We’re pleased to share this article by Kevin Hua, Co-founder of AtlasTrend and , editor-in-chief and publisher of Which-50 and former associate publisher of The Australian Financial Review. 

The following information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.


As society shifts to a world of autonomous driving over the next 30 years, the economic implications are profound — initially, but not only for the automotive sector.

Some of the world’s leading automotive brands are already investing heavily in the technology. Daimler for instance says that prototypes like its Mercedes-Benz S-Class S 500 Intelligent Drive demonstrate that “…the technical conditions for autonomous driving are already well established.” The company expects to have driverless trucks ready for the roads by 2020.

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Ford meanwhile won’t be far behind and says it will have a fleet of driverless vehicles ready by 2021 with an initial focus on the ride sharing market. Ford also has investments (along with Chinese search giant Baidu) in Velodyne, as well as in an artificial intelligence business ArgoAI which is focused on autonomous driving.

Long time rival GM has already tipped half a billion dollars into Uber rival Lyft and a year ago spent almost US$600 million buying Cruise Automation, a self driving startup.

Volkswagen, BMW, Hyundai and Volvo are also all considered leading contenders having been rated in the top 10 Navigant Research earlier this year. (Business Insider has a lengthy piece describing the leading autonomous providers that is well worth the read).

See also:

Interestingly that same report has autonomous pioneer Tesla outside of the top ten over concerns with its autopilot system, however as the BI report noted, “Crash rates for Tesla cars have plummeted 40% since Autopilot was first installed in 2015,” and the company plans of setting one of its vehicles loose between LA and New York before the end of this year.

Then of course there are myriad businesses from outside the autosector looking to break into the market. One of the most high profile is Google’s Waymo. However it is important to understand that Google takes a slightly different tack as Waymo doesn’t plan on making its own cars but rather acting as a technology platform partner for other companies.

Like Google, Apple is focusing more on the operating system than the actual hardware. CEO Tim Cook told Bloomberg television last month “It’s a core technology that we view as very important,” and then went on to describe it as the “Mother of all AI projects.”

Apple also has a billion dollars invested in Chinese ride sharing outfit Didi Chuxing, which counts Uber as an investor as well, having partnered up with the US ride sharing leader last year after two years of fierce competition.

As cars and trucks turn into devices, and as ownership shifts from consumers to service providers, new economic opportunities will emerge. Investors will do well to understand them.

It is also important to appreciate, for instance, that the shift to autonomous driving is also related to megatrends like global urbanisation — which will see two thirds of the world’s population living in cities by the middle of the century.

Research by Strategy Analysts suggests that by 2050, the:

“Passenger Economy will be worth US$7 trillion dollars.”

In fact, the study — which was funded by chip manufacturer Intel — looked for the most part only at direct impacts.

By the time you include the effects on associated industries (batteries, building design, insurance to name just a few) the US$7 trillion figure might start to look conservative.

The impacts of autonomous driving will be ubiquitous.

The authors write that some of the other potential economic and social impacts of the Passenger Economy include:

  • Conservatively, 585,000 lives can be saved because of pilotless vehicles in the era of the Passenger Economy from 2035 to 2045. This is nearly as many people that live in the city of Dusseldorf, and would fill the Melbourne Cricket Ground nearly six times over.
  • Pilotless vehicles will free more than 250 million hours of consumers’ commuting time per year in the most congested cities in the world.
  • Reductions in public safety costs related to traffic accidents will amount to more than US$234 billion over the Passenger Economy era from 2035-2045.

Strategy Analysts believe that the the nature of future transportation will involve consumers being driven in intelligent, pilotless vehicles. “This Passenger Economy represents the value of the products and services derived from the use of fully autonomous, pilotless vehicles, including the indirect savings in both time and resources generated by the use of pilotless vehicles.”

The really big changes will be created as consumers and businesses shift from ownership of vehicles to purchasing Mobility-as-a-Service. “This is the direct effect of autonomous vehicles converting drivers to passengers. Businesses will be a significant driver of autonomous vehicle sales in the early commercial stages.”

While manufacturers are already building elements of autonomy into their vehicles today, and some parts of the vehicle sector (for example mining) already employ full autonomy in some cases, the authors suggest the tipping point — when 50% of new vehicles sold will be fully autonomous — will arrive between 2035 and 2050.

Reports from Which-50 suggest that the first big shifts will come from the trucking industry, which is expected to deliver the first widespread use of autonomous mobility.

Interestingly, while full autonomy (called *SAE level 5 in the industry) is still a generation away, the impacts of Mobility-as-a-Service are already being felt. There is credible evidence that fewer people are buying cars in some key developed markets, and drivers are getting older before they get their licence.

That $US7 trillion Passenger Economy will be made up of three core components:

1. Consumer use of a range of Mobility-as-a-Service offerings will account for US$3.7 trillion — nearly 55% of all revenues.

“Consumers will continue to forgo ownership as they seek out economical, self-directed personal mobility. The range of Mobility-as-a-Service offerings will explode as autonomously operated vehicles become ubiquitous and instantaneously personalised services emerge. Peer-to-peer and networked ride-sharing models of today will be largely displaced by mobility service providers offering mobility for uses ranging from work-related applications or simply enabling movement around urban or suburban areas.”

2. Business use of Mobility-as-a-Service will be almost as significant a market, generating US$3 trillion in revenues.

“Industries like transportation and freight delivery, and sales and service fleets, will utilise pilotless vehicle technology to reshape their fundamental businesses and to leverage new opportunities.”

Furthermore, the authors argue that the adoption and use of Mobility-as-a-Service within the transportation industry will be a strong driver of autonomous vehicle and truck sales in the early years of the Passenger Economy.

“Businesses will make use of light-, medium- and heavy-duty trucks for transportation, delivery, sales and service fleets, and other business-class transport vehicles within Mobility-as-a-Service models and other new mobility services. In the transportation market, the impact of these services will be global as it will relieve long-haul driver shortages around the world. Developed markets will drive the early adoption of these services, accounting for two thirds of these revenues initially.”

3. Emerging applications and services will represent a small (US$203 billion of revenues) part of the new Passenger Economy.

“These revenues will be generated from the use of a range of new use cases for pilotless vehicles in industries like hotel and hospitality, restaurant and dining, tourism and entertainment, healthcare, and service delivery of all kinds.”

The early wins will come from the developed world, say the authors. “It is our view that developed markets will account for nearly three quarters of these revenues in the early commercialisation stages of pilotless vehicles. In emerging markets, vehicle ownership trends and a lack of infrastructure will throttle early adoption, but regulators’ long-term needs to combat congestion, pollution and safety issues in densely populated cities in this region will also fuel growth.”

However, they note that as the market ramps towards 2050, emerging markets will come to account for a larger share of the total.

*Society of Automotive Engineers


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About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Kevin has over 20 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.