Conference Synopsis

The Duke of Richmond opened the fourth Nucleus by welcoming his guests. This small and very select group was engaged not only in rethinking mobility but in ‘remaking the modern world’, he said. The ‘creative and sometimes combative’ conversation which has kept delegates returning to Nucleus owes its quality to the significance of those attending, the Duke said, but also to their willingness to express opinions which they might not in more public fora.

The Duke suggested a theme for this year’s discussion. He proposed shifting the focus away from the big carmakers and those who seek to disrupt them, and instead examining how individuals would have their lives and environments transformed by the technological change the delegates are pioneering. He acknowledged that both the value and the risk in such change often lie in its ‘unexpected consequences’. Our inability to predict the impact of new technologies as they mature should never be a ‘brake on innovation’, he said. But he urged delegates to use their unparalleled vision to attempt to anticipate such consequences, and ‘ensure that the lives of the individuals we seek to serve are disrupted only for the better’.

Nucleus was once again moderated by Krishnan Guru-Murthy. It is held under the Chatham House rule, which allows for the themes of the discussion to be revealed, but the attendees may not be identified nor their comments attributed.

The keynote address was given by the CEO of a major multinational manufacturer. His business works across multiple sectors and is a partner to many of the tech and automotive companies represented at Nucleus. He responded directly to the Duke’s proposed theme for this year’s event, and acknowledged the moral aspect of disruptive change. He said that it was right that businesses like his think not only about how to engineer transformation, but also whether they should. But in almost every case the speaker believes that the answer is yes: because if you don’t innovate someone else will, and you will lose control of that change and the ability to use it to help shape this ‘fourth industrial revolution’ for the greater good. 

That revolution is happening anyway. For the speaker, the real challenge is making change inclusive when its outcome tends to be binary. There have been a few very wealthy winners, but an estimated 380m people – 15 per cent of the world’s workforce – will lose or change their jobs by 2030 as a result of technological change. Such disruption takes out the weakest players in the value chain. The automotive value chain is the largest in the world, our speaker said, giving those at Nucleus a particular responsibility to manage and explain that change to those it affects, lest a populist leader explain it for them.

The speaker for the first session holds a very senior position at an innovative new carmaker but comes from a pure tech background. The early remarks will have gratified those Nucleus delegates from a more traditional automotive background. Carmaking is more complex than many imagine, they were told, and traditional mechanical engineering will be enlivened rather than marginalised in this new era. Carmakers will still build cars for people to own, rather than simply to summon and ride in. Ride-sharing will not kill the ownership model, and it is especially secure in China.

But plenty will change. The speaker set out a vision of a seamless user experience. From configuring, buying and insuring a car on an app to booking a service, software will both remove the ‘pain points’ of ownership and give innovative carmakers far better data on their customers than the traditional carmakers currently gather. Software will define hardware: mechanical and electrical engineering may flourish but they will also have to change, and mechanical engineers will need to think differently. 

In acknowledging the broad theme of this year’s Nucleus – the impact on individuals of the ‘unexpected consequences’ of technological change – the speaker noted that the cellphone was not invented with the intention of it becoming an addiction. But that uncertainty affects everyone, from individuals to start-ups and established players. Our speaker closed by reminding delegates that the company which invented the cellphone no longer exists as a brand.

The Nucleus panel discussion, moderated by Krishnan Guru-Murthy, provided the combative and creative discussion the Duke of Richmond envisaged in his opening remarks. It brought together four individuals making remarkable contributions to the future of mobility in the fields of machine learning, big data, state regulation and radical new forms of propulsion. It turned the tables on the disruptors in the room, challenging their assumptions and examining if they themselves might be disrupted by the failure of technology to deliver, or a lack of demand from end-users. 

From the panel, a pioneer of machine learning posited that the data-driven approach to autonomy might simply be wrong. Humans learn to drive in a few hours, he said, because reasoning allows us to deal with the ‘edge cases’ that data alone cannot. He suggested that driverless cars might fail because they simply never become good enough or because we can’t find a way to regulate them. From the floor, one delegate agreed, wondering if autonomy was attempting to answer a question that consumers haven’t yet asked. 

The panel’s big data expert volunteered that big data alone was not a panacea, but gently pointed out that humans can be unreliable too. A representative of a state with a laissez-faire attitude to regulating experimental technologies said that the way to counter such uncertainty was simply to ‘get active’ and see what works. 

As at previous Nuclei, the leaders of the established carmakers quietly and convincingly made the case for change that is more evolutionary and less convulsive. Not only were the big brands changing, said one very senior car industry figure, but they were continuing to make money as they did so. Change would not be binary, added another. Just as Apple’s valuation is based predominantly on its leadership in hardware, there would always be demand for quality and diversity in cars.

One panellist advocated our continued need to travel, and said he was struck again at Nucleus by the power of meeting face-to-face. But another countered that no matter how many people you put in a room to discuss these issues, nobody could yet figure out what the right bet is. Even at Nucleus.

In the third session delegates heard from a very senior and influential technology investor who has backed many of the companies currently transforming mobility. “We look for a combination of vision and practicality,” he told Nucleus. “There are lots of ideas which can change humanity but which are not investible.”

For the speaker, the car industry hasn’t changed dramatically in 80 years, and has only begun to be disrupted. Five years ago the carmakers were in denial, he said. Tesla has done its job in waking them up and they now embrace change, but capitalizing on it is a different matter. The car industry will look very different in just three or four year’s time, he predicted.

He also predicts disruption for the disruptors. Up to 70 per cent of Uber’s costs are human, he pointed out, and so autonomy is a threat to ride-sharing services too unless they innovate and invest. Autonomy is only beginning to become investible, he believes, and he remains unsure where to place his bets. “Not a week goes by without a new LIDAR start-up,” he said, “and the more there are the less we know how to invest.” 

He predicts that eventually, similar to smartphone platforms, the market for autonomous cars will be able to support two or three core operating systems, but he echoed previous speakers in emphasizing how hard it will be to achieve full autonomy. “It’s our equivalent to putting a man on the Moon.”

The speaker approached the theme of this year’s Nucleus – the need to consider the often unexpected impacts of new technology on individuals and society – from a practical perspective. “You cannot be in business without being aware of these things, because they are a risk to you. The reason Apple cares about addiction is because it won’t be in business if it doesn’t.” 

He offered some comfort to the carmakers, acknowledging, like the speaker in the first session, their ‘complexity of manufacturing’. “Cars are not dumb machines,” he said. “Silicon Valley underestimates this. These are hard things to make.”

But the comfort stops there. The disruption in automotive will be greater than that wreaked on the cellphone market, the speaker believes, and despite the uncertainties the sector represents one the biggest opportunities for investors.

“It will be really messy, as always with capitalism,” he said. “Who will win? Hopefully the ones we choose.”

The Duke of Richmond invited Joe Vitale to summarise and close the fourth Nucleus. Joe began by noting that those in the room might be competitors, partners, suppliers or customers for each other, but they were all facing some of the biggest challenges in over a hundred years of carmaking. He revealed some insights from Deloitte research which showed the speed with which consumers were ‘warming up’ to the idea of autonomy: this year 75 per cent of those questioned said they would be prepared to ride in an autonomous car, up from 50 per cent the previous year. What constituted a ‘trusted brand’ was interesting: in Japan and Germany it was a carmaker, elsewhere a tech brand. And Joe said that Deloitte’s global experience showed that China, with its ability to create both demand and the required regulatory environment, would be a leader in autonomy, and not a follower.

He closed with a quote from the day’s second session, in which one speaker urged Nucleus delegates not to forget the value of change as they struggle with its uncertainties. “If we don’t dream, why do we exist?” she asked. “We need to focus on the glory as well as the utility.”