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• Transport that sounds like the stuff of science fiction – such as robo and flying taxis, hyperloops and even commercial flights to Mars – is either in the works or already a reality.
• Electrification will be vital in reducing transport’s contribution to over 16% of global greenhouse gas emissions.
• Efficiently managed fleets of self-driving cars could revolutionise vehicle ownership and pose an existential threat to established manufacturers.
• Tech companies behind autonomous vehicle software may prove best able to profit from this new world order.

Let’s travel forward in time for a long-distance commute 2050-style.

Our journey should illustrate why the decarbonisation of transport, one of the themes within Fix the Future’s technological change megatrend, has such disruptive potential. It is also intimately connected with other major investment themes, such as the energy transition, and AI and automation.

A 600km commute… in 60 minutes

No virtual reality headset needs to be donned for today’s morning work meeting. An in-person get together has been scheduled in the Los Angeles office a mere 600km (370 miles) away from your San Francisco home. An hour should be plenty of time to get there.

A driverless pod pulls up outside your door as scheduled via the booking app. Autonomous electric vehicles (EV) are so quick as well as safe that the 5km journey to the hyperloop hardly gives you any time to work out using the in-pod gym equipment.

On being dropped at the hyperloop terminal, you swap one pod for another. With a small group of fellow passengers, you’re flung at 1,100km per hour through a partial vacuum inside a 565km steel tube. You arrive in downtown LA 35 minutes later.

You head straight to the on-site vertiport to catch your electric flying taxi. It’s a swift vertical take-off and a brisk 29km cross-city flight to drop you a whisker from your destination. You grab an electric scooter to complete the final kilometre of your journey and join your colleagues on time and ready to go.

What a breeze. And all powered by green electricity and hydrogen.

Getting to next month’s away day on Mars is going to be more of a pain.

Science fiction made reality

While this 2050 journey sounds like the stuff of science fiction, all these technologies are either in the works or already a reality.

Ride-hailing apps and so-called micro-mobility (shared-use electric scooters and bikes) have become part of everyday life already. In the US, on the streets of Phoenix and San Francisco, robo-taxis are in use. The same is true in Beijing and Shanghai. The electrification of transport is also in full swing, which provides a key route to decarbonisation, especially as more electricity is sourced from renewables.

Flying taxis – also known as eVTOLs, which stands for electric vertical take-off and landing – are less close to being a reality. But significant money and work is being employed to develop them. And several companies are planning hyperloops, a truly sci-fi sounding technology that was actually originally conceived in 1799.

And don’t forget the away day on Mars. Rocket maker SpaceX is working on getting us there. The red planet is where the company’s founder, Elon Musk, who is a pivotal figure in the current transport revolution, hopes to live out his days.

We should all be begging for these changes. Were it not for the amazing social and commercial advantages that modern transport has brought, the industry, and especially road transport, would likely be seen as an even greater pariah than tobacco.

Why?

For one thing, it’s a major killer. Globally, road deaths are estimated by the World Health Organization (WHO) to total 1.4 million a year. A disproportionate amount of these deaths happen in low- and middle-income countries. Exhaust fumes are also a major contributor to air pollution, which the WHO classes as one of the biggest global killers of humans, at 4.2 million lives a year.

And then there’s the carbon. Transport is estimated to be the source of over 16% of all greenhouse gas (GHG) emissions. Road transport is the biggest contributor at about 12% of global GHG. Aviation punches above its weight because its 2% of emissions are made at altitude, which is judged to have a worse environmental impact. Meanwhile, shipping, also at about 2% of total emissions, releases many horrible pollutants as well as carbon.

Finally, there is the time that we lose when driving and commuting. Some estimates put the average amount of time an American spends driving at 18 days a year. Huge amounts could be achieved if this time could be used constructively inside well-designed autonomously driven pods.

Changes and challenges

A big question for investors is where the best opportunities for profit lie in this new transport ecosystem. The traditional automotive industry is mature and, except for a few totemic luxury brands, such as Ferrari, has horrid economics.

For incumbents, a low-carbon revolution in transport could make life even more challenging. Factories dedicated to internal combustion engine (ICE) vehicles will need to be converted or closed. Meanwhile, electric vehicle challenger brands, such as Tesla and Polestar, threaten their place in the world of low-carbon transport. 

Consultancy McKinsey estimates that current regulation means about 45% of vehicle sales will be electric by 2030, which is well below the 75% that it reckons is compatible with net-zero emissions. This suggests further regulation pushing manufacturers toward increased EV production is likely.

Autonomous vehicles could also represent an existential threat for established players.

Given most cars spend about 95% of their lives parked, efficiently managed autonomous fleets potentially mean far fewer cars on the road. Replacement rates would need to be much more frequent, but the bargaining power of fleet owners would also be stronger than that of the individual buyer.

Self-driving cars could also curb demand for costly over-engineered vehicles that chiefly – dare we admit it – appeal to the vanity of drivers in favour of efficiency. Meanwhile the provision of in-vehicle features that allow occupants to work, rest and play may take off. Efficiency is also a major consideration because electric vehicles are resource-hungry beasts consuming large amounts of battery materials such as nickel and lithium.

Work by Argonne National Laboratory for the US Department of Energy estimates that the manufacture and disposal of a longer-distance, battery-powered EV produces about 70% more GHG than an equivalent ICE car. Yet even if powered using the current US electricity mix, which draws heavily on fossil fuels, the lifetime GHG emissions of an EV are about half that of an ICE car.

By 2050, assuming electricity from 100% renewable sources, Argonne forecasts total EV lifetime emissions will be closer to one-tenth of one of today’s ICE cars.  

From soft tops to software

The owners of dominant autonomous vehicle software platforms may prove to be in a more powerful position to profit in the new world order than car manufacturers. Unsurprisingly, many high-volume car companies are now attempting to move into this space, often by acquiring stakes in software companies or establishing joint ventures. For example, General Motors owns a majority stake in Cruise, which is one of the companies operating a robo-taxi service in the hustle and bustle of San Francisco. Hyundai meanwhile has a joint venture called Motional with car parts supplier Aptiv. Trials of the technology are planned start this year.

The other robo-taxi company in San Francisco is Alphabet-owned Waymo. Many believe firms with software development at their heart, such as Waymo and Musk’s Tesla, have the best chance of success in developing globally scalable automated-driving platforms.

Robot drivers are also expected to be significantly safer than human drivers, whose errors are estimated to cause over 90% of accidents. They also can be programmed to have far more energy-efficient driving habits.

Commercial applications of autonomous driving technology are expected to arrive as soon as the end of the decade, before more widespread adoption. Commercial uses include delivery drones and last-mile robots as well as autonomously driven long-distance trucks.

Battery technology has developed rapidly to lower costs and make the electrification of transport a reality. However, sharp rises in key battery materials, such as nickel and lithium, both before and during the Ukraine war, is a reminder that commodity prices have a major influence on the development of this technology and EV company profits.

A significant rollout of charging infrastructure is also needed and batteries cannot yet provide sufficient power for heavier vehicles such as trucks and planes. For the manufacturers of these vehicles, developments in hydrogen fuel cell technology and biofuels may offer the answer.

All of this means that 60-minute, 600km trip may be some way off, but it is the road the transport industry is travelling on.