The impact of automated vehicles could hit portfolios harder and sooner than most investors imagine, according to Daniel Kieser, Shareclarity managing director.
Kieser, who road-tested some driverless car investment ideas for a global fund manager in a Taipei investor workshop earlier this year, said if implemented successfully the technology could prove disruptive across a wide range of sectors.
“The switch to a driverless car system won’t just affect vehicle manufacturers,” he said. “In fact, almost no industry will be left unscathed by a transport transformation.”
Kieser said the driverless car investment scenario-testing proved to be the hottest topic at the five-day roadshow, which centred primarily on the deflationary pressures of new technologies.
Wellington-based boutique firm Harbour Asset Management recently attracted large NZ audiences to a series of investor symposiums canvassing similar themes. Harbour imported US clean tech advocate, Tony Seba, for the event. Seba contends that an onslaught of clean energy technologies will usurp the oil-based transport industry by 2030. For example, Seba predicts that by that date all new mass-market vehicles will be electric and self-driving or semi-autonomous with the car market shrinking 80 per cent as a result.
Last week, Transport Minister, Simon Bridges, unveiled a government package to accelerate the take-up of electric cars in NZ.
“It’s clear that electric vehicles are the future,” Bridges said in a statement. “A move from petrol and diesel to low emission transport is a natural evolution, and it is our aim to encourage that switch sooner, rather than later.”
According to Kieser, investors should consider how this potential rear-ending of the traditional car industry would reverberate across their portfolios.
In his presentation, Kieser listed eight sectors that would most likely be side-swiped by the arrival of the driverless world, covering:
- vehicle manufacturers;
- courier, logistics and postal companies;
- public transport firms;
- car parking companies, including councils and airports;
- insurers;
- retirement villages;
- retailers; and,
- governments and councils.
While driverless cars would inevitably disrupt a range of traditional economic activities, he said new investment avenues would also open up.
For instance, Kieser said the “option value of suburban car parks has to increase”.
“Particularly those car parks that are empty at night,” he said. “They could transform into overnight ports for driverless vehicles, close to where they will collect their first passengers each morning.”
By contrast, he said car insurers could easily stall as driverless dynamics choke-off market opportunities.
“Insurance firms are already under pressure from fintech companies,” Kieser said. “And that will be compounded by fewer vehicles to insure, fewer vehicle-related accidents to insure against and a shift from individual vehicle ownership to corporate ownership.”
He said the move away from car-ownership to sharing corporatised driverless vehicles as needed could also free-up consumer capital.
Kieser cited government statistics showing that over the last year NZ consumers collectively purchased about 250,000 passenger vehicles.
“That’s over $5 billion in discretionary capital spent a year,” he said. “If going driverless releases that deadweight capital it could certainly be an opportunistic time to be in retail, hospitality, travel and in-car entertainment. If people don’t spend $35,000 on a new car they could lever it to borrow an extra $150,000, possibly putting more pressure on the property market.”
Shareclarity, a ‘crowd-sourced’ stock research platform launched last year in New Zealand with ambitions to expand globally.
Kieser is a finalist in the INFINZ ‘University of Auckland Business School Emerging Leader’ award with the winner due to be announced at an Auckland ceremony on May 19.