Thinking about an Autonomous Future
Autonomous vehicles and the evolution of Transport as a Service (TaaS) are topics that we have spent a significant amount of time thinking (and writing) about in the past year or so. We see these developments as having a profound impact in many industries and have begun to remove from our portfolios businesses that we see as being on the wrong side of them.
To quickly recap, we think that the arrival of cost effective electric vehicles (EVs) and autonomous vehicle (AV) technology will drive a shift away from private vehicle ownership and towards fleets of autonomous EVs. We think that the low cost per kilometre of EVs and the much greater vehicle utilisation possible through shared AVs gives rise to a TaaS model that provides dramatically lower cost to consumers, significantly increased safety, and elimination of the time and effort required of a driver.
These changes may take some time to play out, but the fact that Alphabet’s Waymo has announced plans to launch the world’s first autonomous car service in Arizona later this year tells you it may be closer than many people think.
This presents investors with a fascinating set of challenges in thinking through the possible implications and the potential winners and losers. The list of possible impacts is long, and the second and third order effects in particular are difficult to foresee, but some of the possibilities that come to mind include:
- Improved safety and fewer accidents will reduce the need for car insurance, accident repair, parts suppliers and even medical trauma care;
- Fossil fuels and their suppliers will lose some of their relevance;
- Shopping will change. Lower delivery costs will reduce the need for people to travel to shopping centres, but may increase travel for services like restaurants and holiday destinations;
- Property markets may change, as long commutes become cheaper and the commuter’s time is freed up to do things other than drive;
- Road use patterns will change. The need for carparks will almost certainly decline substantially, but roads may well become more congested as lower travel costs drives increasing demand;
- Many existing jobs will decline (taxi/bus/truck drivers, mechanics, traffic police, driving instructors, RTA clerks, etc.), with difficult-to-foresee flow on effects to other parts of the economy; and
- The owners of the networks, technology, software and data needed to run vehicle fleets efficiently will likely gain in importance and value.
Being able to properly understand the potential changes ahead of others will no doubt provide some astute investors and entrepreneurs with extraordinary opportunities, so it makes sense for investors to focus some time and effort on this.
We’d love to hear your thoughts in the comments section on how you see these developments unfolding.The arrival of autonomous vehicles and the evolution of Transport as a Service will have profound impacts on many industries and therefore present investors with a fascinating set of challenges. Click To Tweet