The Advisor’s Guide to Innovation Opportunities Within Mobility

Adjusted for inflation, the cost of owning and operating a new vehicle hasn’t budged since the Model T rolled off the first assembly line in 1934: $0.70 per mile. 

That cost has been anchored in the 19th century transportation technology upon which humans still rely today, according to Tasha Keeney, analyst at ARK Invest. The convergence of artificial intelligence and battery technologies within the mobility space could disrupt transportation completely, radically reducing costs and benefiting consumers, presenting a unique investment opportunity.

“Thanks to lower costs and freeing people from the burdens of driving, autonomous vehicles could increase consumer purchasing power while becoming one of the most impactful innovations in history,” Keeney wrote. “More importantly, autonomous vehicles could save lives, as human error is responsible for the vast majority of fatal auto accidents every year.”

The success of autonomous electric vehicles will depend on lower battery costs that will make them competitive with gas-powered vehicles. According to ARK’s research, a 350-mile range EV will be competitive on a sticker price basis with a comparable gas-powered car in 2023.

At the same time, battery technology itself is improving, Keeney wrote. According to ARK’s research, flight energy reserves now can meet FAA regulations, enabling air taxis and air ambulances to fly safely, and electric propulsion can be customized to form factors smaller than those associated with internal combustion engines. Improvements increasing the energy and power density of batteries should enable many other forms of autonomous transport.

Artificial intelligence (AI) is central to the cost declines expected in transportation — a prime example of the convergences occurring between and among ARK’s five innovation platforms. Optimizing path planning, reducing accidents, and increasing auto utilization rates, AI could eliminate many of the inefficiencies associated with human drivers and remote pilots today. Those improvements, in turn, could result in a near order-of-magnitude improvement in costs across multiple domains.

Investors can gain exposure to companies focused on autonomous technology and robotics with the ARK Autonomous Technology & Robotics ETF (ARKQ).

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