More traction for automated vehicles, and the key issue that will determine how soon they affect our daily lives
Last Thursday, Amazon announced it invested in the self-driving car company, Aurora. As to why, an Amazon spokesperson said:
Autonomous technology has the potential to help make the jobs of our employees and partners safer and more productive, whether it’s in a fulfillment center or on the road, and we’re excited about the possibilities.
It’s just the latest in a series of news pointing toward one clear takeaway — the self-driving trend is happening, and it’s picking up speed.
Regular Digest readers know we believe self-driving cars — aka “autonomous vehicles” (AVs) — represent one of the biggest investment opportunities of the next 25 years. This innovation will transform huge portions of our economy and create trillion-dollar ripple effects.
The Aurora investment comes after a partnership announced last year in which Amazon looked to Toyota to explore ways to use self-driving cars to deliver food. Amazon’s overall delivery costs exceeded $27 billion in 2018. Self-driving vehicles could help the giant company reduce delivery costs.
***But the Amazon investment wasn’t the only self-driving car news from last week
We also learned that Waymo (a subsidiary of Google) is in advanced talks to develop autonomous cars with Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp. in a move that would join a leading self-driving force with the world’s largest automotive alliance.
This latest news from Waymo follows previously announced deals with Fiat Chrysler and Jaguar Land Rover. The proposed partnership with the French and Japanese automakers would be Waymo’s biggest alliance to date.
***Over the last few years, we’ve seen a series of partnerships as automakers and tech companies navigate the self-driving revolution
For instance, back in 2016 General Motors invested $500 million in the ride-sharing company, Lyft, as part of a plan to develop autonomous vehicles. This was the first time a major car maker had partnered with a ride-sharing company.
Another example came this past August, when Toyota announced a $500 million investment in Uber as part of a partnership that would exist to develop self-driving vehicles.
These partnerships make sense. From the ride-sharing perspective, AVs could eliminate ride-sharing’s greatest expense: paying human drivers. From the automaker’s perspective, the potential for self-driving car-sharing services (where the future of driving is headed) presents a significant threat to an industry dominated by individual car ownership. Partnering keeps these automakers in the game — even as the game is becoming more difficult.
***One of the most critical subjects that will be researched through these partnerships is batteries
So far, automakers haven’t been able to mass-produce electric cars profitably. That’s mostly because of the prohibitive cost of the battery packs, which make up between 30% and 50% of the cost of an electric vehicle. For context, a 500 km-range battery costs around $20,000. Plus, you have to add another $2,000 for the electric motor and inverter. Compare that with a gasoline engine that costs around $5,000.
Given this battery cost issue, automakers are scrambling to be the first to solve this problem.
Matt McCall is the editor of Investment Opportunities, where he tracks the major trends that are reshaping our world — and creating massive investment opportunities in the process.
Here’s his recent update to subscribers on the significance of batteries in the AV/battery revolution:
(Two weeks ago), Toyota and Panasonic announced a partnership to create batteries for electric vehicles (EVs), which will become the biggest user of next-generation batteries. The new venture will also supply other automakers, including Mazda and Subaru. And keep in mind that Panasonic is already a partner with Tesla in its battery gigafactory in Nevada.
All of the world’s biggest automakers — General Motors … Ford … Toyota … BMW … Volkswagen … Honda … Mitsubishi … Mercedes … Nissan … Hyundai … Audi … Porsche — are spearheading projects to get next-generation batteries into their fleets as soon as possible.
These automotive giants are about to unload millions of electric vehicles on the global car market in the next several years. Volkswagen, the largest automaker in the world, is going all in on all-electric cars, planning to be mostly electric by 2022. Even truck heavyweight Ford is investing $11 BILLION in electrification, with Chairman Bill Ford saying, “We’re all in now.”
To them, the writing is on the wall. It’s either embrace the revolution or become obsolete.
And it’s more than just automakers … (Two weeks ago), Apple hired the former head of Samsung’s battery division. He not only helped develop lithium battery packs but was also involved with next-generation battery technology. Caterpillar, the world’s leading construction equipment company, is aiming to adopt electric power as well for its trucks, diggers, and excavation equipment.
One look at that list and it’s easy to see that any investor who wants to build life-changing wealth needs to be on the lookout for the next big battery breakthrough. It will have multi-trillion-dollar economic implications.
***So, what is this next-generation battery breakthrough? The solid-state battery
Solid state is considered the holy grail of batteries. It’s a superior, safer technology. But researchers haven’t yet figured out how to mass produce them at a reasonable cost. But when that happens, demand will be huge.
From Matt’s January issue of Investment Opportunities:
After all the research and analysis, any potential investment opportunity must still have the numbers to back up big future growth. I would like to share predictions from a few research firms about the future of solid state batteries:
According to MarketsAndMarkets, the solid state battery market is expected to reach $1.1 billion by 2020. That would result in a compound annual growth rate (CAGR) of 72% between 2015 and 2020.
Inkwood Research expects the global solid state battery market to grow with a CAGR of 67% between 2018 and 2026.
Research firm Arthur D. Little sees the entire battery market growing to $90 billion by 2025 from $60 billion in 2015. This is an important number because it shows how the overall demand for batteries is set to explode. (Not the batteries themselves … just the demand!)
If solid state is the standard for future batteries, it will capture a large portion of that $90 billion market. Even a mere 10% is $9 billion. This would represent enormous growth in the next seven years. And even more importantly, it represents massive profit potential if you are invested in the right stocks.
Keep in mind, solid state batteries won’t only impact the auto space. They will also affect everything from your cell phone, to the Internet of Things, to pacemakers, to wearable technologies, even to the U.S. military (wearable bullet-safe batteries for soldiers).
If you’re interested in learning more about these batteries, Matt’s created a video presentation you can watch here.
We’ll continue to keep you updated as this trend develops.
Have a good evening,
Jeff Remsburg
