First signs of disruption for private car ownership and public transport
Ride-on-demand (ROD) platforms are already the fourth most frequently used transportation mode. ROD apps are very popular: the run-rate of downloads has stabilised at c10m/week, while usage continues to increase and the addressable market is expanding.
The UBS Evidence Lab consumer survey of 17,000-plus respondents across six markets shows:
- some early signs of behaviour change; and
- ROD could disrupt both private car ownership (the weight of respondents not purchasing a car because of ROD has doubled, reaching 8% in 2019 (vs 2018)) and public transport (ROD is increasingly used for the daily commute).
The acceptance of robotaxis by consumers is relatively high for a technology that has yet to become available and mainstream. Should the auto industry and public authorities be worried? We do not think so, as the impact on new car sales should remain immaterial in the medium term. Furthermore, the launch dates of commercial robotaxi fleets continue to be delayed, and we do not see a sharp boost in the adoption curve before 2030 at the earliest.
No price war in sight; robotaxi launches should push prices lower in the long term
The ROD industry continues to fragment with regional players gaining further momentum. However, we have no evidence that pricing is about to turn more competitive – quite the opposite, in fact: fewer than 5% of the markets we track globally have experienced a price decline since 2016. Nevertheless, we see downward pressure on the pricing outlook in the long run, mostly driven by the introduction of robotaxi fleets: UBS Evidence Lab's unique robotaxi simulation showed the fare paid by passengers could fall by more than 80% (less than US$3).
Sub-sector/stock implications: Pure ROD players, semis and tires preferred
Sectors benefiting the most include internet, semis, and tires. Some players will be able to capitalize on broader secular trends around adoption and use of ROD while leveraging their scale to efficiently match supply/demand. Semis should deliver strong growth, due to higher content. Tires will leverage the higher number of miles driven. Incumbents are catching up fast.