The autonomous taxi industry could generate annual revenue in “excess of US$10 trillion by the early 2030s”, Ark Invest founder, Catherine Wood, told a Nikko Asset Management roadshow audience in NZ last week.
Wood said self-driving vehicles, expected to be on the market by 2020, would spark the rapid development of cabbie-less taxi networks that “decrease the cost and inconvenience of point-to-point mobility”.
“As a result, the traditional automotive industry may be subsumed by Mobility-as-a- Service (MaaS) platforms that could become one of the most valuable investment opportunities in public equity markets,” she said in her presentation.
Last month Nikko took a 15 per cent share of Ark, an exchange-traded fund (ETF) business targeting ‘disruptive innovation’.
“From a broad spectrum of disruptive innovations, we have identified breakthrough technologies that we believe are best positioned for exponential growth,” Wood said.
She highlighted three of the paradigm-shifting trends in the NZ Nikko presentation with 3-D printing and ‘crypto assets’ joining MaaS as visionary portfolio items.
According to the Ark analysis, autonomous-driving technology combined with ever-cheaper electric vehicles would also subvert the current car manufacturing industry and push oil demand to new lows.
Based on Ark’s most-optimistic projections – where both autonomous taxi networks and electric cars rule – oil demand would fall to below 90 million barrels per day by 2034 compared to almost 115 million forecast by BP. At the same time annual vehicle sales would be “24 million units” lower by 2030 than industry projections if the auto-taxi networks materialise as laid out in the Ark scenario.
“Ark estimates autonomous MaaS will reach $10 trillion in gross sales by the early 2030s, 20% of which could accrue to service operators,” Wood told the Nikko audience.
As of today, she said the global MaaS business – epitomised by firms such as electric car manufacturer Tesla and NVIDIA, which, among other items, produces autonomous driving technology – should be valued between US$1-3 trillion compared to current actual valuation of US$110 million.
Likewise, Ark tips 3-D printing – via myriad industrial applications – could grow more than 10-fold over the next five years from a US$6 billion business as of today to US$65 billion. Ark’s forecast for the 3-D printing industry revenues sit at the upper end of research projections that mostly range between US$12-21 billion. Only McKinsey, which projects 3-D printing could generate between US$180-490 billion by 2025, is more bullish than Ark.
Finally, Wood told the Nikko crowd that ‘crypto assets’ such as bitcoin and other blockchain applications presented new opportunities for investors.
Ark identifies at least three crypto sub-classifications, including:
- Crypto-currencies – such as bitcoin, litecoin and zcash;
- Crypto-commodities – for example, cloud storage and bandwidth suppliers like ether, golem and storj; and,
- Crypto-tokens – that use “consumer facing distributed applications” exemplified by companies such as augur, gnosis, swarm city and steemit.
“We believe that bitcoin and other cryptocurrencies are not just ‘currencies’,” Wood said. “Traditional asset classes differ in three ways: politico-economic features, correlation of price movements, and risk-reward profiles. ‘Cryptoassets’ can be considered a new asset class entirely.”
She said the pace of innovation was rapidly transforming equity markets with the average lifespan of an S&P 500 firm, for instance, dropping from 100 years in the 1930s to about 14 years now.
“On average, an S&P 500 company is now being replaced every two weeks, and estimates suggest 75% of the S&P 500 will be replaced with new companies by 2027,” Wood said.
As well as a range of six innovation-themed ETFs Ark develops bespoke investment strategies for institutional investors. Nikko holds exclusive distribution rights for Ark in the Asia-Pacific region.