The autonomous car trend is going to create exponential investment wealth, but in the meantime, we have practical, implementation challenges to solve

I live in Los Angeles, where driving on the freeways is not for the faint of heart.

On some days, a courteous driver who lets you change lanes in front of them will restore your faith in humanity.

Other days, you’d gladly trade your first-born for the chance to firebomb the Ferrari that cut you off, slammed on the brakes, then flipped you the middle finger.

Interestingly, “personality” affects driving styles, with some individuals being very cautious, others wildly aggressive, and a great many of us somewhere in-between.

Now, if you’re scratching your head, wondering whether I suffered a concussion in a recent fender-bender, which is leading to this odd Digest, let me provide some context …

Autonomous vehicle (AV) technology is improving fast — and at an increasing rate. It’s going to change our everyday lives and lead to vast investment wealth in the process. Over the past many months, we’ve featured content from Matt McCall, editor of Investment Opportunities, which points toward the incredible growth rate the AV market will experience in coming years. In short, autonomous vehicles will present one of the most lucrative investment opportunities of our lifetime. We’re going to continue bringing you all the info you need to know about this.

But as AV technologies break new ground, we’re running into unexpected challenges. One of the latest challenges reduces to a question:

What happens when a logical, rules-based computer — the “driver” of the autonomous vehicle — meets a very illogical, emotions-based person — the driver of the Ferrari who has an itchy middle finger?

You see, there are currently 250+ million conventional cars in the United States — and they won’t simply disappear after fully-functional autonomous vehicles are here and operating.

This sets up a period in which AVs and human drivers must play nice. We’re beginning to see what this mixed-world looks like, and it’s pointing toward a comedic/sad/interesting takeaway …

Humans can be jerks.

 

***We’re not logical investors, nor are we logical drivers. This makes engineering an AV’s appropriate driving-algorithm challenging

You’re likely familiar with efficient market hypothesis. The idea, championed by academic, Eugene Fama, suggests that “beating the markets” is impossible in the long term, since stock prices reflect all available public information and investors always act rationally.

But do investors always act rationally? I don’t. Similarly, autonomous vehicles may have a 100% accident-free rate when driving alongside other AVs that are similarly programmed. They’re all acting rationally, based on the same, available information.

Enter humans — who don’t always drive rationally. Forbes recently ran an article pointing out an unexpected twist in all this. Sure, humans drive in ways that can be irrational, but what AV engineers weren’t expecting is that some human drivers are now intentionally driving in erratic ways when they spot an AV — purely to mess with it. From Forbes:

You might liken this to what some human drivers do when they see a novice teenager driving a car that’s marked as a driver instruction vehicle. Believe it or not, some human drivers do rather dastardly things toward such a vehicle …

In case you weren’t already aware, human drivers are now starting to do that same kind of “triggered” driving whenever they see that an autonomous car is nearby.

Some like to cut off the driverless car and see what happens, akin to the same trickery pulled on a novice teenage driver. Others are annoyed that the self-driving car is abiding by the speed limit and do the zip around maneuver to leave the autonomous car in the dust. There are pranks being played on self-driving cars, such as coming up to a four-way stop, and the human driver seizing the right-of-way by rolling through the stop sign, meanwhile the driverless car waits patiently because it has been coded to only take its dutiful turn when so permitted (even if it reached the stop sign first).

***Now, while this does have a bit of comedic element, let’s push beyond that to consider the ramifications …

Will new laws have to be enacted to protect AVs from drivers who want to haze them? Sounds a bit absurd, but remember, AVs will have cameras capturing all visuals that are happening around the driverless car. A recorded video could easily be uploaded to a police station, which could be examined, resulting in a mailed ticket to the offending human driver — or even a license revocation.

Of course, this dovetails into privacy concerns. Not only that, but who’s to say my sudden lurch toward an AV had a malicious motive, versus I had to swerve to avoid a pothole that the AV camera didn’t catch? Who decides?

So, what’s another option? A separate proposal is to divide up our roads. But this has an abundance of issues. The cost of new roads for AVs could be enormous and the construction time-consuming. And if the eventual future is a world where practically all driving is done via AVs, wouldn’t new roads be an unnecessary, short-term expense?

Plus, if we split up existing roads, how would humans react to some old traffic routes suddenly being deemed off-limits? The inconvenience could lead to some less-than-noble human responses.

Finally, there’s the idea of simply making AV algorithms tougher. An eye for an eye, so to speak. Algorithms would be modified not just to follow pre-programmed rules, but to mimic driving patterns learned from observing human drivers in real-world settings.

Is that really a good idea? I’m suddenly imagining an AV slamming its brakes in front of me, as a mechanical arm extends out the window, extending a hydraulic middle finger.

Now, while this is a bit of the “lighter side” of this amazing technology, the reality is there are serious ramifications that we’ll need to address sooner than later. That’s because this technology is coming fast. On that note …

***On Wednesday, BMW and Jaguar announced a partnership to develop next-generation electric vehicles

It’s just the latest in a series of such auto partnerships. The two automakers said the alliance is central to the industry’s transition from traditional internal combustion-powered cars and trucks to vehicles that are electric, autonomous, and connected.

The companies report they plan to benefit from cost efficiencies gained from shared R&D efforts and economies of scale across the broader supply chain.

***If you’ve been following Matt McCall, you know just how big EV/AVs are going to be for investors

Here’s how Matt has described the opportunity:

The car as we know it is on the verge of a transformative change not seen since it was invented. In fact, the whole transportation sector is now poised for its version of 2.0.

I’m not exaggerating when I say this will lead to trillions of dollars in money sloshing around in the coming decades.

I see electric and autonomous vehicles as the biggest investment opportunity of the next 20 years for one main reason … the sheer number of dollars we’re looking at. We could see a $7 trillion shift in the transportation industry. That’s more than the economies of 188 of the 190 countries in the world.

Now, as we’ve talked about before in the Digest, one of the best ways to play AVs may not be what you think. While an obvious bet would be to go with one of the traditional automakers that are jousting to become the AV front-runner, another option is to adopt a “picks-and-shovels” approach.

That means looking to the batteries that all AVs will require.

Let’s go back to Matt:

Electric cars are the future. That’s especially true in Europe — where carmakers face strict zero-emissions deadlines from EU bureaucrats — and China, with its air pollution crisis. And it’ll be true for Americans, too, whenever they want to save money on gas.

Better batteries are the key to this future.

Specifically, next-generation batteries. Not only will our cars and smartphones charge faster and hold their charge longer, but new batteries — solid state batteries — will also push airplanes (yes, airplanes!) into the future. Large sums of money are going into the future of air travel, and this is backed by the biggest companies in the industry.

If you’re a newer Digest reader and this isn’t on your radar, Matt’s put together a free presentation on the breakthrough in battery technology that’s going to be powering tomorrow AVs. In one example, Matt found a company that holds key patents. Automakers like Toyota are relying on this tiny company for its electric cars, but the company is off the radar of most investors. If you’re interested, you can watch Matt’s video for free by clicking here.

In the meantime, stay safe out there on the roads, and please don’t haze the AVs.

Have a good evening,

Jeff Remsburg