To The Moon

Autonomous vehicles (AV) have been hitting the news in recent times following major updates.

Gartner Technology defines an autonomous vehicle as thefollowing:

Anautonomous vehicleis one that can drive itself from a starting point to a predetermined destination in “autopilot” mode using various in-vehicle technologies and sensors, including adaptive cruise control, active steering (steer by wire), anti-lock braking systems (brake by wire), GPS navigation technology, lasers and radar.

Most of us will automatically tie AV to changes in how we commute. The disruptions will go beyond mobility (moving from one point to another). This is not just about driving or being driven. Before we explore the impact, let us look at the state of its implementation in the major cities around the world.

Without a doubt, one of the biggest benefits from AV will be the safer roads, improved traffic conditions and hopefully, more time for personal and professional pursuits. In essence, AV will usher in much improved quality of life for a better and sustainable future.

Europe

In thearticleby EE Times, Europe is implementing AV but lags behind China and USA in areas such as AV software, AV use cases & AV testing but leads in AV standards & regulations. In fact, the table below shows us how China, the USA and Europe are progressing in AV adoption.

Progress of AV -(Source:Egil Juliussen, October 2022)

Singapore

The city-state of Singapore has been testing AV for the last 5 years as per their national newspaperarticle.

Here is an extract from the news article in Jan 2022:

SINGAPORE - More than 40 driverless vehicles have been tested and approved to ply Singapore's roads since an autonomous vehicle (AV) test centre was opened in2017.

According to statistics that The Straits Times has seen, these include driverless taxis, shuttles, buses and road sweepers, certified by the Centre of Excellence for Testing and Research of Autonomous Vehicles-Nanyang Technology University (Cetran).

Another 10 were also approved by Cetran to be put on public paths, fulfilling functions such as last-mile delivery of food and equipment, as well as surveillance.

America & Canada

The most famous AV program in the US belongs to TeslaTSLA-1.54%↓FSD program (full self-drive).

Tesla’s “Full Self Driving” Beta Goes Out For Wide Release In North America as per announced by Elon Musk on 24 Nov 2022.

Elon’s tweet on FSD Beta for North America on 24 Nov 2022

China

One of the leading players in autonomous vehicles in China is BAIDUBIDU0.66%↑which has successfully launched its Apollo Go program in various China cities.

Newsextractfrom Global times dated 24 Nov 2022:

Apollo Go provided more than 474,000 rides in the third quarter of 2022, up 311 percent year-over year and 65 percent quarter-over-quarter, Baidu said in its financial report, adding that the cumulative rides provided to the public by Apollo Go reached 1.4 million by the third quarter of 2022.

Baidu said market demand for Baidu Apollo's automotive intelligent solutions is increasing, and its cumulative contracts reached 11.4 billion yuan ($1.6 billion) recently.

The revolution will start in commute and spread into other sectors. For ease of example, I will be using Tesla as the case study.

Transport & Logistics

In the world of transport, we can split transport into groups of passenger and commercial vehicles. This can lead to changes in vehicle functionality.

For passenger vehicles, Tesla’s FSD will be allowed (eventually) after they manage to clear all the national requirements for both USA and Canada.

Companies can also turn to AV for deliveries, collections and reverse logistics. With the traceability of the vehicles available to all relevant parties, this can be a major improvement to the supply chain experience. There would be need to integrate electric proof of delivery (e-POD), documentations, location & date/time stamping of key logistics milestones into the order status. This would weigh even more on the various demands for timely supply chain updates.

Following the (coming) FSD rollout for passenger cars, the attention will soon be directed for Commercial AV. The US is reported to be short of 80,000 drivers (October 2021) and if FSD can be used by Tesla Semi, this can be an important game changer that would address the issues of driver shortage. This will be a major leverage for the supply chain industry.

Tesla Semi will help to reduce US vehicle emissions and US vehicle particulate emissions

Apart from bridging the shortfall of drivers, Commercial AV will be important for the environmental as Semi account for a huge proportion of the US vehicle emissions and US vehicle particulate emissions.

Beyond the reduction of carbon emission, Tesla’s Semi are also quieter and improve the health of folks staying near highways and key roads thanks to lesser road noises and lesser pollutants in the air.

RoboTaxi (Tesla)

Tesla’s unveiling of Semi on 02 Dec 2022 has a sneaky promotion of their Robotaxi

Tesla will be launching the RoboTaxi soon following FSD’s successful rollout.

From Statistapost, here lies the potential of the taxi and ride-hailing market in the USA:

• Revenue is expected to show an annual growth rate (CAGR 2022-2026) of 4.72%, resulting in a projected market volume of US$74.45bn by 2026.
• In the Ride-hailing & Taxi segment, the number of users is expected to amount to 97.2m users by 2026.
• User penetration is 27.8% in 2022 and is expected to hit 28.4% by 2026.
• The average revenue per user (ARPU) is expected to amount to US$0.66k.
• In the Ride-hailing & Taxi segment, 71% of total revenue will be generated through online sales by 2026.
• In global comparison, most revenue will be generated in China (US$102.60bn in 2022).

Ride-hailing & Taxi - United States Expected Revenue

 In the USA, the revenue from the taxi and the ride-hailing market is expected to reach about USD$74.45 billion by 2026.

China has started her own Robotaxi in certain zones in various cities. This is expected to be rolled out to more zones and cities over time.

Vehicle Ownership

For those who own a car with the AV function, this vehicle can “become” an income-generating asset. WANADAreportsthat U.S. drivers spend an average of 17,600 minutes driving each year. This works out to be 48.2 minutes per day (ie about 0.80 hours per day). Should we round this up to an hour of daily vehicle utilization, the vehicle has a utilization rate of 4.16%. This leaves a spare capacity of 95% for the vehicle. If RoboTaxi can be readily available in various major cities, the need for vehicle ownership would come under scrutiny. But if we still buy the vehicle and avail the unit for ride-hailing, we can potentially be making money from our car from the USD$74 billion market by 2026. From car owners, we can also become “business” owners, tapping into the ride-hailing market. Compared to traditional cars, the AV can be optimized as an income generating asset.

Vehicle Insurance

With the vehicular data, Tesla is able to expand quietly their vehicle insurance.

This is a recentupdatedated 14 Nov 2022:

Tesla insurance had been available in 11 states, but today Tesla has added another state to the list. Tesla Insurance is now officially available in Minnesota, making it the 12th state in the U.S. to support Tesla's insurance initiative.

This is a win-win scenario for Tesla as they provide more relevant products in their growing domain. With the data & footage in their vehicles, it will be able much easier to validate the cause of accidents. Thus, this would allow the insurance claims process to be managed with objective data. This will mean straightforward, objective & quantitative closures for all claims. We can expect Tesla to walk away making decent profits from their insurance especially when they have the data from their own vehicles. The insurance industry has met a worthy opponent but they are missing animportant leverage - data of driver behaviour and vehicle data leading to any accident.

Data Analytics for Township planning

With all these data of vehicle movement, Tesla has accumulated good information:

• about peak traffic - the average speed during different times of the day,
• the speed in different seasons and weather conditions
• vehicle data near certain accident hotspots > which the town council can use to mitigate the risks of accidents
• carbon footprint > that can be shared with parks, tree planting to better manage carbon emission and reduction
• Driving behaviour at different hours
• Driving behaviour at different parts of town

Tourism

The availability of RoboTaxi can easily open up a new mode of travel. With RoboTaxi, there is no more need for a driver. Everyone in the vehicle will be able to take out their cameras (or phones) to take photos as they cruise past the various sights and sounds.

This can cater easily for typical family with 4 pax. All we need are Travel APPs which will provide travel narration (in various languages) to enthrall the travellers. At the same time, they can reach out to “Google or Siri” to ask for more details of the places, local food recommendation, place of interest recommendations, history and cultural background of places they visit. The travel industry will need to pivot or face potential disruptions. There is potential to integrate this with “augmented” reality for a more wholistic experience.

Food & Beverage and Hospitality

This may spell trouble for some of the hotels offering affordable lay over. With the RoboTaxi, the travellers can choose the option to “drive” to the next destination at night, skipping these layover hotels. The travellers will only be limited by the need to charge their vehicles, toilet & meal breaks. Will this lead to a consolidation of lodging & food operators?

The same challenge may unfold for towns typically used for layover. If the AV can drive straight to the next destination (over the night), some of these towns may experience drop in visitors. Food operators who are on such layover routes may also suffer in lieu of these. In essence, we may see the “demise” of some of these layover towns and thus, relocation of population out of these township. Will we lose some historical places?

Need for data privacy and security

With so much resting on the software and hardware, data privacy and security will rise in importance. Beyond just the protection of user data, the various AV companies will also need to safeguard the data against perpetrators with malicious & criminal intent.

For every good product, there would also be some criminals who may use these mobile network to transport their cargo. Thus, there will also be requirements for us to review and limit these criminal acts. Protocols will need to be set up for goods transport to ensure that contraband products and illegal activities cannot take advantage of these innovations.

Telecommunications & Energy

All these will point to a greater dependence on telecommunications network and the energy consumption required for both infrastructure and the AV. The cities will need to review their telecommunications and energy network accordingly to ensure that they can cope with the increased traffic. In recent times, extreme weather has caused energy challenges in various states and thus, we will need a more robust energy grid.

Apart from energy storage, the state will also need to look into greener ways of generating energy away from fossil fuels. There are also options for us to explore other green energy like hydro (from dams), wind and solar. Some of these options maybe better for certain states due to geographical locations. The states should consider incentives for homes to be more energy self reliant (example for solar panels and own home based energy/battery storage).

Business Continuity Plans (BCP) ~ manual intervention

With so much of businerss & homes relying on energy, software and hardware, every state will need to establish BCP protocol to address these potential scenarios:

• Loss of power
• Loss of venue
• Loss of system
• Pandemic
• Terror events
• Others

Charging Network

For AV to be widely adopted, the availability of the charging network will be an important infrastructure. With more and more AV adoption, the cities will need to refresh its charging needs and ensure that there will be sufficient energy to support these increasing demands. A city suffering from blackouts due to “inadequate” infrastructure may face problems of AV adoptions and may even see outflow of its population to other cities.

Mobile Roadside Support (MRS)

With the increase of AV, there may also need more needs for roadside support. In times past, the driver would be able to get off the car to replace a flat tire. However, these may not the case for AV. Thus, there should be increasing demands for mobile roadside support. This can be bridged if the AV have features providing alerts like tire pressure, battery. Such MRS will need to be fitted with quick charging options with more AV/EV on the road.

It is known that battery life are shortened during winter. AV and commercial AV operators will need to study this. Over time, we can expect the battery life, charging speed, charging network to improve.

My Investing Muse

Personally, one of my personal highlights of my family vacations is in the long drives that I take. Driving in a different (often unfamiliar) country brings a certain excitement and thrill as changing landscapes thrill with their sights, sounds and smells. Singapore is one of the most expensive cities for car ownership. I look forward driving a different vehicle for the next few days. This is a form of luxury too. I think that I do enjoy being driven around but there is a part of me that still enjoy driving, building bond with the car that you drive. I will probably turn on AV feature when I am tired or when I am greeted by stunning sights.

As AV becomes a closer reality, there lies new opportunities and threats for many markets. What I have mentioned that but some of these. For AV adoption, we will need regulations, infrastructure and affordable energy. This is essential for better road safety, better sustainability and hopefully better quality time for the people and things we love.

Let us not forget to set up proper regulations and controls so that we will be able to minimize criminal exploitations and be prepared for disruptions to several industries beyond mobility and logistics. AV is round the corner. Let us be ready for this new world.

$Baidu(BIDU)$$Tesla Motors(TSLA)$$BYD COMPANY(01211)$

@TigerStars