Riversimple adopts circular economy to create a cutting edge eco-autoSeptember 2016
By Adam Woodhall — A passion for racing cars and environmentalism aren't usual bedfellows. Hugo Spowers is not an usual entrepreneur though, and the business he has created, Riversimple, isn't a business-as-usual company. Its purpose: “To pursue, systematically, the elimination of the environmental impact of personal transport”.
The headline innovation of Riversimple it is bringing to market a hydrogen fuel cell car: the Rasa, on the roads as a pilot late this year, with the full launch scheduled for 2018. Whilst impressive, it is actually only one of the cutting edge innovations at the core of this company. As Andrew Davis, CEO of the Environmental Transport Association, observes: "It’s important to think outside the box. I think some people at Riversimple don't know where the box is”.
Whilst he was pursuing his youthful passion for fast cars, Spowers defended his passion for the planet by observing that motor sport was the quickest and cheapest way of increasing efficiency in combustion engines. He still believes this is true, but he also came to believe that we need to end the rule of the gas guzzler, and so left his passion for racing behind. In the process of doing a sustainability focused MBA, Hugo realised that the best way of achieving his environmental objectives would be by building a car—and a business—from the ground up.
This has led to innovation in three different, yet intimately connected fields: technology, business model and governance, with circular economy weaving its way through the whole business. Andrew Davis further comments, “Whilst I like having cars that ‘run on thin air’ and the technology is undoubtedly great, the fact it's got all three innovations is really impressive”.
Fuel cell technology isn't ubiquitous yet, but it is also not new, being invented in 1838, and first used extensively by NASA. However, rather than trying to fit a fuel cell into an existing car, the car is being built around the fuel cell—for example, using extra lightweight and strong carbon fibre for the body, motors in each wheel and regenerative braking. Putting it all together means that the car will have at least half the "well to wheel" CO2 life cycle impact of the most efficient internal combustion engines, if not far more when the energy source used to produce the fuel cell is renewable energy.
Spowers is clear about the challenges: "The barriers we face aren't the technology, it's people, politics and business inertia". This is in part why he has spent around half his time for the last decade or so focused on the company’s business model and governance structure. As he says: "From the start, we've looked at whole system design approach to the business strategies as well as the engineering challenges of the car. If you are prepared to change everything simultaneously, it lowers the barriers and risks. This is very counterintuitive. I’ve said that about the car, but it also applies to the business model”.
The business model is classic circular economy, as Riversimple isn’t just selling a car, they are offering a service. "This will be our customers’ only transaction in their mobility provision, with a monthly direct debit, making it less hassle, and then you just hand back the car”, explains Hugo. “This changes all our motivators. If you sell cars, then you’ve an interest in selling more cars. In our model, we are rewarded for resource efficiency and producing as few cars as possible”.
Peter Wells, a Professor of Business and Sustainability at Cardiff University, has been following the journey of Spowers and Riversimple since its inception. He says, “Riversimple is full of soft innovation. If they were just doing low volume manufacturing, the Rasa would be three times the cost of a normal car. The basic idea is to capture more added value of the vehicle so it can compete against the existing business model. Therefore, they have combined manufacturing, retail, and servicing”.
Both Davis and Wells agree that the most cutting edge innovation of Riversimple is its governance model. There are only six voting shares on the board, which is designed to balance and protect the six shareholders: financial investors, environment, staff, customers, commercial partners and community.
Spowers explains: “The duty of the board is to protect and balance those six benefit streams, and so we don’t try to monetise them, as some are only partially financial, or not at all. We need goodwill of all six stakeholder groups to maximise potential of business, and can’t expect that to happen if we try and subordinate interests of five of them to one. By putting all on symmetric footing, we believe we can generate a greater level of good will to all those stakeholders, therefore being more profitable and resilient.”