Gary Burt on Future of Car

Henry Ford revolutionized the automotive industry by making the assembly line produce affordable cars for the masses, which changed society and how we lived and worked by making it quicker and more convenient to get around. 

This helped the economy prosper by giving birth to many businesses and spin-off industries, which created thousands of new jobs. 

Fast forward to the current day, where Tesla has manufactured battery packs at an affordable price for mass-market consumption to make sustainable transportation a reality. 

If research comes to fruition, over 50% of the cars in the next 20-30 years will be Electric and will disrupt and significantly reduce the need for oil. 

Just how soon is the future? 

Gary Burt provides perspective the car industry's transformation toward electric, autonomous, and connected vehicles empathetic to benefiting society with improved safety, less pollution, freeing up time, and customized services and experiences through intelligent technologies.

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Music by Iain Mutch 

Transcript

Roy Sharples: 0:05

Hello, I'm Roy Sharples, and welcome to the unknown origins podcast. Why are you listening to this podcast? Are you an industry expert looking for insights growing your career? Or are you a dear friend, helping sponsor your old pal on? I created the unknown origins podcast to have the most inspiring conversations with creative industry personalities and experts about entrepreneurship, pop culture, art, music, film and fashion. Henry Ford revolutionized the automotive industry, by making the assembly line produce affordable cars for the masses, which change society and how we live and work by making it quicker and more convenient to get around. This helped the economy prosper by giving birth to many businesses and spin off industries, which created 1000s of new jobs. Fast forward to current day, where Tesla has manufactured battery packs at an affordable price for mass market consumption to make sustainable transportation a reality. If research comes to fruition, over 50% of the cars in the next 20 to 30 years will be electric, and will disrupt and significantly reduce the need for oil as we envision the future car. The signposts point toward electric, autonomous and connected vehicles, empathetic to benefiting society with improved safety, less pollution, freeing up time, and customized services and experiences through intelligent technologies. But how soon is the future? What will it entail? And how will it impact people's lives and society? I'm joined with Gary Burt to discuss the forces driving change in the car industry and perspectives on what the future may entail. Hello, and welcome, Gary. Hi, Roy, good to speak to you again. Always a pleasure to watch the litical with you, Gary. Okay, let's get right to the heart of the matter. What will cars of the future be? What will they look like? How will they be different? And what are the benefits that people and society can expect?

Gary Burt: 2:23

There's a lot of things in there. Um, I think the starting point is we is probably some recognize that I think at the moment we are in a real inflection point of automotive engineering and the car industry. You know, I don't think it's even you got to look at the stock price to see that Tesla has given Ford VW, you know, the Audi group. You know, GM, Toyota, Honda, it's it's come on sounds like you whip them in I think the last time I saw. So this is this is, you know, early 2021. Now, the last time I saw is that the market cap of Tesla was worth about the next six or seven manufacturers combined. And I was looking the other night for this stock. And I think at the moment, Tesla's shipping about one 10th of the cars that Ford does. So a tiny fraction of the combined number of car companies. Now if we clearly there are some financial elements to the Tesla share price. But ultimately, if we trust that there's some rationale to the market, the market is seeing something in Tesla that it simply isn't seeing in the other companies. So what what is that? I mean, what is what is that different about Tesla, particularly, I know it's not alone. There are other companies in that in that area. But there's nothing with anything like the traction, the market cap. So ultimately, the funding of Tesla. I mean, I think this is probably the best evidence of the fact that the traditional model is going to really be facing some very big challenges going forward. Tesla's strategy is to enter the high end of the market, based on customers being prepared to pay a premium and then driving down the market as fast as possible to higher unit volume and lower prices. With each successive model. They have proven to successfully produce affordable and high quality electric vehicles. And their business model integrates aspects of being an automaker hardware supplier, and a tech company. One of Tesla's master strokes was not to set up shop in the Detroit Auto fishbowl and instead, California and fundamentally positioning and operating like a tech company coupled with being able to attract some of the finest talent and the tech industry thought in itself has given Tesla considerable competitive edge, thinking more broadly? What will this mean for the automotive industry as we know it? What business model innovations will need to be considered to achieve the future vision of the industry? What will it mean for the distribution supply chain and operations components of the industry? I think at the moment, what we've done is we've seen a very narrow shift in terms of the bigger changes that are going to come up are going to come from Tesla's and you know meteoric growth in arrival into the market. So if the thing which I see is I look at this, and, you know, I'll start with a UK perspective. But as I look at this, a lot of those key underlying dynamics haven't yet changed, haven't get involved. However, the underlying technology means that the assumptions on which those were based, no longer apply. So a couple of examples, one, so in the UK, and actually a lot of spending a lot of Western Europe, the cost of the car, in many cases is a smaller part of the revenue model of the manufacturer, the revenue model also comes from servicing costs by you know, a whole range of mechanisms which lock people into dealer servicing. So, you know, you buy your BMW for 30,000 pounds, but actually, the money is really made in terms of the servicing and the parts over the first, absolutely three for the warranty, maybe the next owner as well around six years. So that's the first thing. The second thing is that it's a highly complex model that has an element of built in obsolescence. So you know, we know that brakes will last a certain amount of time, tires will last a certain amount of time. But there are also ultimately becomes a point at which it's not worth repairing a broken engine, or you know, an aged engine, because it's old, and it's highly complex. And whilst it costs a fortune to build, when that's done in a factory that's really cost competitive, when you have to take it apart and fix it that's highly uncompetitive, really, really expensive. So to just examine a couple of those dynamics, if we look at the first one, let's let's compare the traditional car then to the electric car. So the fact that it's going to be you're going to need dealer servicing, well, you're not the complexity, the number of parts on a Tesla, the number of moving parts, the number of engineered moving parts that were out on a Tesla or any electric car, it's a fraction of a traditional car. Now, clearly, the brakes are gonna wear out, the tires are gonna wear out, but you don't have the same issue with the engine, it's massively simpler, you have a number of motors on the wheels, but you don't have anywhere near the problems with, you know, the transmission system or the engine or the any of the complex physical motoring. Now that what that means is, you're not going to be able to have the same level of servicing revenue that you had before. So that's going to be one shift. The second thing is, you've got a lot of mechanics there are not going to be needed. If this is going to be a much simpler system, you're not going to need that level of skill in the dealerships. So that's, that's the second shift. I think the next one is then to look at the finance the financing model around this. So the norm in the UK used to be a essentially, you would buy the car, you would put a deposit down and you would buy the car on hire purchase or a credit system over normally three years, that's transitioned to a lot of lease type arrangements, whereby you'll put a small amount down, but you'd be paying amount over typically three years, sometimes for two to essentially rent the car. And at the option, you've got the end of that now, that three years, which is I guess, stretch into four is is a fairly arbitrary figure. But it's certainly based on the fact that a car goes through a number of life cycles. So you have that initial three years, you have the second buyer three years and maybe a third buyer, or plus, you know, period at which the cars depreciated to about a quarter or lower of its value based on the mileage. But what happens to that model, when the car isn't going to suffer that degradation. So one of the reasons for getting rid of a car and not having it too long is because the cost of repairs goes up, but that's not going to happen with an electric car. There is clearly the issue of the battery, which is you know, one huge cost, but most of the other repair costs are either going to be removed or reduced because you know, in terms of what can go wrong, you've got you know, the the braking system, but that's gonna be no different, but you're not gonna have A big problem with engines, you're not going to have the problem with those big servicing bills. So if you're going to buy a car, you're going to assume to look after it. Why Why buy it for three years? Why not buy it for five years? or seven? Which then brings into the fact that well, do you need to own it at all if you're not going to drive it? And to be honest, I changed my car earlier this year. But well, the middle of last year now and I'm, you know, it's an incredibly hard financial decision. Why? Because most of the time, it's something the drive. So if the car usage is going to change, the model is going to change is that going to open innovation for different financing, different affordability options? I think, I think this is an area we know when we talk about electric cars, we've focused far too much on the car and not on the ecosystem and the business model around it. So I think in terms of where we're gonna see those shifts, yes, the car will evolve. But it's actually our relationship with the ownership of the car, which is going to be much more fundamental, which is going to be a much more fundamental change over the next few years.

Roy Sharples: 11:05

That brings me on to a story that I'd like to tell about jack Nasser, who was once the CEO of Ford back in the late 1990s, early 2000s. And in his fiercely sharp reign at the helmet, Ford, jack made them the world's most profitable automaker, with profits in excess of 7 billion, which made him golden at a certain point and gave him free rein to experiment and innovate. JACK had the vision to revamp Ford from being an automaker to a consumer business. He also believed that Ford could not compete across the entire automotive market, including the luxury car space. And for the latter, he formed the premier Automotive Group that consisted of Aston Martin, Jaguar Land Rover, Volvo, Mazda, mercury, and Lincoln, and sought out to acquire the automotive ecosystem to have an integrated end to end distribution operations and supply chain system experience. And in transforming Ford, from an automaker to a consumer business, his vision was that consumers could self select the car that they wanted and be able to customize it online, then have it built and delivered to them within 14 days if if memory serves correctly. He also diversified Ford's business to include e commerce, car distribution, auto repair shops, and also junkyards an amazing vision. And so right yet the time was not right to be able to realize it with such a complacent, monolithic dinosaur industry to be able to change at the rapid rate of transformation needed to realize the vision combined with really bad luck. Arguably as well, some of it was out of Jack's control, such as the product recalls of the Ford Explorer, due to faulty Firestone tires that Ford had to both Ford ended up losing the legal case. And they ended up having to fund the expense out of their own their own pocket, which cost them dearly, combined with multiple other friction points internally, but also within within the industry, and ultimately, the nosedive of the auto industry that ultimately led to John's departure. He was a hands on detailed, oriented executive. But the point being in this was that Jack's vision was perhaps too early. And Elon Musk's was timely, combined with having the talent, agility, and resources available at his fingertips to make things happen at speed. I think the other thing as well got it I know I'm going off in a bit of a tangent here, but to add some humor to the situation. As a member A while back, Bill Gates had apparently criticized the auto industry in particular, General Motors. And there was a he it stated apparently, if GM had kept up with the technology industry, we would be driving$25 cars that got 1000 miles to the gallon. General Motors issued a press release responding to this just brilliantly, but rather than go through all of the points that GM made, I'll call it a few ones here. But basically the response was, if GM had developed technology like Microsoft, we would all be driving cars with the following characteristics for normal reason at all, your car would crash twice a day, every time they repainted the road lines, you would have to buy a new car, or occasionally execute in a maneuver, such as a left turn, would cause your car to shut down and refuse to restart. And you would have to reinstall the engine. And when your car died on the freeway, for no reason, you would just accept this restart and drive on. There's a few other ones here that I just thought were brilliant. And every time GM introduced a new model, car buyers would have to learn how to drive all over again, because none of the controls would operate in the same manner as the old car. And finally, you would press the start button to shut off the engine. But human aside, gates made a great point there around really challenging the the auto industry to get with it. And to start getting inventive, and to really disrupt itself to build for the future and to deliver products that was much more affordable to the masses.

Gary Burt: 16:01

I think the story, you know, if we look at a couple of those stories that you've talked about, there are some really interesting takeaways we can take from them. So let's go back to that, that gates and GM story. So gates Gates is essentially saying that, you know, we've driven massive efficiency, and you haven't Now, look, if we go through all of those things that you mentioned, they are they were software problems. So what happened was, you know, GM are calling out the faults in essentially consumer software not being if we rephrase it, it's consumer software not being relevant, not being appropriate for mission critical scenarios. Now, you mentioned that Tesla is a tech company, it's, it's fixed this. So if you think of the analogy in terms of what Bill Gates was calling that out, what do you think, well, any smart company, and this could have been GM would have gone, we need to take the best of what Gates has done, in terms of that ease of use that accessibility to technology, that ability to upgrade, that ability to innovate, and we need to deliver that in the cars. They didn't. Tesla dicto. So what you've got now is a, you know, is a, for the most part, what a drive by wire system in it in a Tesla, you've got a highly intelligent car that centered around its technology that's actually done is the irony that's actually done to General Motors, what Gates was joking about. So the answer was there. So when, when GM came back, if you think rethink this, if when GM went back to Bill Gates, assuming it's true, but they certainly store has been around a long time, it doesn't really matter if it's true. The fact that you have that list of things is actually a checklist is a manifesto almost, for GM to be able to pick up and go, we've actually written our own solution to solving this, which is, if we can deliver all of these things in terms of reliability, that's what we would have had replay those and flip those around, and you have what's in a Tesla, you know, you have a reliable system that doesn't really do that does that stuff. And the model was known, but none of the big companies were able to do it, none of them were able to step outside of their original mindsets, into the very fixed mindsets and see that technology solving the technology was the key to the future of the car. You know, we continually innovated in a very incremental way in terms of more luxury, more gadgets, more technology, that was, you know, additional to the function of the car, but wasn't about reinventing the car. Whereas, you know, it's the function that reinvents that changes, the fundamentally change the experience, which has been transformational. The other thing about Musk was, certainly the hands on thing is very real. I can't, I'm struggling to think of any other exec in any of the big companies. That is Diddy's has his head above the water above the parapet. And he's and he's actually calling out where we should be going. You know, we see the same very protective mindset of everything going through 25 corporate revolutions, sorry, corporate steps, and evolutions to the point that anything was possibly interesting has been hammered out. Whereas, if you look at what's happening with innovation, you shorten that you allow yourself to pop things out which are going to be contagious, you know, I can't It's been a while since I've looked at you know, concept cars and got excited about them. And then you put out the Cybertron, which for me is it's not a pretty truck, but the fact was, it drove massive amount of energy around the willing And the ability to have that discussion, will the truck that comes out look like that? No, it will evolve from that. But it doesn't matter. Because what you've done is you've put that out, you've owned the leadership, you've owned the space, but also you've provided the opportunity for the world. And its dog, and every child and every model and every engineer to come back. And whether they come back directly, they start to talk about it. Not only do you own that mindset, but you've encouraged the feedback that will take that product from that that rough cyber truck concept to something which is the solution, the exact solution of what will be the most successful evolution of the cybertruck will be out there. Now, what are the manufacturers are creating that dialogue with the customers and with the market? BMW, Audi, you know that the huge VW Group is it, encouraging that dialogue about what car should become? You know, we see, we see some concept cars, but then it's taken that long to bring the concept car to life, that by the time it comes, you know, either the world's moved on, it's just not exciting anymore. And so I think there's a real lot to be said. But one thing before we before I lose this about what you were saying before, I think when we look to the future of where the innovation will come, NASA was absolutely right. And every company adopted this. And it's if you think about where they started, it started with the luxury manufacturers, you know, the Rolls Royces of the world and their Daimler's, that allowed the people with the deep enough pockets to have essentially anything they wanted in the car. And that still continued. Now, the large manufacturers then move that forward with having a lot of pre designed options available, in many cases, really expensive options as well, because they were again a source of huge profit for the manufacturers to produce a fairly basic model. And then to absolutely rocket the price based on additions that weren't particularly expensive to put in, but very expensive for the for the buyer to buy. However, I think there's one observation that I would make that I've not seen any manufacturer pick up on, which is which cars today, which vehicles today command, the highest resale prices, the latest in their life cycle. And I was I was thinking about this insight. Which cars have the highest longevity? Yeah, the greatest longevity. So which cars are in demand, long after they would have traditionally been scrapped. And there were two that came to mind. One was the Land Rover Defender. So you know, the traditional farmer truck, but now very much in demand. So you know, Western Europe, they've stopped making them that the price has gone through the roof, you know, for you're paying an absolute fortune for what was it engineering, terms of engineering technology, really basic car. The other one is the VW camper van, you know, various generations of Camp have a huge retention of value. Now, what is it that's making those retain their value? So firstly, they're iconic, but in terms of performance, they were both pretty rubbish. Now don't get me wrong. The Land Rover is a brilliant four by four off road, but it's not comfortable. It's clunky to drive. There's loads of in terms of user experience, there's loads of problems with leaking in terms of the parts have been great, but people love it. Now what is it about those that love them? why people love them? I think this is what a lot of manufacturers are missing. And I think for me, there's a couple of observations. One, both of them are highly maintainable. So they were they've both allowed themselves or they ecosystems have built up. I mean, we did with the Land Rover that was designed from start to be modifiable. It was designed to be repairable and it was designed to be cost effectively repairable. Now with the VW is slightly different. What's happened is I don't think it was designed to be easily repairable. But it wasn't designed to be expensive to build. But what we've had is the in both of these, we've had an ecosystem build up, which has provided those parts long after the original manufacturer has stopped. Why? And I think this is where we need to look at what will be some of the big shifts in which some of the large manufacturers could benefit from it's it's about not just being able to specify the car when you buy it. But first of all, having a car that is designed to be using user modifiable, and ultimately, you know, hackable throughout its lifespan to be able to go as long as you want to do it. Now, we compare that original Land Rover, and we compare the Land Rover ecosystem and the VW ecosystem for the camper van and Jeep are probably a good example in the States. So you can pay those ecosystems to what we're seeing now from cars and we're seeing highly locked systems that are not modifiable components which are designed to, you know, in the case of most even premium cars, once they break, it's it's an expensive repair. And in many cases, if you have what can be a really minor crash in a prestige car, it's cheaper to write the car off than repair it. And this is madness. It's the complete opposite of what's happened with the defender and the campervan. So, you know, if you wanted to have a car that was going to have our car manufacturer that was going to have longevity, maybe they need to think less about selling the car, and more about having a car that's going to be able to live for far, far longer. Yes, I think this is where, you know, at the start, you're sort of having some challenge around that real lack of innovation in the, in the, in the automobile and the perform in the automobile market, I couldn't agree more, the more they've gone down the route of trying to appeal to customers, the more they've locked in, the more they've increased the cost of customization, the more they've actually, although they've offered lots of features, you know, lots of things that you can buy, when you build the car, the ability for you actually to do anything different and evolve the car. The manufacturers have rarely involved, they're not getting any money from that. But it's a third party companies often done without any kind of support with the manufacturer that are getting the benefit of this. You know, I think there's a real point here about the fact that so many of the big companies are just failing to get what is a really important dynamic, which is, what else do I care about the car and what it does, I also it's a, it's a statement of what I am and what I buy. And a very small amount of the population of the world has the ability to afford a new car. So by limiting that you're limiting the future viability of your car. I know we've probably gone a bit off topic. But I think when we talk about creativity and innovation, the car companies are locking in completely the wrong place, instead of looking for how they sell the car today, perhaps the right answer and well done to Jeep for having removable doors and making some way forward this is to think about how we can have cars which are going to be much more adaptable over their lifespan and welcome that. What do you think your point around the durability and and being able to modify the car throughout its kind of duration?

Roy Sharples: 27:28

I think that's a great point. And I don't see any I don't see any reason why that can't, that cannot be implemented today. Because the technology is certainly that I mean, for example, imagine if the car was designed beyond the core of the the engine and the the hard coding of a chassis. But things like the aesthetic value of a car, you could easily change the color of it through computer programs, right? Sorry when I say easily but you could change that you could you could change the aesthetic feel and identity within that car just as basic examples, right, of how can a technology could could do that and do that pretty effectively. The other thing is, well, the point that you made around VW, especially the camper van, is, you know that that's highly appealing to people similarly to Landrover, because it's about lifestyle, and you made that point really well as well around, people buy cars, out of out of reflection of themselves, especially when they can get to a point where they can afford the cars that they want. It's usually done as a way that it reflects themselves and their tastes and, and lifestyle. But I think the and I think the more lifestyle oriented, and that could be infused within car design. I think that the better. And I think I think the industry has really lost its way around doing that because it's became a lot more mechanical, in terms of it's almost like been and this is no discredit to engineers. It's almost like it's become engineering, lead designs rather than product or creative kind of designs. Right. And I'll come to that in a second when we speak about imagination in car design. But back to lifestyle. Branding is one of the key things that the business model of the automotive industry should explore if they haven't already, and I'm sure they probably have by opening and diversifying their market is to start looking at ways where the core manufacturing of the car could be outsourced and opening entry barriers to prominent bonds. For example, lifestyle brands like Apple, Google, Virgin, Nike, Disney, so that they're able to design and brand cars, and the actual manufacturing of is outsourced to manufacturers who enable that to happen in a cost effective, efficient and scalable way, but things like the applecart I can totally envision how that would look and feel given how strong that our design aesthetic and brand identity is. And I think a lot of these lifestyle brands really stand for things like liberty, imagination, innovation, passion, hopes, dreams, aspirations, power to the people. Right. And I think that's what like, the VW campervan really did provide liberation and not just its association with hippie culture, which it certainly did. But that feeling of freedom and dreams being realized. And then the other point, and this is going more into the next point I was going to make around, I totally believe that the imagination and car design has really lost its way. I mean, if you look at car designs, the 1950s 60s and 70s, they were extraordinary staples of imagination, and that what I read previously novel today, each car model almost looks identical, and are being prioritized based on the engineering of the car to keep us safe, provide the best fuel economy, the cheapest to produce, combined with standardized technology and software packages to design the car. Now, that in itself, even like those design packages, every automaker pretty much using the same one that drives obvious constraints and boundaries versus see the freedom of the pencil and paper, which is a blank, which is ultimately a blank sheet of paper, which is the perfect which is the the natural tool for creativity. And I'll go back to reuse and the court that we've used a few times Gary in the past and from Pixar, john Lasseter where computers don't create computer animation any more than a pencil creates pencil animation. What creates is computer animation. What what creates computer animation is the artist and it's exactly the same in car design. just feels like the engineers have kind of an engineering lead design has took over and I get how legislation, how regulation and how safety and fuel, be insensitive to pollution. totally get that as essential, but balancing that with adventurous and innovative design. So for example, let's look back on some of the marvels of creative car design. The 1964 Db five Aston Martin the 1970, lancea, backto and stress FM, the 1959, Cadillac cyclone, and the 67 Mazda Cosmo sport just just incredible car designs, they really are and then back to your point. And there's a great question you challenged us with around how many of cars designed to D hold their value over time? Well look at the 1950s 60s especially the sports cars and the vintage classic cars and their value was canonized cars reflect pop culture. And when that became most apparent to me, was when I visited the Henry Ford museum near Detroit in 2001. This place curates and exhibits the past by bringing it forward to modern day through stories of ingenuity, innovation, and the resourcefulness that ultimately shaped American society and culture. And what they did was they had installations from the beginning of the car, such as the Model T. And then they chronologically had installations through all the different errors right up to modern day. And it showed how the car was intrinsically linked to society, and how it connected to pop culture, fashion, music, TV, architecture, and design. Pop Culture reflects time. For example, in the 1940s 1950s Art Deco, was a prominent art movement that was reflected in the shape and colors of the design, the architecture, fashion in the car. And then in the 1960s. The art movements then was minimalism, abstract pop art, and so forth. And that was also reflective within those various components of design that I mentioned earlier. So anyway, the point being, is that pop culture reflects time. And we all live in time as a human race, infusing our ideals, our values, tastes into the everyday and the design of things. So of course, it is all interconnected because humans, we as humans are fundamentally dreaming up and making this all happen. So it so by nature, by default, it will be all interconnected. I visited Portland, Oregon, just over 10 years ago. And I remember science and a coffee and I was looking outside the coffee, and forgetting about how similar some of the architectural components look like Europe and Portland, what I started to notice was how the actual image that I was looking at, and the street, what was not American at all, it was very European. And I thought to myself, if I took a photograph of this gallery, and I sent it to you, and said, hey, guess what I am, you would probably have guessed, you probably would have said somewhere within Western Europe, or the UK. And the reason for that it was a car design, very few American branded cars, but even the cars that were American branded, they looked like Asian, or European cars, which is a real sign of the times, and fall from grace, in terms of being once the distinguished world leader to where the Europeans and Asians had knocked their crown. Anyway, moving forward. imaginative and Human Centered Design needs to be really pushed towards the center, by understanding the needs of people now and in the future. The economic implications and viability, engineering excellence, and creativity, those are the four elements, that when you find the intersection of those, that is where we will be able to unlock the next frontier of the car revolution.

Gary Burt: 36:28

I think so much, there are a couple of points that I really wanted to pull out. So the first one, you mentioned about the branding. I didn't get why the car companies haven't done this, you know, you want to buy a costume so easy, doesn't seem so obvious. I don't, I think the problem is that perhaps we think that these, these partnerships need to be forever, they need to be exclusive. They don't, you know, so, if I look at if I look in my wardrobe, you know, I'm an outdoors Esau person. So a lot of the stuff is for me a lot of outdoor brands, you know, but even just as a thought experiment, what does what does a partnership with North Face look like? Yeah, what does a partnership with Patagonia look like? Or Gucci? So, these huge, these are these, to call them brands is almost an understatement in terms of the lifestyle commitment that a lot of fans of these products would have, you know, how would that if you you know, you're let's pick a common your Ford? Yeah, I'm the Marketing Director of the Ford, you know, f 150 range, huge, one of the best selling drugs, I think, the best selling truck in America and the best selling Ford Model. And now we're seeing this go to other countries as well. So huge. Well, you know, what do you partner up? I mean, we've seen it with car companies, but not in a way that's had any meaningful lifestyle design. In most cases, it's been a slightly different colored trim, and some stickers on the doors, seat design or seat leather or stereos or just Yes, rubbish. Now, if you think about how you might how you would have a, you know, what happened if you partnered with, you know, how would a partnership or collaborative partnership go because this is not about taking the dollar? And then sticking the name on? That's absolutely not what it's about. But you go, look, I'm, I'm Ford, I want to, we want to build sustainable cars, we're going to what would a partnership with Patagonia look like? Well, they might go, I would expect they go? Well, sustainability is going to be key, reuse, lifestyle, flexibility. So we want everything that you can do within the car to be as sustainable as it can be, you fundamentally start to rethink what your car is. Now, you're not gonna be able to do all of that. But just by even having that conversation, even doing it as a thought experiment. Move you so much further from what we're seeing today, which is this this ridiculously slow innovation. And I think when you start to go down that route, you know, another point that you picked up around, you know, having Microsoft or and Apple engineering Well, why? You know, when I buy a car, today, I have absolutely no control over that environment. So why don't you give me a choice engineer your car to be that modular, that I can have an apple interface, I can have a Windows one, you know, we're seeking these explicit tie ins. So start to start to think how I would have that. I mean, the reality is, for the most part, the car companies have been fighting against integration and serious integration with technology for years. How long did it take, you know, Bluetooth to properly work in cars? How long did it take to start to see real innovation in the user interface happening? I'm not going to do it. I can name 20 leading cars that the user interface in terms of the the technology and facing the car is just woeful. Yeah. You know, no computer company would would release this. No Web company would release these interfaces, but we accept them in cars. And if you buy the car, there's nothing you can do about it. You know, we're not seeing upgrades. And I think this is, you know, probably a real good example of where Tesla if organizations are not careful, what's going to happen with Tesla is going to spank the auto industry in the way that Apple spanked the mobile phone manufacturers. So we go back to 2000, we go back to pre iPhone days. Now, Apple wasn't the first organization to allow upgrades of operating systems on phones. You know, if you had a Windows smartphone, you could do that. The trouble was, it was unreliable, it was painful, it was hard. And any benefits you got were certainly outweighed by the challenge of it and the unreliability of the new iOS. Now we compare that to the Apple world, OS upgrades are built in they're seamless, they're timeless, and they're costless. But, you know, what did that that absolutely massacred? The the phone industry, you know, we've got a lot of manufacturers, but the only two companies making any money out of this are Apple and Google the OS companies. And in Apple's case, the maker of hardware, assuming Google doesn't sell a huge number of its own brand phones. So you then start to look at that, and go, the car industry is not learning from this. You know, it's not, it's not moving forward, what you have is you have this environment where you have a lot of customers that are locked into your ecosystem. And the only way they can upgrade is to buy a new car. And and you think even if you accept that, let's say I'm tied into so I'm tied into the game, who bought my car from, I didn't pay for it cash because they don't have enough money. So I'm paying every month I'm paying BMW, some money for a car. But in all, in all seriousness, I'm locked into that. But why? If BMW, if I'm paying being dirty money, why don't they offer me the premium option to always get out of that contract to say, No, no, there's no penalties for coming out. In fact, you want to come out of that contract, you want to change your car, great, we want you to make sure that we are so far up that list of the company you're going to buy from. So maybe when I buy a car, I don't buy a car, as I do today, I buy the ability to pick from a car, what I can do is I can flick between these as much as I want. Now, clearly lack of phone, if I want to change it every year, it's going to become more expensive than changing every three years. But I might also want to keep my car five years. So why don't instead of you know, we look at this as a system, the longer I keep keep the car, the less I pay you to keep that because I've already paid the cost me. So this is whereby the innovation doesn't have to be in the car, I think it needs to be for any company to be successful. But just having taking some of the lessons from the plot what we've seen in other platform environments, whether in phones or PCs, or in you know, ecosystems of cars from long ago, just embracing some of these could often could could really change the mindset of what a lot of customers think is going to be possible. And the company that really nails this first in a really scale way. I think whether it's it will need to be one of the big companies. But imagine if you were you were given the job of your you're picking up Audi, your brand manager for Audi not a brand manager, you're the product god of Audi. And you go, Well, what am I going to do to compete? Well, I know I'm going to go electric, I've got to get designs of smoother, I've got to be fast, I've got to be economical, I'm focused on the batteries, and nine tenths of the other environment, you're completely ignoring. You're not changing the financing model. You're not changing the contract, you're not changing the modularity. You're not changing the ability to innovate in the ecosystem. You're not allowing me to improve the car. You know, there's so much that they're not doing and these are not innovative lessons that Gary and Roy are super coming up with. We're just looking at this and going Yeah, why are you not doing what's happening in other industries? Because if you're not doing that, the one thing we know from every other industry, every other technology and platform industry, if you're not doing that, your competitor that puts you out of business will do it. Yeah. You know, Amazon, Facebook, Apple, Netflix, this, this, this, you know you there's a number of streams, you can pull out one centricity of the customer to this, the centricity of the user experience, unlimited innovation, continual innovation, yeah, at zero cost. You know, you buy it, you buy an iPhone, you might go through three or four iterations of an upgrade even if you want. To change your iPhone, you can buy a contract that allows you to change it as soon as a new iPhone comes out. So I think not to embrace those is massively dangerous. But that's what's happening in the car industry, we're not seeing that. Now it's a completely inward industry with you've got maybe five or six giants that basically own the industry, the barriers to entry is just so difficult, so hard that it does need blowing up. Hey, your point there around Netflix is No, that would be another lifestyle brand experience where I can start to imagine the Netflix can a vehicle where it's like, you know, entertainment and motion, where there's custom designed cars, where you, you know, if you're going long, especially if you're going long distances, where it just becomes a whole entertainment experience. What do you think the future car could be? could end up just becoming a device? Or will it remain much the same, but just incrementally improve? Or do you think it could be something quite different?

Roy Sharples: 46:05

I remember watching the movie, the Blade Runner from back yonder, and always thinking, my goodness, you know, like the future has never looked so beautiful. And I mean, not visually, not. Culturally, I mean, culturally, it would be a massive, don't say, You know that I was the window to the soul where you're I was the facet of the body language that unconsciously demonstrated your intent and emotion where blade runners are bounty hunters hunting down and wiping out any remaining replikins with any emotion. And the Blade Runner having the mental test that consisted of emotion evoking questions to distinguish our applicant from being a hit from a human? And definitely not, that's definitely not the people first civilized society that I think that we want the future to be, but just from a concept perspective, what what could the future be in terms of what a car becomes?

Gary Burt: 47:04

I think, I think so. We've got a couple of trends that we can we can pick up on, we've covered one, I think one of the changes that will we will evolve to is the moment we have this battle. And, and COVID has really thrown a spanner in this, but we have this battle between individual entitlement empowerment, and, you know, movement in terms of what's typified by Tesla, then we have the opposite of this, which is a much more European model around public transport. You know, and I think he saw those two extremes. And wherever your view was, there's no doubt, I think that, you know, what we've seen over the last year with COVID is going to make is going to be something that's going to play massively into that change. So if you wanted to see, you know, where the changes are going to occur, you know, the irony is, it's probably public transport, there's going to need to innovate much more than the, the car companies initially. But I think we then go to, you know, one of the things is, we then start to look at, well, if, if one of them has problems, but the other one has problems, where can we start to look at characteristics that we can take from each other, that give us some of the benefits without forgoing what we've got. And it's really important that we look at, we look at embracing some of the human values that we take from travel. So I love traveling, I know I'm a big fan of trains, I love trains I love driving to they're not opposed. Well, I don't like it. I know, I sit on packed busy trains. So I don't like sitting on you know if and to be honest, you know, if I didn't want to sit on a busy train to do two years ago. Now, that's not even. Okay, so I don't want to sit on a busy train. I'm not gonna sit on a busy train, and can't see myself being comfortable with that for some time. So, but how do we start to how do we start to move to start to challenge those barriers? How do we start to do this, and I think we will see the evolution towards something that will bring as much closer to the middle. So, you know, when I when I grew up, and I'm over 50, but when I grew up, the oldest trains had the concept of compartments. And what a compartment was, was if you had a train that, you know, today, we think of a train and you think of a traditional train, you will have it's completely open. And you'll have all the seats facing in one way or there'll be offset on tables, you know, you're used to that model. The same on airlines, you know, on on trains, they'll often be offset, and they'll be differently seating but it's essentially a modular form of variables. modular and systemize former seating? Well, one of the things with compartments years ago was, what they did was, instead of having the train of all of it being open, there might be seven or eight compartments of six seats. So what you had was, you would have a corridor down one side of the train, and you would have these doors into these compartments. So, you know, what you then do is you look at a model that's, I think, 6070 years old, certainly from the UK, that we got rid of in the 70s, and 80s. We replaced all of these because we could fit more seats on, but we had a model that would actually be perfect for what we've got today. Because I want to share with my family, I can book a compartment on a train, I can have the benefit of isolation, I can have the benefit of a closed space. And I can have the benefit of privacy of you know, this is mad for a train, but you know, that bio control, I can control the environment, I could change the heating. So you had a midway. So I think we could see, I think we will absolutely see public transport move back to that much more to a way that protects the sacrifices, and the amount of people it can stop on the train for the quality of the experience on the train, and particularly starts to put systems in and, and design adaptions to provide more isolation. And that that's not rocket science, it could be that what we start to do is we get a traditional, let's say a high speed train. And what we do is we start to reduce the number of seats, so we can spread them out. But then we just put some glass, some increased glass around this. Yeah, now just simply doing that would give us, you know, better experience in terms of bioseparation. But also more privacy would improve the acoustics of the train, it will make it quieter if it's done properly. Yeah, no. So So I think there are things that we can do, ironically, that we can learn from a long time ago that we can move forward. But then let's go back to the original point of the car. So I think the one thing that's gonna change within the cars in the next few years is not the car within the car, all the changes around, you know, sustainability, we want to see more sustainable cars, we want to see more modular, adaptable, upgradable cars, we want to see changes around the financing and the ecosystem approach all of those, I think one of the biggest changes will be the interaction between cars and the environment. And this is something that we've not seen, for the most part come from the leading companies. Why because it's not in their interest to do this. So it's not in the interest of a company that's selling speed, that selling performance that selling individualism, as most of the car companies are today. And I'm not calling out Tesla, because it'd be known for their business model and their mindset, their customers, probably the right thing to do. But, you know, the right answer is not huge numbers of autonomous cars. The right answer is cars that are able to plug into network ecosystems that allow them to start to understand, not understand the car in front, not by having sensors, which are going to automatically understand that distance that's going to be there. But it's also going to be about the cars communicating together, the cars communicating with the road, and the cars communicating with the wider environment. That's that, for me is going to be the biggest shift. And I think the problem we've got. And the reason this will happen is because if you don't have that what you're going to have is a load of electric cars, replacing diesel cars, that whilst they are emitting less pollutants, are going to have absolutely the same problems with congestion. And actually given COVID. And people going into cars more for isolation is going to get even worse. So I think if you wanted to see where we're going to see some innovation, it's not that it should happen, it's the only way it's going to be able to happen is to be able to have cars, which start to have the ability to plug into ecosystems and networks so they can start to behave as part of a community when that's needed. Now, that's not to say you can't go to a country road and have some fun. But it does mean perhaps that when when you come to a motorway, your car isn't automated by you know, the systems in your car, your car is automated, because what it does is it simply snaps into into a, you know, a money traffic system. It's much it's probably much closer to driving your car onto a train, you know, like you do with your OTL or you do with you know, the old long distance car transporters that you don't see anymore. But I think it's much closer to that concept that you'll still be in your environment. But you'll be ceding control to a much more efficient, city wide or national ecosystem. I think those are the big shifts that we're going to say. And because otherwise, the irony is you're going to be buying the car for a load of features that you can never ever use. And you know, you might have blistering performance, but it makes no sense if there's no the no roads are clever enough to do it. But if you follow this through, I think there are, there are some real benefits. Now, I'm really cagey about having the environment override the driver. But you can imagine it let's let's follow this through and you start to go well, Gary, that works. And that works on roads that works on sorry, you know, networks, it works on interstates, it works on three freeways, it works on highways, it works on major roads, it works on Manage roads. But actually you could start to have that work and much more macro or micro level, which is, well, what we're going to do is we've got these cars that can communicate with their environment that are not about sensing. So we're not saying the car is, is reading the speed sign that's coming up, but the car is able to understand this electronically from its position about what's appropriate speed. But maybe what we start to do is we start to say, on this road, there's a really dangerous bend down a lot of people crash into, yeah, so what we're going to do is, we're just going to make a really minor change. And this is this could be a GPS engine, it doesn't even need to be physical. But where we see those really dangerous bends, we what we're going to do is we're just going to restrict any cart and not go round at more than 50 miles an hour. Why? Because once you do, you might be fantastic, your comment might be fantastic, but the chance of you coming off the road hitting the barrier is really, really high. So what we do is, and this doesn't have to be a one for one or or it could be, Look, you've got a you've got an entry level car, we're going to slow your car to 30 mile an hour, you've got a better high performance car with a great braking system, we're going to allow you to go to 50. And I think you can have intelligence in this. But the goal is not to is not to restrict the driver, it's just to put some guardrails around, I think when you start to do it in an intelligent way that says, Look, a car that's built as a performance car should be able to go faster, why? Why are all cars able to only travel up to a certain mile an hour 60. But what we might do is we might limit this to the safety of the car. So you buy a safer car, you're allowed to go faster. You you buy a car with that, Scott, you know better performance, better braking, better handling, that you're able to go round bends faster. And you know, so I think there's a there's a lot more innovation today. And you're seeing too much as this really, you know, I'm not, you know, we see it almost as this, I'm in control, or it's a socialist daring control system. But actually, there's something in the middle that we can start to do. And I think when you start to do it not from a And the key thing is when you start to do this, don't do it from a big brother point of view, start to do it for the human, it's like no, we're not, we're not taking away your ability to be an idiot and crash your car. That's not the goal here. What we're trying to do is to stop you really hurting yourself and killing yourself. Yeah, we're not saying you can't ever swerve to avoid anything. We're saying that there shouldn't be. There shouldn't be if, if you're going around the corner. And this is not about your driving the laws of physics and our intelligence and analytics in that car, say you're going to crash to allow you to crash would simply be madness. So what we do is we're not we're not doing this, all we're doing is we're increasing the quality and the safety of the car. But it's not about taking your ability to do it, you know, to be a bad driver, it's just about saying we don't need to be a dangerous driver, you know, and actually, this becomes utterly critical when we get into network road systems, because the whole concept behind this is that cars, cars are able to drive at safe distances. Well, that really breaks down if the guy behind you can override your system and drive one foot away from your, you know, your bumper, your fender at 60 mile an hour, you know, I'm keeping my distance, he's keeping his distance, and he closes the distance. Well, what happens then? Well, I'm worried about him hitting me. So what I do is I slow down more, because if he is going to hit me, I'm going to lower the damage by slowing down. Therefore the whole road that you know fails, the whole manage traffic system fails. So you if you want the benefit of having, you know, the moving of systems, then you do have to forego some of that control. That doesn't need to be everywhere. You know, I think I think we just need to move the quality of the debate and the dialogue forward because far too much flip between flips. You know, really stupidly between this. It's either all about the individual, I've got my car, I want to be able to drive the ability where I want how I want one hour where I want and then the other one which goes the reality of if you do that We're just going to have smaller cities. And whilst there will be, you know, less pollution that's going to be no more no less than older than they are. Yeah. And I think, let's, let's have an intelligent discussion that doesn't demonize something, but says how do we use technology to solve this problem without forgoing freedom to actually does it in a way that makes things better for people doesn't do it for the state, but does it for the person, I think that's the big shift that needs to happen. In a farting lexemes. debate, well, you need to have your car controlled. Well, you don't want it I think we can be more intelligent.

Roy Sharples: 1:00:40

The car has always been symbolic of independence and freedom. However, some trends indicate that some people view car ownership as a burden and an expense. Things like car sharing, Uber Lyft, are becoming increasingly popular, especially with the millennial generation. And with the proposition of personal convenience and social improvement.

Gary Burt: 1:01:05

Whilst we've seen a growth in the rise of Uber and Lyft. In recent years, it's not been without controversy, both in terms of protection, but also rights for drivers. If we're going to see real growth in this area, we need to see companies addressing these issues. So whilst price matters, there are lots of users who care about company having clear policies on worker rights, and a sustainable business model. But this is going to be a huge opportunity area too. So COVID has seen a lot of people displaced, it's going to see for more people and businesses suffer changes, structural changes. And the gig economy offers a real, valid or workable way to help scale, you know, future employment. The key thing is whether that's the evolution, this is going to be led by the companies taking a leadership position, and building out the model that's really going to appeal to customers and to the drivers, or whether this is going to be needed to be pushed by government legislative changes. The key thing is we need to see a shift in the reward model. It can't be one where the stockholders of the big companies and their execs and making all the revenue expense at the expense of a lot of those drivers, it needs to be more balanced. But the growth, when we look at these businesses, the growth of these services is going to be an increasing cost of owning a car, which is going to make any form of fractional ownership, whether that is in a shorter lease or a higher, or a much more transient relationship with ownership much more attractive. This is particularly going to be the case in cities as the costs drive to make car ownership and driving itself much more expensive. But also we're seeing a shift, particularly in the smaller cities towards embracing personal portable transport. So bikes, but also ebikes, electric skateboards and electric scooters. And this is something that we've seen during COVID, we've seen a real growth in the use of personal transport devices. So this is about people who have been able to efficiently get around cities. And what and again, one of the things we've you know, certainly seen is as people haven't wanted to travel on, buses haven't wanted to travel busy underground, they look for ways to move around the city much faster themselves. So this is a real boon time for skateboards and scooters. But we need to see some evolution in terms of standards around these there isn't a major city that hasn't introduced either bikes, or E bikes or E skateboards and not had a problem. So we need to look at making this a really balanced introduction that recognizes some of those real challenges, and starts to put in policies and processes that balance this for those citizens who don't want to use these. So this is that's the first driver, the second driver is really a desire to have greater flexibility in driving. So what I mean by this is, at the moment you buy a car while you're stuck with whatever car you want, if we look at hiring in a more flexible model, and particularly look at something like Avis or even Uber, so we take two different models essentially providing access to a different kind of vehicle. So this allows you to you know, hire a sports car or an SUV in that you know, in the case of ABS and the higher companies, a motorhome or a truck depending on what you need, but also what your mood is. So fractional. Any form of fractional ownership where you're having a part ownership for a period, or you're renting it for a period is gives you a lot more flexibility to change within the wider framework. And you know this and we look at the lifestyle evolutions of you know, I need something to shift this stuff this week. I want to have a weekend driving around in the countryside. I want to go to the park, I want to go camping, very different trucks. And what we've traditionally done is bought one that becomes You know, a master for all of those of which in most cases in the US, and increasingly Europe is a truck. But in many cases, we're bringing in additional costs to having this type of vehicle as well, they're big, they're not necessarily efficient, and in cities that are really bad fit. So being able to change your form of transport is certainly a much more sensible evolution rather than buy one for, you know, your your least worst option, you know, a four by four that will wade through mud for the days that you want to go camping. So the final thing around this in terms of these drivers is really the changes that cities are going to make to really discourage driving. So we've said the car costs are going to increase. So let's look at some of the specifics of this. If you if you drive into London, today, you're going to pay 15 pounds per day. So what's that about$20 per day congestion charge. Now, if you have an old diesel, or an older petrol, and when I say an older diesel that might be only five years old, you're gonna pay an additional 12 pound 50. So it was about 15 $16, for a low emissions, ultra low emission zone cost. So this is if your car is a higher polluting car, you're going to pay an additional charge on top of the 15 pounds. Now, when you add in parking, maybe 25 pounds per day in London is not excessive, then you're going to see that driving into cities becomes very expensive. Now add in the recent changes to the charging time. So they used to, it used to be free after six o'clock, it's now charged till 10. He used to pay he used to be free at weekends, it's now chargeable. And then you look at the final expansion of the charging area itself. And what London points to is a model within cities where driving becomes very, very expensive. Now, that's not just driving, it's the it's the ability to have a car within the city, even if you don't drive it, you're going to be paying huge costs. So Gary, you say, Well, what about electric cars, clearly, they don't give the emissions. So therefore, you know, we're not going to see the charges. No way, there's there is absolutely no way that these cities are going to stop taking the money out of your pockets. So what we'll see is what we've seen in a lot of taxation, whereas Initially, the taxation was brought in on emissions. And when we saw the emissions fall, but as people move to electric cars, we realized there was a big drop in the revenue, which you know, governments have become very attached to, so what they do is they shift simply shift the way that they measure. So instead of charging on emissions, they charge on miles, they charge an entry, but that's not going to change. Even with electric cars, you might see a short term debt when you buy the electric car, but you're not going to see the removal of charging costs, it is going to become more expensive, even with electric cars. But there's also a much more bigger macro change that we're seeing as well, due to COVID. So COVID has shown that we don't need to be in the cities as much, you know, we can work remotely. But also we know that a lot of people have recognized that quality of life is important. So London has seen a net reduction of people living in the city. So those were the financial assets to do so have temporarily, we think relocated out of the city. Now, clearly, that's been for those who have the resources to do that. But we know that the fastest growth of real estate is in those commuter areas. So people are moving out of the cities. They're moving to the green greenbelt areas, they're moving to the, you know, more access to parks, fields, smaller towns, smaller schools, wide open space, but with the ability to go into the city, but as the city disincentivizes people going into it, I think are those people ever going to go back? And the risk here, I think, is that as cities increase the costs to incur recover lost revenues, people will desert the cities and avoid them staying locally, you know, within their local towns, increasing the ordering online and when they do drive, they're driving driving to areas that have a low cost, instead of driving to the city which might cost them 5050 pounds or you know $75 they're going to drive to a shopping mall where the parking is free. There's no congestion charge, and they're going to be welcomed. And you know, for shopping malls. This really provides a potential opportunity if they recognize these shifts and embrace them guarding

Roy Sharples: 1:09:40

based on what you know incense today, what do you anticipate the top predictions to be in the car industry?

Gary Burt: 1:09:48

It was Peter Drucker who said the best way to predict the future is to invent it, and no one typifies that more than Elon Musk. So when you want to look at how the auto industry is going to evolve, certainly, you know, you're not gonna go for a run by looking at what Ilan is doing. However, you know, we need to recognize that not everything is within his control. I think it was Casey Stengel manager of the Yankees and later the Mets who said never make predictions, especially about the future. And the reason is that it isn't within, you might invent it, but you're not able to control all of those wider conditions. So predicting the future is incredibly difficult. Now, to be honest, a prediction if I was going to make a prediction, it will be next week's lottery numbers, which I can't do. So instead, I'm going to use the word evolutions. Rather than predictions, we're going to look at what are those ongoing shifts? What are those trends? And what are those developments that we expect to see. And reason for calling them evolutions is really because they're going to evolve over time, they're not going to happen on one certain date, what we're going to see is shifts that start to pick up over the coming year, but they may last several years, and they may not pick for a while. So let's start to look at five predictions. So the first one is, I think we're gonna see more models based on the use of common platforms. Well, I know it's in Gary, this has been the case for years with Ford, GM, Volkswagen, they've been using common platforms for years, they are, but I think we're gonna say much more diversity here. The best example of what I've seen today is the terribly named EBC. From electric brands. That's e bu SS Why? terrible name for actually really cool concept. So this is a modular electric bass that can take a range of different bodies. Now, here's where it differs, not just car bodies, but also trucks, pickups in camper vans. This is a real shift from what we've seen with a lot of the traditional companies. And the reason this matters is it isn't simply about manufacturing a common base and, you know, building and integrating things on top, it's much more modular approach about having a common base and then being able to drop a lot of almost pre built parts on top. And this modularization is certainly something I see as a much bigger shift in in car making. And when we look at the massive car companies, there's so much potential there for getting a common base, right, but allowing much, much more flexibility in terms of what you can put on top. And this is possible in a way that it hasn't been before. Because all you're going to be doing between the top part the cabin, the bit you're set on and the wraparound is actually giving the electric bass commands, the limits, you don't have the same level of technical integration with no brakes, which steering with gears with transmission that you had before, because a lot of this can be electronic, it can be essentially fly by wire systems. So when you start to evolve the way that you build the car, you open up much more flexibility. The next shift number two,we've talked about subscription models and pray pay as you go, and how you pay for the car. But I think what we're going to see is much more flexibility around the way that we pay for our cars. So today, we've got really fixed payment models. Now a few people can buy them, whether for cash or separate financing, you can lease them, you can have some form of long term higher, but essentially most cases unless you're buying it outright, and even when you buy outright, you're sort of thinking of this period of ownership, maybe three to four years. And so what's the evolution around that. So the first one, we're going to see much more flexibility, not only we're going to see longer leases, but also shorter ones as well. So being able to lease and access cars for weeks, but also months, and then through two years. Now traditionally, the limit around the pricing of three to four years, and it's evolving to five is around balancing the ability to pay with the depreciation and the cost. Now, typically, that depreciation is driven by a whole range of factors. But key in that is the essentially the depreciate, sorry, the depreciation of the car, the point and the cost of increasing servicing and the increasing value in the car over time. But as we look at much simpler cars in terms of technology, with with electronic, sorry, electric battery cars, we're looking at cars, which potentially have a very long lifespan. Now, we know that the batteries are going to wear out and the engines will wear out and they'll need reconditioning. But ultimately, we're not going to see that same level of wearing out. And that same level of cost that we see with a traditional engine and a traditional transmission. So we have the potential for people to be able to keep cars much, much longer without seeing those maintenance costs increase. Now, the dynamic that this opens up is a shift to own a car for a much longer period. So instead of three years, because you know after three years or four years the repair start repair bill starts go. You could own the car for maybe five years, six years, seven years for the duration of the battery. And as we start to see companies start to have to take responsibility for the upgrade and the maintenance and the replacement of the batteries, then there's a reason to have that going even longer. So what we see from the car companies is a real potential opportunity for them to really reward loyalty and think much more longer term around the payment models, we also have the potential for much more usage based pricing. So insurance companies are now starting to do this in the US with refunds. So if you drive less miles than you predicted with COVID, then they'll refund this at the end of the contract. But GPS, and you know, electronic monitoring and use of smartphones allows us to do this much more real time. I think the other the other real time shift is going to be around car pricing, you know, access to roads is going to be much more real time price. Anyone who thinks tolls are not here not going to come mistaken. They're already down in several European countries, we have, they're going to come to the UK, and we're going to see them more and more in the US, as we start to, you know, differentiate using price as a differentiator for access. A final one is really I think we're going to say, or we have the potential to see a shift to much more integrated pricing, and much more integrated services around transport. So at the moment, if I want an Uber, I want to rent a car, I want to hire a car, buy a car, these are all very separate contracts, separate contracts, separate services, separate propositions. But actually, I don't want to hire a car. If I own a car, and if I don't have a car, I don't have access to a car, you know, then I want to hire one. So if we think about this sensibly, we can see the potential for car companies to start to mix these together, to be able to say instead of We Are the company that builds your one car that you have for three years, we are the company that helps you with your transportation needs, we're going to provide you with beneficial rights to services, you know, beneficial pricing models for Uber, we're going to provide you with the ability to hire a car, we're going to provide you the ability to buy a car for a shorter period. So I think we're gonna see that financial evolution of the model, which is going to really be much more advantageous, particularly particularly for people in cities. So you'll be able to flex between whichever model that you want within the framework of a wider contract. Number three, and sustainability. Now we know that electric cars, ie cars, sorry, electronic cars, electric cars, based on battery technology, and hopefully later hydrogen technology offers significant benefits in the environment, particularly in terms of emissions. But there are some, you know, costs to the environment, which we often ignore. So batteries are incredibly damaging to the environment in terms of the building those, there's still lots of questions around the recycling and the disposal of them. But also, we've got several million 10s, hundreds of millions of cars that run on petrol and diesel out there. And I think this is going to become a real challenge. So how do we start to evolve the use of electric without, you know, really scraping every mineral resource from the from the world to build the batteries, but also then build scuzzy, but also then build big pits in the ground, to dump all of the cars into that we've scrapped that perfectly working, they're just not electric. So I think we're gonna see an increased focus and shift towards a responsibility for sustainability, recycling, a really lifetime ownership and a lifetime model of ownership for the car, it's not going to be enough to say we've got a cool electric car that's really fast, they need to take the car companies are going to need to take much more responsibility in terms of what's going to happen to your existing car, what's going to happen when the battery reaches the end of its life, what's going to happen to those batteries. And I think this will become a real differentiator companies that are able to step up and have that really transparent view of sustainability, right recycling, and lifetime ownership. trend number four, the shift from meat away. So at the moment, the majority of cars, particularly autonomous cars, assume a world of want. They're full of sensors that are designed to protect and help me now this is both inefficient, but also expensive. I've got to have all of the sensors in my car about gotta have all of the processing. I'm generating huge amount of data unique to me. But I think what we're going to see is a shift to intelligent environments, intelligent communication between cars. So we're going to see increased communication both with the environment and within an ecosystem of cars. And this makes much more sense. So it's At the moment, you can have a you buy a new car, you'll have, you can have an option in many cases system, which will allow you to automatically detect how far the car in front is, and warn you if the car behind is perhaps too close, although there's very little you can do about it. And really this is massively inefficient, will be far more efficient is cars able to communicate with each other, communicate with the environment, and regulate their speed as a network. So instead of each car slow, speeding up and slowing down, based on the distance with the car in front, we're able to understand the concept of, you know, a swarm of cars traveling together at the right speed much closer because they're communicating much closer than they will be able to do they had individual sensors, but also able to interact with the environment as well. Now, this doesn't have to be, you know, a big brother control of the car thing. But it can be really simple things like limitations around speeds. And now these could be physical, so they're in the road and the car picks up at a certain point, it has to slow down for a dangerous corner. But it could also be, you know, the establishment of low speed zones, around schools, for example, that at particular times limit speed. Now, this isn't a case of tying your hands and restricting the freedom, it's a case of saying, you know, we're going to have intelligent cars and make them intelligent and benefit someone other than the driver, or the school child. So we put a low speed zone in of, you know, 20 mile an hour. And actually, we just limit cast to this. Now the potential of doing that, in terms of reduction of crashes, reduction of injuries is huge. So, and again, this is only possible, really, if we start to think about any ecosystem, that interacts that where the car interacts with the environment, and other and other objects in that weather cars or weather with them, you know, environmental conditions and timing and events. Right, the final one, and number five, fifth trend, increased customization. Now, you can already do this car manufacturers as long as word exploited, they long exploited buyers love for customization pre purchase, so you want to buy a new car, you pick your whatever car you want your Chrysler, your BMW or Audi, and you have this massive list of things that you can add to that car before it's built. I mean, the reality is they're factory fitted. But you know, they're largely, you know, things that you want on the car, but typically, you're paying a lot of money for those. However, the ability to fit things after purchase, though, the post purchase change is often really limited. So whilst you can have hundreds of things fitted, you know, hundreds of options fitted before you buy the car, you can, I mean, clearly some of those are going to be really limited. So, but the ones that you can fit post purchase, and particularly do efficiently in terms of cost, I'm really restricted, so you have the ability to define the car before you buy. But afterwards, you can buy a few bits, but you can't make some changes. But then if we look at the cars that have had long longevity, you know, real longevity in terms of cars, VW camper, vans, Land Rover defenders, that in the UK, and you're the traditional mini the little mini, there's a vibrant ecosystem of suppliers providing third party parts and services to be able to modify and evolve those. Now that third party ecosystem isn't just limited poach post purchase either. There are pre purchase and ecosystems already. So if you want to buy a Range Rover, you can have huge range of options, you know, put on that new Range Rover. But also there are companies before you buy it in or before you buy your car, that you can buy a Range Rover from brand new that will all rip that will extensively customize the engine, the bodywork, the performance, and give you a unique car pre purchase. So when we start to look at some of the earlier trends around the concept of longer term ownership, reduced costs or long term ownership upgradable operating systems, then there's a real need to be able to have cost a much more upgradable, much more amendable, much more changeable much more modular. And what we've seen if we look at some other industries, particularly technology ones, we look at PCs, laptops, smartphones, where we've seen increased upgradability and modularity, we see increased ownership. So there's a relationship here between the ability to have long devotee of a product and also the ability to modify it. If you can't modify it, typically it becomes a you know, a simple replacement. Now when we go back to the sustainable driver, that becomes an issue. We're not going to be able to simply throw the car away, there's going to be a need And hopefully responsibility for manufacturers to take responsibility for that. So I think when we start to look at that customization that really opens a whole new, whole new category of areas. So we see the customization, the potential for customization of brands, for much more experienced, like designing the car, to be able to design a car and put those changes in, that closer fits your lifestyle. Now, again, one of the areas we're seeing huge growth in is around trucks. And these are ultimately for most people, lifestyle purchases, they're about not about just shifting stuff, but about having a vehicle that's able to adapt to what you want to do with it. And this is something that's going to continue, certainly the ability to be able to take a vehicle and be able to really customize that and better fit what you want to do. And I did say five, but we're going to sleep, we're going to put a sixth one in there as well. And this is for the industry itself. So everything we've talked about so far is really consumer driven. But I think there's one which is going to drive the industry changes. And this is going to be access to resources. So both the natural resources, but also the manufacturing scale is going to bring consolidation, mergers, but also increased partnerships with industry and government. So one good example of this, the local city government in Berlin has cooperated with Tesla, to build the new factory there. Now what this has done is essentially supported the destruction of a huge area of forest to become to make sure that they're at the central sustainability. Now this is the home of Volkswagen, Porsche, Audi, BMW wanting to be at the center of the future of cars. So that alignment between industry and cars becomes absolutely critical. And I think that access to resources is going to drive increased takeovers and mergers the walls have increased. And that's going to be a real transformation, not just for those areas. So if you're not part of them, then they've got a lot of choice. So we're going to see increased competition across cities, globally. Companies, huge manufacturing plants to be able to produce the results.

Roy Sharples: 1:27:28

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