Conference Synopsis

His Grace the Duke of Richmond

Opening Nucleus for 2023, His Grace the Duke of Richmond told guests that it had only been eight years since he first convened the event, but that we already find ourselves deep into the future which the first Nucleus set out to explore.

Some of the issues discussed then have been at least partially resolved, he said, such as the commonly-accepted shift to electrification.

Other possibilities examined back then have not yet come to pass. The tech giants have not invaded the automotive space in quite the way some feared they might. Autonomous vehicles have also not yet found the widespread use and acceptance some previous guests predicted.

But none of this makes the future any more knowable, he said. In fact, it’s quite the opposite, making Nucleus is all the more important and relevant eight years on.

In the past, Nucleus focussed more on the race to innovate. But you cannot innovate unconstrained by context or consequence. That context is changing faster than ever, he told guests, and as innovators they must now react as much as provoke.

The rush to electrify leaves us dependent on new natural resources and means radically rethinking supply chains. And geopolitical realities are reshaping those supply chains too. Businesses and governments alike want to insulate themselves from further shocks. And the importance of mobility to economic security means it is in the cross-hairs of governments wanting to on-shore or friend-shore economic assets of strategic importance.

Thus politicians are now at least as important in all this as hyper-caffeinated twenty-something tech bros, he said. But just as the first Nucleus did, this year’s event would once again bring together a diverse range of people with world-changing influence in this space, for a conversation unlike any other.

The first Nucleus session brought together those who set the context for the New Mobility, including the lawmakers who regulate it and can encourage it with subsidies, and those rethinking the infrastructures within which it operates: and in particular, our fast-growing cities. The panel included two very senior politicians from the US and UK, the leader of a business rethinking and investing in infrastructure, and a world-renowned expert on future cities.

One of the politicians opened by saying that he preferred carrots to sticks when encouraging new technologies, and he reminded Nucleus that creating the conditions in which to make profit and scale up was as important in attracting tech start-ups as any enterprise.

His political counterpart on the panel acknowledged that it would be hard for his government to compete with the carrots currently being offered by the US Inflation Reduction Act; that competing with America in a ‘cash-throwing’ exercise would be futile; and that it might be better to encourage change with regulation instead, setting what he saw as challenging targets for the switch to EVs. States are not always the best allocators of capital, he said, and it was not the role of governments to decide which technologies should win. Our first legislator agreed, saying that sometimes the best thing a politician could do was to get out of the way.

They also agreed politicians could invest well, particularly when thinking on timescales beyond their immediate electoral horizons. One reminded Nucleus that London’s Crossrail project had been controversial and costly, but now that it is operational, nobody would seek to uninvent it. He said that he had no objection to taxpayers’ money being spent where the market was failing, such as to encourage a faster and more effective roll-out of the charging network.

The other gave a substantial investment by his own government in tech as a further example. His aides had cautioned him to downplay it, he said, and he acknowledged that voters would rather the money be spent on roads. But if the investment made his region the next Silicon Valley, nobody would object in retrospect.

From the floor, one very senior automotive industry leader decried the effects of political interventions such as the Inflation Reduction Act, which he said would distort global markets in return for relatively few new jobs for the US. One of the politicians replied that the US had to make a major change and it had to happen fast, and that such a major reset would always have geopolitical implications, including changing America’s relations with its allies.

Our future-cities expert said that states and legislators needed to plan very differently when creating the habitats required for the world’s additional billions if we are to avoid serious problems, not only of sustainability but also in areas such as mass migration. New urban developments need to address coming demographic shifts, such as the need to provide employment for both larger and younger populations.

Innovation often struggles to unfold in existing cities, he said, and their structures needs to be rethought at a systemic level. To applause from one delegate and vocal disagreement from others, he said that the car may no longer be considered fit for purpose, especially in new developments not already dependent on its use.

The infrastructure investor on the panel agreed, and said that the tendency to favour the lowest-cost solutions in big city projects often left innovation ‘on the cutting room floor’. But he also struck a more optimistic note, referring to infrastructure investments which are assisting with the advance of autonomous vehicles, and providing the learning that will encourage similar advances elsewhere. Not quite the ubiquity once predicted for autonomy, he acknowledged, but progress nonetheless, made possible by a combination of innovative infrastructure and political will.

The second session dealt with probably the single most pressing problem facing the global carmakers: one which has serious geopolitical ramifications and thus the full attention of lawmakers. Global automotive supply chains are being torn up and remade for two reasons. The shift to EVs requires new suppliers and brings reliance on new natural resources, while the value and importance to economic security of these supply The second session dealt with probably the single most pressing problem facing the global carmakers: one which has serious geopolitical ramifications and thus the full attention of lawmakers. Global automotive supply chains are being torn up and remade for two reasons. The shift to EVs requires new suppliers and brings reliance on new natural resources, while the value and importance to economic security of these supply chains means they are front-and-centre for governments wanting to reshore or friend-shore such chains to insulate them from the impact of future wars, both physical and trade.

Two very senior car industry figures actively involved in this remaking were joined by two supply chain experts with experience far beyond automotive. Opening the discussion, one of the car industry leaders said that the scale of the change required was probably without precedent; that the job wasn’t yet half done and in some cases, is moving very slowly. China’s supply chains were already low-cost and highly effective, he said. The Inflation Reduction Act, which will likely provide in excess of a trillion dollars of incentives for onshoring critical new technologies such as battery manufacturing was exactly the right thing for the US to do and has attracted remarkable political consensus. But it repudiates the economic orthodoxies of recent years he said, and he suggested that Europe needs to put away its economic textbooks if it is to have anything left.

His car industry counterpart said that this trend would make the world more dangerous, and that an interdependent world in which we are forced to talk to each other is safer. Taiwan in particular becomes more vulnerable the less dependent on it we are, and the best thing we can do for Taiwan is to stick with it and not reshore. It would still be a disaster for the world were Taiwan’s industries to be disrupted by war, but he accepted that there is a political will to reshore which business has no option but to follow. It can be done, he said, but it will make supplies much more expensive.

A supply chain expert with particular experience in defence and aerospace said that in many cases, the US simply doesn’t have the skills to replace Taiwan as a chipmaker; that new capacity outside Taiwan would take at least two or three years to come online and that staff were being sent to Taiwan to be trained. Single-source supplies – whether from one nation or one manufacturer – are many enterprises’ biggest headaches right now. And she said that many makers are still in a post-COVID recovery phase; more focussed still on simply getting their products out of the door than on cost, as they were pre-pandemic. That gives power to suppliers not affected by the rush to reshore, who are no longer happy to be rule-takers and are pushing back on cost.

The second outside expert said that the online retail boom of the early 2000s was the closest comparison he could think of, and that such transformative change almost always has a negative corollary, such as the impact online sales have had on the high street.

From the floor, another very senior governmental figure said that walls were expensive, and that global supply chains currently being unmade had lifted and kept people out of poverty in developing nations. The global system was already optimised, he said. State interventions would not be productive, and the capital being deployed in trade wars might be better spent defusing real ones.

The third panel discussion assembled the leaders of three innovative start-ups from outside the traditional automotive sphere, each of which has taken on a challenge once thought near-insurmountable and seemingly cracked it, alongside the leader of a chip maker which also has its roots beyond the car industry but which now powers legacy carmakers and startups alike. What can established businesses learn from the rate and depth of innovation of these startups, and their ability to implement?

The CEO of a highly innovative mobility business which is just about to come to market at scale told Nucleus that had he and his team known when they began what others in the room already knew about the challenges of steering a such a start-up through to viability, they might not have started at all. But he also emphasised how his business had chosen to see the bigger picture, seeking noThe third panel discussion assembled the leaders of three innovative start-ups from outside the traditional automotive sphere, each of which has taken on a challenge once thought near-insurmountable and seemingly cracked it, alongside the leader of a chip maker which also has its roots beyond the car industry but which now powers legacy carmakers and startups alike. What can established businesses learn from the rate and depth of innovation of these startups, and their ability to implement?

The founder and CEO of another, now well-established, AI-enabled mobility business agreed, saying that they had found mass acceptance and success as much for the human advantages their tech brought as for those of cost or logistics. He also said that he believed that we will be living in an ‘augmentation world’ for a couple of decades yet at least. Fully automated trucks will be banned in California, typically an open-minded and early adopter of such tech, until 2031 at the earliest, for example, leaving real opportunity for small and nimble start-ups with more modest solutions than full self-driving.

The CEO of an electric aviation business had to crack tough regulatory hurdles as well as near-impossible challenges of power, weight and reliability to get to its first commercial flight, due very soon. But he also referred to the human aspect of his business. Public acceptance is as tough a nut to crack as the tech, and he said that his next challenge is to get passenger costs down from the current $10 per kilometre, and prove that electric flight is not just for the wealthy.

All of mobility was being transformed by more powerful chips, the panel’s chipmaker told Nucleus, urging guests to look for the next big leaps not only from the chips resident in vehicles, but in the virtual testing of autonomous cars, or the modelling and optimization of plants before ground has even been broken. If the reshoring discussed in the previous session makes building new plants inevitable, more powerful chips, modelling and AI can at least make them as clean and efficient as possible, he said.

The final Nucleus session was a conversion between moderator Sarah Montague and the co-creator of some of the world’s most successful and compelling consumer tech hardware and systems.

He admitted that he woke up in cold sweats about how much the some of the tech which he and others had pioneered had changed society, but he also offered some wisdom on how to learn from the success of those products when engineering the New Mobility. Nucleus guests should think not only about whether they can do something, but whether they should, he said. And rather than focusing on a particular technology or product they should think about rewiring their worlds at a systemic level.

The same applied to cars, he said. He lives in a major global city but finds driving there a waste of time and doesn’t own a car there. Electrification is fine, he said, but he urged delegates to question whether a car was appropriate at all. Compelling products solved a pain point for consumers, he said, but EVs do not solve the pain of congestion.

And he questioned how capable existing carmakers, aviation companies and others are of innovating at a system level when their natural instinct is to maintain their current operations and investments. You can’t change hundred year old cultures overnight, he said: the people who are frustrated with the old ways and can see what’s wrong need to be pulled out and put into new, separate teams and cultures which the bigger business might then emulate.

Great innovators plainly don’t rest, nor lose ambition. Despite having transformed our digital lives in past decades with his products, the speaker is now working on breakthroughs which might put even his previous innovations in the shade, and whose solely beneficial consequences would be unlikely to keep him awake at night.