Investors have a bird’s-eye view of the driverless revolution happening before their eyes
Recently, Cruise, the autonomous vehicle subsidiary of General Motors, announced that they plan to have one million or more autonomous vehicles in their fleet by 2030. In late September 2020, the research arm of Toyota Motor Corporation, Woven Planet, acquired Renovo, an automotive operating system software firm with the hope that it will help expedite the company’s development of autonomous vehicles.
Even though fully autonomous vehicles may be years away, Republican Representative Cathy McMorris Rodgers said she hopes that Congress will get ahead of the curve and provide a regulatory framework for issues such as cybersecurity, safety and other standards. She compared the future transition from regular to autonomous vehicles to that of the transition from horse and buggy to the first Model T Ford. In short, McMorris Rodgers called the shift “transformative” and hopes that America will lead the way.
Others in Congress also understand the importance of this transition. Republican Congressman Darrel Issa and Democratic Congresswoman Yvette Clark co-founded the Congressional Smart Cities Caucus with the goal of educating and connecting lawmakers to new smart technologies that will have a dramatic impact on how cities function. On October 12th, the Consumer Technology Association held a webinar bringing executives from Aurora, Reef Technology and Argo AI to discuss with the aforementioned members of Congress the importance of collaboration between the Federal Government and autonomous vehicle companies to help usher in this new era of transportation.
McMorris Rodgers’ comment underscores the revolution that autonomous vehicles can bring to people’s lives across the globe. Metro North Commuter Railroad service used to market its train service under the slogan: “Your train time is your own time.” An autonomous car would turn your travel time into your own time. A self-driving car would make the car a kind of leisure area as the car self-drives to its destination. Deciding when to leave for a certain destination would be much more flexible since passengers could sleep or accomplish other things during the journey. Cars could potentially park themselves, eliminating endless searches for parking spaces.
Autonomous vehicles could also address an important safety liability: human error. The problems of human distractions, fatigue and sometimes falling asleep at the wheel, which cause many accidents, could be significantly reduced by autonomous vehicles.
This is not only a safety issue, but also an economic issue. For example, in Australia, the Australia Road Safety Foundation estimated that car accidents cost the economy $30 billion annually. According to that figure, even a small reduction in crashes could save the economy billions of dollars. With reduced safety issues, insurance premiums could be reduced.
Due to the reduced human interaction needed for autonomous vehicles, this new innovation could pave the way for people with disabilities to use their cars and in essence become more independent. Hence, an unintended benefit of these cars would be their inclusivity.
Companies looking to manufacture driverless vehicles are doing so with an eye on the environment. These vehicles will likely be electric, thus, reducing carbon emissions. In addition, the style of driving of an autonomous vehicle, less braking and accelerating, would also contribute to reduced emissions.
Your capital is at risk
Concerns about autonomous vehicles
Alongside the revolutionary potential that autonomous vehicles offer, there are also concerns. Some of these concerns include: potential computer errors that could cause an accident; who would bear responsibility in the event of an accident; ensuring that the computer system in the car is secure from hackers; making the cars affordable and the idea that although a computer may be a better driver in cases where a moral dilemma is at stake, a human would be preferable.
A bird’s-eye view of a revolution
Traditional car manufacturers, newcomers to the market as well as service providers for the many technological aspects of the autonomous vehicle are all competing to produce the best product. Investors have the luxury of seeing this process play out from a bird’s-eye point of view. The field of companies producing the software and hardware needed for these vehicles offers investors an array of investment opportunities with risk as well as opportunity.
The auto industry worldwide is expected to reach $9 trillion by 2030. The driverless car market is expected to grow from $56 billion in 2020 to $220 billion in 2025. Those companies at the forefront of producing technology and other components of autonomous vehicles could reap huge benefits.
As with many investments, figuring out which might be the most successful company is challenging. Moreover, investors may be looking to diversify their investments within these two subsectors of the auto industry. eToro has attempted to address these challenges by creating a series of Smart Portfolios.
In general, these are a series of portfolios which focus on a specific group of financial assets. These assets could be related to a traditional sector of the economy, or innovative technology, disrupting certain industries, while others may focus on assets connected to a certain geographical area. The goal is to provide investors with the opportunity to gain access to an industry about which they may be passionate or to invest in what they believe will be the next revolution. Furthermore, Smart Portfolios allow investors to diversify their portfolio within a certain theme or investment strategy.
On the topic of autonomous vehicles, eToro has created a driverless Smart Portfolio where users on its platform can invest in an already assembled basket of companies which are at the forefront of the driverless vehicle and EV revolution. The portfolio allows the investor to gain exposure to many companies powering both of these revolutions through one financial asset as opposed to investing in each stock by itself.
The pursuit of producing autonomous vehicles will be exciting to watch as companies will need to continually improve and improvise to be successful as part of a revolution some have compared to the likes of the Industrial Revolution.
Nonetheless, while the finished product of a fully autonomous vehicle may be revolutionary, the process of reaching that point is not all or nothing. Auto companies are consistently producing new features to current vehicles which bring us step-by-step closer to a completely driverless vehicle. Each of these new features provides a technological advancement to current vehicles and all of them added together will finally generate a fully autonomous vehicle.
Your capital is at risk
This communication is for information and educational purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to, buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.