Five key tech trends for 2019, part 1: cars

It’s a new year, which means a new tide of news and articles referencing what may come in the next 12 months.

It’s like a sort of mass delusion. Nothing has changed. But that doesn’t stop our brains creating significance around an arbitrary number changing.

We all know nothing has really changed, and yet we all still play along. Enough of us play along, in fact, that things really do change.

And so I’m going to play along too.

Over the next few days we’re going to take a look the tech and investment trends we can look out for in 2019 across five key areas:

  • Cars
  • Communications
  • Big tech
  • Crypto
  • Medicine

So let’s get started.

Trends in cars

The last few years we’ve seen many predictions that car ownership will die out. Every year it gets cheaper and easier to hire a car instead of own one. But people like their own space.

Still, car ownership is being attacked on all sides.

Cheap taxi firms like Uber make it effortless to call a car to wherever you are, day or night.

These tech-based taxi companies ten do be far cheaper to use than traditional ones because they are willing to lose money.

It’s no secret that Uber’s master plan is to eventually eliminate the driver – the biggest cost – from the equation.

Last year Uber made a $500m deal with Toyota to speed up this process.

From The Guardian:

The aim of the partnership is to use technology from both companies in purpose-built Toyota cars to be deployed across Uber’s ride-sharing network from 2021. Toyota’s investment values Uber at $72bn, despite mounting losses that totalled $4.5bn in 2017.

And Uber isn’t the only one. Alphabet’s (really Google) taxi firm Waymo began a slow rollout of its own driverless service late last year.

From Bloomberg in November 2018:

Waymo, the secretive subsidiary of Google’s parent company, Alphabet Inc., is planning to launch the world’s first commercial driverless car service in early December, according to a person familiar with the plans. It will operate under a new brand and compete directly with Uber and Lyft.

Driverless taxis have two distinct advantages over current ones:

  1. You don’t have to share the car with someone you don’t know.
  2. They don’t have to pay a driver so they can cut prices down to the bone.

That first point may not seem like too big of a deal. But like I said, people like their own space. And while you may enjoy chatting to a driver for a short journey, it would definitely get awkward if you wanted to go long distance.

The second point is much more obvious. Uber and its ilk are cheap, while paying the driver for their time. Subtract the driver’s wage from the cost of your trip and you have a very cheap journey.

Upfront costs for fleet of driverless taxis would be high. But with no driver wages to deduct from companies’ profits, those costs could be offset in no time.

But setting the groundwork for driverless cars is an almighty task. The technology may be ready, but the regulations are not.

Which is why Partners for Automated Vehicle Education (PAVE) was announced on 7 January 2019.

This is coalition of carmakers and tech firms that have teamed up to speed driverless car adoption along. Its members include Volkswagen, Audi, Intel, AAA, GM, Nvidia, Toyota and Waymo.

From its website:

PAVE is a coalition of industry, nonprofit and academic institutions with one goal: To inform and educate the public and policymakers on the facts regarding driverless vehicles so that they can fully participate in shaping the future of our roads and highways.

But driverless taxis aren’t the only game in town. Over the last few years “car clubs” have become increasingly popular in big cities.

These companies call themselves car clubs. But all they really are is a company that lets you hire its cars without all the associated paperwork of traditional hire firms.

If you’ve ever gone on holiday and tried hiring a car from the airport, you’ll know how much of a nightmare traditional car hire can be.

With car clubs like Zipcar, you join though their website or app and when you want to hire a car you just walk up to it and wave your phone.

There are so many car clubs in London you can usually find a car to drive within 500 metres of you, at most times of the day or night.

Where driverless taxi firms aim to make transport cheaper by replacing the paid driver with an unpaid robot, car clubs do away with the driver altogether and have you do it.

This means they can be even cheaper than a driverless taxi because they don’t have to fork out that big upfront cost for all the driverless technology.

In fact, they even claim to be significantly cheaper than even owning your own car.

From Zipcar in 2016:

Car ownership in the capital costs the average London driver £3,436 per year on top of the cost of purchasing the vehicle, according to new research from Zipcar, the world’s largest car sharing network.

It shows just how much city drivers are prepared to spend on their cars versus the relatively limited amount of time they spend driving them. In total, the average Londoner spends just 182 hours in their car annually, at a cost of £18.88 per hour.

Zipcar’s pay-as-you go approach, for example, means that a typical car club member saves around £3,500 versus owning a car annually, and can still access cars by the hour, or by the day, close to where they live and work.

Of course, the above research was conducted by Zipcar itself and that excerpt is lifted from a press release. But it does illustrate the point.

Car clubs could cut their prices even further if they could switch to electric cars. The price per mile of an electric car compared to a combustion engine is miniscule.

A Tesla Model S, for example, costs around 3.3p per mile in electricity. That compares to around 5.4p per mile for an average petrol car.

So an electric fleet would cut their fuel costs by around 39%. This would mean that if you live in a city, joining a car club would be significantly cheaper than owning your own.

This is already happening. In 2018 Zipcar added 325 electric Golfs to its fleet. The cost of hiring one of these cars is currently capped at £14 per hour.

I would have expected this to be cheaper. But after looking into it, Zipcar doesn’t ask users to charge the car after using it.

From Zipcar:

Right now, we don’t think there are enough publicly available charging points around the city to expect our members to find one at the end of every Flex trip. So until a time when the charging network is ubiquitous and open, we’ll be topping up our e-Golfs overnight at rapid chargers across London.

And that brings me to the final piece of the puzzle: electric car charging points.

As you may know, the UK has pledged to ensure all new cars sold in the UK will be zero emission by 2040. Although, MPs have stated they would like this to be brought forward to 2032.

As it stands, even finding a charging point in the UK’s capital city is a trial. Outside major cities it is nearly impossible.

So if electric cars really are to rule the roost in just a few short years, things need to change fast. So this year the UK is launching project Optimise Prime (which I can’t help noticing sounds a lot like the leader of the Autobots from the Transformers film franchise).

From Wired:

In 2019, the UK will be host to the world’s largest trial of electric vehicles. It has a humble aim: to work out all the myriad of ways in which we are hopelessly unprepared to ditch the internal combustion engine once and for all.

Around 3,000 electric vehicles will be deployed in the second half of 2019, with data collected from the fleet being analysed to asses their impact on grids in urban, rural and suburban areas across the south and east of England.

As you can see, all the pieces are slotting into place for the world of car manufacture, ownership and driving to change. And 2019 is the year that change really begins.

If you’d like to know more about any of these areas, and how you can invest in them, I can highly recommend reading my publisher Nick O’Connor’s book, The Exponentialist.

He spent months tracking down and interviewing leaders in many areas of cutting-edge technology. His aim was to get a clear picture of what the future will bring us, and how you can invest in it.

It’s a great read, and it has a lot of insight in it. But then I would say that wouldn’t I? Why not see what it’s all about for yourself by clicking here.

Tomorrow we’ll take a look at the changes we can expect to see in communications, with a big focus on 5G.

Until then,

Harry Hamburg
Editor, Exponential Investor

Category: Technology

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