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.
Find out more:
Article Date: 17th June 2020.