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When you call an Uber in London, you nearly always expect a Toyota Prius to pull up, so synonymous with modern driving the hybrid model has become, just over 20 years since its release.
While those of us living in city centres are now accepting these quasi-electric vehicles as commonplace, electric vehicles (EVs) are still seen by many as a relatively new invention. Yet this is not the case; EVs can be dated back more than a century2 and for many years, the main hurdle was trying to develop a battery that could compete with gasoline cars in terms of size, distance, cost and speed.
Electrification is just one of four categories of investment that taps into the theme of mobility. Recognising the rich opportunity, The Boston Company now has a dedicated fund that will also explore companies linked to connectivity, being autonomous and sharing.
If ‘mobility’ means the ability to move or be moved freely and easily, adaptability, flexibility and versatility are key concepts. Both inside our vehicles and the roads on which we travel, technology is revolutionising the transportation industry.
As might be expected, this investment universe is fundamentally global. The BNY Mellon Mobility Innovation Fund could include such companies as a Canadian lithium producer to an artificial intelligence company in Russia. It might look at a robotics firm in Switzerland, or Italian cable manufacturer and US-based companies ranging from car sensors to user experience software.
Spanning continents and industries while casting its net from forward-thinking innovators at one end to traditional sectors at the other, The Boston Company’s interest lies in companies with a shared vision of advancing mobility innovation.
This is where the rubber meets the road – literally. While most investors will be familiar with the growing trend of driverless cars, it is worth remembering that these cars cannot necessarily drive on today’s roads. For the biggest opportunities, the team is looking further ahead, with advancements in driverless vehicles already leading to data and infrastructure growth, according to George Saffaye, a member of the Mobility Innovation investment team at The Boston Company.
He says: “Given the scale of technology required to support autonomous driving, the opportunities in areas such as data management, semiconductors, cloud computing and next-gen 5G low latency-high bandwidth communication systems are significant.”
This is driverless cars themselves. Those old enough to remember David Hasselhoff’s adventures in Knight Rider, may feel a little nostalgic. Yet the idea was around before the 1980s; interest in autonomous vehicles (AVs) stretches back to the 1920s when a radio-controlled car was driven through Manhattan without anyone at the steering wheel.3
As technological advancements have propelled AVs from hype and fiction into everyday life, the major car manufacturers are now stepping up their games. Google kicked off mainstream development in the AV space in 2009 with its self-driving project, but by 2013 several of the major automotive companies including General Motors, Ford, Mercedes Benz and BMW were working on their own self-driving technologies.4
According to The Boston Company, urbanisation will drive demand for ride sharing as a cost-effective and energy efficient mode of transport.
The group says: “Annual congestion cost is US$160bn in the US, including seven billion hours of lost time and three billion gallons of fuel burned. Today, consumers use their vehicles for every purpose; in the future, they will choose an optimal mobility solution for each different specific purpose.”
But despite the arguments in favour of ride sharing, with some likening it to carpooling or using public transport, it may be a while before it takes off.
Global consultancy firm McKinsey said in a report last year that the success of ride sharing will depend on how accurately the underlying system can predict supply and demand. In other words, cities will need to deliver a massive bank of data to be collected, analysed and put to work.
Electrification and battery technology are moving far beyond cars, with Saffaye expecting huge future demand on the power grids and distribution networks.
“[This will create] opportunities in battery storage to support peak electricity demand, smart meters to regulate energy usage, and renewable energy,” he says.
From 1997 when the Prius became the world’s first mass-produced hybrid EV, to 2006 when Tesla Motors launched a luxury electric sports car capable of driving for more than 200 miles on a single charge, through to supporting our energy infrastructure, electric vehicles look only to be driving in one direction.
If you are unsure which type of investment is right for you, please contact a financial adviser.
- 1 Effective on 31 January 2018, The Boston Company Asset Management, LLC (TBCAM) and Standish Mellon Asset Management Company LLC (Standish) merged into Mellon Capital Management Corporation (Mellon Capital), which immediately changed its name to BNY Mellon Asset Management North America Corporation.
- 2 https://www.energy.gov/articles/history-electric-car
- 3 Digital Trends – History of self-driving cars. As at January 2018.
- 4 Ibid