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Crazy? Possibly. The Riversimple crew believe that if people are to continue to drive cars, given their environmental impact, not only will the cars have to be different, so will the companies behind them. Hugo Spowers, the brains of the project, was originally a race-car engineer. He says success on the track comes from ‘systems integration’ — putting things together differently, rather than inventing things anew. ‘In the early 1960s, Cooper and Lotus were building racing cars better because they were putting existing technology together in a different way. That’s what we’re trying to do with both the Riversimple car and the company,’ he tells me.
Riversimple’s vehicle is a two-seater made of carbon fibre, weighing 350 kilos. It is distinctly bug-like — the upward-opening doors make it look like it’s about to fly off. It runs on four hydrogen fuel cells and four electric motors, one on each wheel. Each motor’s batteries can recover and store 50 per cent of the energy generated when the car brakes, rather than losing it as heat (a process known as regenerative braking).
None of this is unique, but the synthesis of elements is distinctive. Honda has produced a hydrogen-fuelled car, but placed it in a conventional steel body. According to Taras Wankewycz of Horizon Fuel Cell Technologies, who produce the fuel cell in Riversimple’s car, the main cost in hydrogen cars have so far been the fuel cells. ‘Riversimple reduced their size by 15 times compared to Honda’s, cutting fuel cell costs by at least 90 per cent. Horizon’s developments have reduced fuel cell costs by a further 50 to 80 per cent.’
If the combination of technologies in Riversimple’s car is so revolutionary, why are they giving the design away? Spowers says they are ‘inviting the world’s engineers, tinkerers, inventors and vehicle enthusiasts to redesign the vehicle continually, as best suits their needs’, and to set up manufacturing plants for the car under ‘open source’ licence. Open-source development isn’t new; its best-known use is by Wikipedia, the web-based encyclopaedia written by the people who use it. Conventional auto design means employing expensive teams of engineers and protecting their designs with patents, but Riversimple’s founders argue that this merely slows down innovation by excluding other ideas. Sebastian Piëch, a member of the Porsche dynasty that Matthew Lynn wrote about last week and a partner in Riversimple, says they chose the open-source design system because of the urgency of the underlying environmental issues. When I spoke to him six days after the Riversimple launch, he said they had already had ‘hundreds’ of offers of assistance via their open-source website.
By way of analogy, Spowers likes to quote the famous case study of VHS versus Betamax: Sony’s Betamax had the better technology but the VHS system became the standard in the video wars of the 1980s. Why did Sony lose? Because JVC, the owner of VHS technology, decided very early to licence production to multiple manufacturers, whereas Sony did not. Similarly, by making Riversimple’s technology available to anyone who is really interested, the company can ‘take advantage of the groundswell of support and capital available around the world to help embed its standards,’ Spowers says.
The Riversimple car will cost around £200 a month to lease, plus 15 pence per mile. The lease charge will include fixed costs such as breakdown insurance, with the per-mile cost covering fuel, tyres and other variable items. This way, Riversimple will have revenue streams different from those of a conventional car company that sells cars and parts. ‘The traditional method of buying a car rewards obsolescence and high running costs. Our model means we have a built-in incentive to make a car as economical as possible to service and repair. Since we’re also paying the fuel costs, we’ve got a direct incentive to make it fuel efficient as well,’ says Spowers.
And Riversimple is far from corporate normality in other respects. It is a limited liability partnership (a structure more often used by accountancy and law firms) in which all the stakeholders — staff, customers, ‘the environment’ and ‘neighbours’, as well as actual investors — have a say in the direction of the company. The representative of ‘the environment’ is Peter Lang, a consultant who has worked for Green groups in the European Parliament and the London Assembly. He writes that ‘Riversimple hopes to sidestep the way many companies enrich one stakeholder group at the expense of another that has no voice, such as investors gaining high returns at the cost of environmental damage’. Piëch points to successful partnerships such as John Lewis, and says that what Riversimple is trying to do is to create a robust venture that stands the test of time.
Robustness is one thing, but will it make money? Not any time soon, the founders concur, although they’re sure it will be trading profitably within four or five years. The company is designed to be low-risk, and suited to the way the world is developing. Piëch invested in the first round and is committed to participating in next funding round of £20-25 million. He says potential investors he meets now ‘get it’ because of the changed economic situation. ‘Most of the funds I meet say they wouldn’t have been interested in the company a year ago, but because of the atmosphere surrounding investment… they’re interested now.’ Spowers is adamant that long-term resilience is more important than profit — but makes the point that resilience implicitly demands profitability. Not so nuts after all.
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