all the, toxic and, uh, safety implications of that and the energy con, uh, issues, on resource consumption.
[01:10:00] energy efficiency, all those things. They're the really big deals that we've got to crack now. Whilst preserving the joy of motoring. So your, your term forever motoring, uh, we'd absolutely endorse. We don't see there's any fundamental conflict and we're We're not very sympathetic with the Puritan view of a sustainable world, where everybody's got to do this, got to do that, and it's going to be a miserable lifestyle.
I don't believe it need be, and I think it's much easier to get to a sustainable future if it's an attractive future.
Andrea Hiott: Beautiful. Well said. We should probably end it there. That's just perfect. I just, one last thing is, um, it seems like the, the way this is going to work is if this kind of model of corporate governance is accepted at other levels, like the ones of the people creating infrastructure because then it's very easy. Then you start aligning all of this in a really way that could actually go very quickly. There's a lot of people who want to do [01:11:00] this.
Hugo Spowers: We honestly don't believe that infrastructure is a, a huge barrier. The barrier for us is, has always been, raising the capital, to do something left field. It's getting easier. 10, 15 years ago, we were asked, people would say, well, yes, you could do that, but why? People couldn't even see the point of doing it. Uh, we're past that now. We're still a bit left field, but it's becoming increasingly obvious that the The current model is fundamentally unfit for purpose and is financially and economically unfit for purpose.
I mean, it is, it is really on a tightrope, but we would argue that it's because the interests of the, of industry in the current business model are completely opposed to reality. Um, so, It is becoming, more accepted. What we need is to, to, to get to market the chicken and egg of hydrogen infrastructure and vehicles.
We're very clear. It's a lack of vehicles. We work with infrastructure [01:12:00] partners and again, we work to align our interests for them with them. They specifically say we don't need subsidy. We've been into meetings where they say, if there's any subsidy, please don't give it to us. Give it to the vehicle. What we need is bond rather than subsidy.
And if you give it to the vehicles, it creates a demand justifies our investment, but critically, if you build something like a Toyota Mirai, there's the one area where I'd be critical of the industry. Um, they're effectively saying, well, we need 300. It's a brilliant bit of engineering. It really is.
But they effectively are saying you need 300 filling stations in the UK to create a market for our wonderful car. And, and, and poor little us at Toyota, we can't afford that. Um, so governments, you got to pay. And that's not a strategy. It's just passing the buck. So we are specifically designing for local vehicle use. There's over 3 million cars in the UK that operate within a 25 mile radius. And that's a very significant market segment that isn't [01:13:00] targeted as a segment in the segmentation of the auto industry today. Um, and this is why the car only does 60 miles an hour. By doing that, we can make a car that's much cheaper and more cost effective for customers and with the relatively expensive new technology that we're using.
Um, and, if we put in, uh, um, work with our infrastructure partners and, uh, they put, uh, a hydrant pump on a forecourt on a ring road of a small city of sort of a couple hundred thousand people, and we put a hundred cars into the market, they've got a hundred captive customers from day one. And that one filling station is enough to create a market for our, a hundred cars. And so there's a business case for the infrastructure provider, and concentrating the demand is key to that, and it also makes it easier for us to support the cars in the market. And you can replicate that in different places. Each one, there's a standalone business case that doesn't depend on a nationwide network, but it allows you to develop the [01:14:00] skeleton of a nationwide network without ever taking a nationwide gamble.
And to that we see as the path forwards for developing hydrogen infrastructure. And the lead time for those pumps to go in is much shorter than the lead time for us to build a factory. We reckon that we're on now a path to starting production in Q2 2027. If the money keeps arriving in a timely fashion and, uh, and the lead time for those infrastructure partners is much shorter than that.
So we're working with them and we've, we're, we're confident that that's doable. Unlike battery charging, where the forecourts simply cannot afford the multi megawatt substation that they need to support A large number of battery chargers on their forecourt. That's great.
Andrea Hiott: I wish we could talk about that even more.
Maybe some other time we'll just have to talk more about specifics, but I just want to say thanks that for what you're doing and to your team for, a new model being put forward. [01:15:00] And I think the more people become aware of it, some of it's just like information, the more it becomes obvious and, and the alignment kind of spreads, but last thing, uh, maybe in one sentence or something, what, how do you see the future of motoring?
What's like a few little ideas that come to mind, more local or
Hugo Spowers: um, I, believe that uh, I, I believe that we've got far too many cars on the planet. We will have a world where there's far fewer cars, but the answer isn't no cars.
They will be used more appropriately. We will have less congestion and we will have much more, much better mass transport systems, particularly cities. Cities can only work well where the majority of transport is, is uh, mass systems. Um, and it's to the benefit of all, but there will always be some car use.
And in cities, I think a lot of shared cars, outside cities, I don't think it works nearly so well. And I don't think it's as sustainable because there's a lot, an awful lot of extra mileage. For summoning cars when [01:16:00] you need them, quite apart from the lack of spontaneity and flexibility that it can offer you. But I think it's, the possibilities are all there, whether or not we get to that sunny upland, I don't know, because, um, it doesn't fit, um, the interests of, uh, a lot of industry today. And,, uh, I believe that the barriers are not. Technical they're all to do with people, politics, and inertia in our systems.
And uh, so I, , I'm, I'm not suggesting that isn't necessarily the way it is going to emerge, but I do believe it is a future that can emerge if we will it.
Andrea Hiott: Wonderful. We'll leave it there. A movement of mind in a way. Thank you for being here today.
Hugo Spowers: Oh, thank you. Thank you very much, indeed. And, we have had some conversations in, um, the Netherlands because there's an awful lot more hydron mindset there
[01:17:00]