Bill Gates once said, “people overestimate what can be achieved in one year, but underestimate what can be achieved in ten years”. This is especially true of the disruptive nature of technology. It seems so far away until suddenly its right in front of you. That is exponential growth at work.
Consider driverless vehicles. This one technological subset will probably be the most visible example of hundreds that demonstrate the convergence between automation, robotics, and artificial intelligence. Not just cars but trucks and every other mode of transport that currently requires a human to drive it. They will not only be autonomous robots they will be connected learning machines aggregating data from all users across the globe to create massive efficiency.
Soon enough families will no longer own a car. They will subscribe to Transport-as-a-service. It will save them thousands of dollars a year and be incredibly efficient. Not to mention hundreds of hours a year of time freed up for each person. By 2030 this will likely be a reality. By then many industries will have changed significantly and the companies that are the winners and losers already defined.
Imagine the not-too-distant future where you have an appointment. You won’t need to order the car; it will know your routine and schedule. The driverless Tesla connected with Uber and integrated seamlessly to your calendar will send you a notification upon approach. The car will arrive at your front door exactly at the time required to ensure you are at your destination on time. It will consider the traffic and weather conditions and know if you will be out the front waiting or dawdle out 5 minutes later.
Their integration though will not be without challenges or controversy along the way. They will eliminate millions of jobs, most obviously it means no more truck drivers, bus, taxi, or train drivers. Yet as we have seen throughout history, it is likely that many millions more will be created in industries that are only just emerging or not yet invented. Upskilling, education, and entrepreneurship will boom.
With over 90% of road accidents resulting from human error they will prove to be significantly safer than human drivers. But they won’t be perfect and no doubt the media will spark fear with every mishap or accident until they become mainstream. But once driverless vehicles are adopted across the board, they will virtually eliminate road deaths and road accidents. Insurance companies and road safety authorities will all be on board and in the end, statistics will win out and lives will be saved.
It has massive implications for not just the economy but society. Frees up first responders, police, paramedics, emergency wards, massively reduced insurance premiums, no one will own a car, no need for car parks as cars will operate 24/7 stopping only for maintenance, no more smash repair businesses because there are no crashes. No more car theft. Massive reductions in pollution. As with all computing devices they will become cheaper and more powerful over time. It will ultimately reduce the costs of logistics and the price of goods.
Agriculture, mining, manufacturing, and logistics are all industries that will see once in a lifetime reduction in costs and increases in productivity. This will translate into significant increases in profits, equating to increased returns for shareholders both from dividends and higher stock prices. We are talking about trillions of dollars globally.
This is not an incremental change; it’s going to completely change the world. All this from just driverless vehicles. So, consider the dozens of similar changes that will occur in other industries from retail and hospitality to health and finance as automation, robotics, and artificial intelligence become standard.
It is my view that investors are too focused on the short term and medium term and drastically underestimate the real pace of change. As these changes occur at an ever-accelerating rate it is more important than ever to position your portfolio for the long term (10 years plus). Investors need to consider more deeply what the future will look like, the companies that will transform it, those that will be out of business because of it and those that can adapt and will benefit from it.
This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from an investment adviser who can consider if the strategies and products are right for you.