CIO expects substantial growth in smart mobility during this decade, as it revolutionizes both the car industry and the way we use automobiles.
The dependency on fossil fuels and the price developments at the pump have shone a spotlight on the issue of mobility. We think the push toward reducing emissions and becoming less dependent on fossil fuels–– particularly given the geopolitical situation around Russia's invasion of Ukraine––has received a boost and will put this investment theme back into focus, even increasing its growth potential. Looking at research and
development, capital expenditure, and the resulting robust product lineup of manufacturers, this theme should enjoy strong momentum led by Europe and China, with many of the headwinds priced in across the
whole value chain. We think investors underexposed to this long-term investment theme and willing to tolerate potential volatility ahead could add to positions.
We also note the long-term drivers of consumer preferences are rapidly changing due to higher tech affinity, regulatory pressures and incentives, and the desire for a net-zero carbon economy. As a result, governments,
societies, and consumers alike are focusing on smart mobility, with the US catching up as well.
Projections and opportunities
We estimate at least 30% of new vehicles sold globally to be electrified by 2025, with at least 15% being battery electric.
- Autonomous driving
By 2025, around 80% of all new cars could be equipped with some kind of basic autonomous, highly lucrative equipment.
- Safety concerns necessitate smarter transport
In 2018, more than 1.35 million people died from traffic accidents worldwide—more than 3,700 per day.
- Smart mobility
By 2025, we estimate the annual addressable market of our theme to be around USD 465 billion, or 3 times to-day’s size.
- Car sharing, car hailing
One car sharing could replace up to 25 private cars, and car hailing 5–10 cars.
- Parking spaces
Roads and parking spaces use up 15–20% of city space. Car sharing should reduce parking and road space needed.
- Sustainable investing
- SDG 3: Good health and well-being
- SDG 11: Sustainable cities and communities
- SDG 13: Climate action
Some near-term drivers of the Smart mobility include, Electrification, Autonomous driving & Car sharing/car hailing
Main contributors - Rolf Ganter, Hartmut Issel, Kevin Dennean
The Longer Term Investments (LTI) series contains thematic investment ideas based on long term structural developments. Secular trends such as population growth, aging, and increase urbanization create a variety of longer term investment opportunities. To learn more, contact your Financial Advisor or go to: ubs.com/lti
For more, see the one pager on the Smart mobility.