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Mobilizing the Fourth Industrial Revolution | Future Transportation | ITEK | Megatrends

Overview

The fourth industrial revolution is the current environment where disruptive technology trends such as the Internet of Things (IoT), Robotics, Artificial intelligence (AI), Future Cars/Autonomous Vehicles, Blockchain, Cloud Computing, Genomics and Social Media are changing the way we live and work.

Unlike past industrial revolutions, these technologies are rapidly combining to create an accelerating, virtuous cycle of disruption. While previous industrial revolutions were often localized, todays is interconnected and global and its impact is already visible in homes and businesses across the world.

This is a short guide to help investors understand the main sectors of the fourth industrial revolution and their features, applications, and growth potential. In this part, we focus on Future Cars. 

Future Transportation

Horses were first domesticated around 6,000 BC and the wheel was invented sometime around, 4,500 BC. Even though it took humanity nearly 1,500 years to create the first horse-drawn wheeled vehicle, we’re now making huge developments in transportation technology that enable us to travel further and faster than ever before and in incredibly imaginative ways.

We already have e-scooters, personal submarines, functional jetpacks, wingsuits and electric planes; and sci-fi scenarios like self-driving cars, trucks and robo-taxis operating in smart cities may be coming to your neighbourhood in future.

Autonomous vehicles use artificial intelligence, software, RADAR and LIDAR technology to monitor a 360 range around the car to form a dynamic 3d picture of the environment. By combining sensors, software and controls, the vehicle can navigate, drive and respond to the actions of other road users without the need for human input.

Future transportation is a key theme of the fourth industrial revolution and encompasses a range of new technologies that are making it faster, cleaner, smarter and safer to move goods and people about.

The inter-connectedness of the fourth industrial revolution is well illustrated by advances in the future transportation sector. Along with the development of advanced battery technologies, advances in areas such as robotics (manufacturing of vehicles, autonomous driving systems) cloud computing (design, security, smart cities, driver assistance systems, mapping, AI, ride-share platforms and network connected services for transportation)  and cyber security (prevent hacking of transport systems, theft of vehicles) are helping to push the industry forwards.

While electric and hybrid vehicles are the most visible indication of how rapidly new transportation technologies are being adopted, the industry is multi-faceted and includes manufacturers of hybrid, electric and autonomous (self-driving) cars, trucks, planes, boats, e-scooters and delivery drones, as well as battery and fuel cell producers, high speed and wireless charging technologies, raw material suppliers, sensor manufacturers and technology hardware and software providers.

In combination, these companies are helping to create a new transportation paradigm that is forcing change across industries and businesses– one where low polluting vehicles can safely navigate to a location with minimal human input, reducing or eliminating the need for human drivers, speeding up delivery and travel times, reducing congestion and lowering costs.

As the industry evolves, it has the potential to fundamentally reshape road usage and vehicle ownership; changing the way that urban spaces are conceived and how cities are designed. With the majority of the world now living in urban areas, new approaches to transportation’s effect on both humanity and industry have the potential to be massive and profound.

Hybrid & Electric Vehicles

The investment opportunity of the electric and hybrid vehicle market is well illustrated by the fact that, by market cap, Tesla is the now the second largest car company in the world. With a market cap (20th May) of 150Bn, Tesla is larger than General Motors (35.3Bn), Honda (43.5Bn) Ford (21.1Bn), Daimler (36.2Bn) and Harley Davidson (3.3Bn) combined. Only Toyota, at 195.5Bn is larger.[1]

Overall, the global electric vehicle market is projected to reach $802.81 billion by 2027, registering a CAGR of 22.6%[1], with continued growth in the sector spurred by developments in battery technology and the direction of government environmental and urban planning policies. [1] https://www.alliedmarketresearch.com/electric-vehicle-market

Cheaper and better-quality batteries are increasing use by auto companies and driving down the cost to the end consumer. The cost of Lithium batteries used in electric vehicles fell 87% from 2010 to 2019[1] and new combinations of chemistry, design and technology mean the next generation of batteries will offer longer ranges, fewer and faster recharges, wireless recharging and increased output.  

Lower cost batteries mean more car and truck manufacturers are creating electric and hybrid models – an estimated 500 [2] different electric vehicle models will be on the market by 2022, meaning more competition, lower prices, and broadened appeal across different consumer segments.

Governments are also imposing increasingly stringent environmental guidelines for vehicle manufacturers in a bid to combat emissions and meet CO2 targets and reduce congestion, further spurring the development and adoption of a wider range of electric and autonomous vehicles.

Electric taxis, buses, mopeds, scooters and bikes are already commonplace in in many cities. Large fleets owned by delivery companies and couriers are incentivised to ‘electrify’ their fleet by the imposition of variable emission charges in urban areas.

Huge vehicle fleets owned by public transport operators are also electrifying. For example, London owner of Europe’s largest electric bus fleet of 200 vehicles, plans to add a further 78 electric buses in 2020 [3]. The city’s entire fleet of 9,000 vehicles is planned to transition to hybrid or electric by 2037.

As cities seek to reduce congestion, many are looking at the feasibility of fleets of self-driving taxis and ride-sharing vehicles to replace private transport and free-up space previously used for on and off-street parking.

Market Growth & Summary

Electric and hybrid vehicles still represent only a small portion of the overall automotive market – about 2.7% of all sales in 2020 [4]. Nonetheless, growth is significant, with sales surging from 450,000 vehicles in 2015 to 2.1 million in 2019. This growth trajectory is expected to continue with as many as 54 million vehicles, or 58% of the total market being electric or hybrid in the next 20 years [5].

The market for autonomous vehicles is still in its infancy, with an estimated value of $54.23 billion in 2019, it is projected to garner $556.67 billion by 2026, registering a CAGR of 39.47%. According to Statista [6], autonomous cars by 2030 could account for up to 10% of all vehicles sold globally.

According to Statista In 2019, Europe and Asia represented ~75% of the total electric and hybrid vehicle markets and are expected to be significant growth markets for the autonomous vehicle sector.

As such, the future transportation sector is positioned to play a significant role in the future economy and provides an attractive option for investors looking to enter an industry at an early stage of development.

Investing in the Future Transportation Theme

The growth potential, consumer interest and size of the addressable market of Future Transportation has spurred investor interest in this theme. Investors who see long-term opportunity can consider an allocation to The HAN-GINS Global InnovativeTechnology UCITS ETF (ITEK). ITEK includes Future Transportation as part of 8 transformational technology trends that are reshaping the world alongside Robotics & AI, Cloud Computing & Big Data, Cyber Security, Genomics, Social Media, Blockchain, Augmented & Virtual Reality. 

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Article Date: 17th June 2020.

 

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