Van’s note: Van Bryan here, Jeff Brown’s longtime managing editor. At the end of every year, I sit down with Jeff to discuss his biggest predictions for the coming year. Remember, you can always catch up on earlier editions in this series by going here.
Today, Jeff and I discuss the “Future of Transportation,” the convergence of technologies that will give rise to electric, self-driving vehicles.
Can anybody catch Tesla? What is Google up to with its self-driving vehicles in Arizona? And will Apple take the plunge into the electric vehicle market?
All the answers, and more, below…
Van Bryan (VB): Jeff, let’s discuss “The Future of Transportation,” one of your investing themes at Brownstone Research. And let’s start with your prediction from last year: You predicted that Tesla would release a self-driving update that would allow the cars to drive themselves in almost any condition. Do you think you got that one right?
Jeff Brown (JB): Absolutely. Tesla released version 10.5 of their self-driving software on a limited basis in October. And this update can do exactly what I predicted, drive in virtually every condition.
Busy city streets, winding roads, freeways, it doesn’t matter. There are some remarkable videos online where readers can see it for themselves. One that caught my attention was a Tesla driving nine and a half hours without ever disengaging from its self-driving mode. It looks freakishly good.
[Van’s note: Earlier this year, Jeff got to test an earlier version of Tesla’s self-driving software. For any readers who missed that demonstration, go right here.]
The next step will be to make this full self-driving software available to all of its customers. In 2022, it will be widely acknowledged that Tesla has the most advanced artificial intelligence applied to autonomous driving technology.
And what few people know is that Tesla accomplished this by configuring its entire artificial intelligence into a neural network.
VB: Could you explain the significance of that?
JB: Rather than programming the artificial intelligence to react based on experiences, imagine taking a human brain and then walking it through millions, if not billions, of miles of data.
The significance of a neural network is that it’s loosely modeled after a human brain. So Tesla’s cars essentially “learned” how to navigate any driving condition. And it’s done it brilliantly.
VB: You’ve predicted that Tesla’s ultimate goal is to create a network of “shared autonomous vehicles,” or “SAV.” It would basically be a fleet of robo-taxis to directly compete with companies like Uber. Do you think Tesla will get there in 2022?
JB: The idea of a SAV network is really Tesla’s masterstroke. We can imagine driving our car to work… Once we get to our destination, we could instruct our Tesla to “join the fleet.” The Tesla would then provide ride-hailing services while we’re at work and it would return to us at the end of the day.
Historically, cars have been depreciating assets. But with a SAV network? Our car literally becomes an income generator.
Will we get there in 2022? I don’t think we’re there just yet. And the reason has nothing to do with Tesla. I fully expect Tesla will have all the necessary technology in place to make a SAV network a reality. However, Tesla is still going to need regulatory approval. This is really the last hurdle.
But once the regulatory approval is taken care of, Tesla’s SAV network will launch shortly after. One day soon, we’ll hail a cab and find nobody sitting in the driver’s seat. The car will literally be driving itself.
VB: I’d like to follow up on another self-driving prediction you made last year. You predicted that Waymo – Google’s self-driving division – would sign a licensing deal with an automaker to use its self-driving technology. I don’t think that happened in 2021.
JB: [Laughs] Well, Mr. Bryan. I’d point out that I still have a few days left in the year. So I won’t admit defeat just yet. Maybe I’ll get that one right.
But even if that doesn’t happen this year, I believe the discussions are already underway in boardrooms all over the world. And the reason is simple: Tesla is dominating the electric and autonomous vehicle market right now. Half of all EV (electric vehicle) sales in the U.S. are Teslas.
And then we should consider Apple. The company has essentially put a stake in the ground and made it known that it intends to enter the electric-autonomous vehicle (EAV) market as well.
Automakers are going to be paranoid. They know they need to enter this market quickly. And many of them will turn to Google’s Waymo.
Remember, Google’s strategy isn’t to be an automaker. What they want is to own the operating system of the car. What the Android operating system is for smartphones is what the Waymo self-driving software will be for cars.
Take a look:
My prediction is that we will begin to see more of these geo-fenced environments where customers can take rides in a Waymo self-driving car.
VB: What companies do you think would license Google’s self-driving technology for their vehicles?
JB: We’re already seeing several legacy automakers make progress with their self-driving divisions. GM has Cruise. Ford has Argo AI. We’re starting to see very clear delineations on future partnerships.
That said, there are also several automakers that don’t have any autonomous technology. Some of them are legacy carmakers that just haven’t done the work.
And then there are new EV upstarts that have focused on just building a great electric vehicle, but never did any work on self-driving capabilities. Those types of companies will be easy targets for Waymo.
VB: You’re talking about newer companies like Rivian and Lucid Motors?
JB: Exactly. Both of those companies went public this year, by the way. And there are so many more that are still private. This is such a land grab right now.
And when you look at some of the other companies that went public this year, what you see is lidar-related IPOs, autonomous tech IPOs, and even battery companies. All of this tells me that the EAV trend is not slowing down.
VB: I’d like to ask you about something you said earlier… You mentioned that Apple is planning to enter this market. What makes you say that?
JB: One of the implications of EVs is that these vehicles are becoming more like large consumer electronics products. And Apple is arguably the world’s most successful consumer electronics company.
And Apple’s EV ambitions are something of an open secret. The company has code-named its EV initiative “Project Titan.” I know a lot of people are skeptical that Apple would enter the EV space. But the company has surprised us before.
We should remember that when Apple launched the iPhone in 2007, it was widely misunderstood. Apple was mostly known for its computers and the iPod at the time.
Of course, the iPhone became the most iconic consumer electronics product in history. And I believe Apple is going to surprise the world again when they release an electric vehicle.
VB: We’ve mostly talked about electric, self-driving passenger vehicles. But what do you see happening for logistics and shipping?
JB: One of the big things we’ll see next year is autonomous technology applied to trucking. And my prediction is that it will be most widely used to transport goods from one distribution facility to another.
What I mean is that we’ll see self-driving semi-trucks shipping goods from a port to a distribution facility. Or it will be used to transport goods from a distribution facility to a smaller warehouse. We’re already seeing this.
In the last few weeks, I’ve been sharing some of these stories with readers of The Bleeding Edge. One involved a Swedish autonomous trucking company called Einride. A fleet of these vehicles is now deployed at General Electric’s campus in Louisville, Kentucky.
Einride Autonomous Truck
And then there is Walmart. The company has been using autonomous semi-trucks to move goods between distribution centers in Arkansas.
Walmart Autonomous Truck
Most of the trips that these trucks will go on will be straight along the highway, so these trucks will run very long routes that happen every day. And when they arrive at the distribution center, an experienced driver can remote-control the vehicle into the docking bay.
We’re just starting to see this now, but it’s going to start becoming more commonplace in 2022.
VB: Thanks, Jeff. Anything else you’d like to add to this theme before we conclude?
JB: What I’d like readers to know is that we are still at the very beginning of this trend. I’ve been publishing research on electric and self-driving vehicles for more than five years, but there’s still so much more to look forward to.
It has really just been the last two years that electric vehicles have taken off.
This will be a decades-long trend – and we’ll have some incredible investment opportunities along the way.
VB: Thanks, Jeff.
P.S. Tune in tomorrow for Jeff’s next prediction. We’ll be sitting down to discuss cryptocurrencies and blockchain technology.
I’ll ask Jeff where he sees bitcoin going, what crypto ETFs mean for the industry, and he’ll reveal why he finally launched his dedicated cryptocurrency research service, Unchained Profits..
And as Jeff shared today, the electric, self-driving vehicle trend is just getting started. It will be one of the most profitable investing trends of the next decade. And to prepare, Jeff recently revealed the name of his #1 EV stock to buy today. Click right here to learn more.
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