There’s no denying that innovative companies are shaping the future of transportation.

Research from Guinness Atkinson Asset Management has found that electric vehicles will increasingly replace internal combustible engines. Additionally, the firm expects that autonomous vehicles will become increasingly commonplace. The convergence of these two technologies becoming mainstream will transform how consumers interact with and consume transportation and launch new industries such as “autonomous transportation as a service,” which has the potential to grow into a $1.75 trillion market over the next decade.

ETF Trends caught up with Jim Atkinson, CEO of Guinness Atkinson Asset Management, to discuss the opportunities in the smart transportation revolution.

What excites you most about the smart transportation revolution?

Jim Atkinson: The magnitude of the changes that may come about as a result of the changes in how we transport ourselves. We think the digital revolution and the internet have been huge and have had a profound effect…and they have. But there is a great deal of potential change coming from the transportation revolution that might dwarf what we’ve seen with the digital revolution. For starters, the smart transportation revolution can save millions of lives annually around the globe including tens of thousands in the United States. Smart transportation can result in large cost savings for consumers. We estimate the average US family can save $6,000 per year on transportation costs. No other single economic event in US history has ever enriched American citizens to that degree. Add to that the ability to free up virtually all of the space currently reserved for parking, which represents up to 25% of urban land areas and you begin to see that smart transportation has the ability to reshape the very make up of our cities. A key element of smart transportation is the electrification of the automobile fleet and EVs, which are significantly more efficient than gasoline powered vehicles, can drastically reduce gasoline/oil use and dramatically reduce emissions.

Okay, it’s big. But, what exactly is meant by transportation revolution?

Jim: At its basic level it is electric vehicles, autonomous vehicles and transportation as a service, which most will recognize as ride hailing or ride sharing. EVs are here now; autonomous vehicles are just starting to enter public service and transportation as a service is here as well. The direction of travel is for more of all of these. But, the biggest impact will occur when these three converge. Should EVs, AVs, and ride hailing services converge then a lot of exciting things begin to happen.

Such as…?

Jim: For one, the cost of transportation could fall by 80%. EVs are cheaper to operate both from a fuel and maintenance standpoint. Autonomous vehicles avoid the cost of the driver. Combine these and you have your cost savings. The average American car sits idle 95% of the time. That’s a lot of capital consumers are financing for a 5% utilization rate. Beyond the financial savings AVs offer a great opportunity to save lives. We don’t think AVs will have perfect driving records but they could well represent a 70% reduction in traffic accidents. Add to this the ability to reduce time in traffic and the ability for the mobility disadvantaged to gain inexpensive access to transportation and you begin to see an accumulation of benefits for society.

What is meant by the mobility disadvantaged?

Jim: The young, the old, the poor and the disabled. For different reasons these groups are not being well served by current transportation system.

How big is the technological demand going to be for the autonomous industry?

Jim: The basics of autonomous vehicles has already been cracked. Several companies are already operating driverless vehicles on public roads right now. By driverless I mean without a safety driver and I mean trucks, buses and automobiles. That said, the technical challenge to get to the highest level of autonomy is a large challenge. If you speak to consumers about autonomous vehicles they tend to raise questions like, “What if a plastic bag gets blown into the street?” These odd, rare and unexpected events are referred to in the industry as edge cases or corner cases. Things we just cannot easily teach a car because they cannot be anticipated. The plastic bag example is really not a challenge because it has been thought of and experienced by the developers. It is the truly rare, the edge cases that the average consumer wouldn’t think of that presents the challenge. Incremental advancements in autonomous driving tend to be exponentially more difficult than previous advancements. The good news is that the hardware is getting better and faster at an exponential rate as well. If you ask autonomous vehicle experts when we will achieve what is known as Level 5 autonomy you will get a large variance in responses. Some say autonomy will be cracked in the next year or so; others say it is five to 10 years away and some will say the answer is never. Waymo, which is Alphabet’s autonomous vehicle effort, is already offering driverless transportation to consumers in Chandler, Arizona now.

How soon could major developments in the industry come to market?

Jim: EVs are here now. AVs are in limited use at the moment. And transportation as a service is here now with Uber, Lyft and others. Waymo has merged two of these developments; autonomy and ride hailing. At the moment these offerings are limited. The major development will really be the expansion of these services and then the convergence of EVs, AVs and ride hailing. It isn’t likely that there will be a big single development. What is interesting is that while many realize EVs and ride hailing are commonplace and recognize that AVs are being developed, most do not realize that huge, disruptive change may be just over the horizon. We believe that we’re at the beginning of the revolution and that the revolution is starting off in stealth mode.

What can go wrong and derail the revolution?

Jim: We’re less concerned about the advancements in technology than we are how people will respond and adapt. How will regulators and consumers respond to driverless vehicles? What happens when a driverless vehicle has a serious safety incident? What will the reaction be? All new technologies have faced these issues. It was once a ridiculous notion to fly. Now it is commonplace. There was even a time when elevators required operators and there was a fear of automatic elevators. It is never easy to predict how a technology will be received or, in some cases, utilized. That said, it is clear that the direction of travel is for electric vehicles, autonomous vehicles and ride hailing. Will they converge as they might? We don’t know. But there is a compelling case for the convergence and the future looks quite exciting.

For advisors interested in learn more about the evolution of transportation, ETF Trends and Guinness Atkinson Asset Management will host a complimentary webcast at 2 pm EST on Tuesday, Dec. 17. Click here to register.