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The Next Disruptive Wave

Posted January 7, 2016

GM President Dan Ammann believes transportation will change more in the next five years than it did in the last 50.

Transportation is the building block of society. New York City is where it is because of the Hudson River and the Erie Canal. Ports, canals, railroads, and roads... ships, boats, trains, and cars... wind, peat, coal, and oil...

Suburbs were created because of the automobile. Rome conquered the world at least in part due to roads. The reason we have time zones is because of railroads.

When change happens to basic transportation, it disrupts whole cultures. Where people live, work, and play changes. So does how they spend their time, money, and energy.

AV Culture Disrupter

If you think about the insurance, professional drivers, independent mechanics, dealers, renters, valets, car washers, mini-marts with gas pumps, tire shops, aftermarket parts, sound guys, driveway pavers, and on and on... a huge part of our economy is built around the automobile.

That's not even getting into the money that is collected and spent on roads, bridges, and other infrastructure. Whole groups of people who have been living off state graft will have to find new ways to sponge money from taxpayers.

It is no wonder Dan Ammann, GM CEO, is looking at an accelerating pace of change.

He is so concerned that he spent half a billion dollars buying a piece of Lyft. Lyft is like Uber, a ride-sharing company that is destroying the current taxi system. And it is happening faster than you think. One taxi company in San Francisco just announced bankruptcy this week.

Other companies are chasing the dream as well:

  • Ford is partnering with Google.
  • A consortium of German automakers bought Nokia's mapping assets.
  • Uber partnered with Carnegie Mellon's robotics department and hired 50 of them into the company.
  • Apple is working hard on the Apple Car.
  • TomTom CEO says its maps are destined for use in self-driving cars.
  • Tesla activated advanced driver assist and plans to technically make self-driving cars safer than human driving within two years.
  • Toyota said it will activate data-gathering on all of its cars to improve its self-driving software by 2020.
  • Ford CEO Mark Fields sees the potential for fully autonomous cars to be available for use on U.S. streets in four years.

Elon Musk says that not having a self-driving car in 15 years will be like still owning a horse.

Furthermore, much in the way this year's biggest Christmas present — the hoverboard — was spawned by 1,000 Chinese factories at the same time as the component parts reached widespread availability, the broad penetration of AVs will cause an explosion of other products. Think humanoid robots.

According to McKinsey Report:

... the two share many technologies. These include remote advanced sensing, hyperprecise positioning/GPS, image recognition, and advanced artificial intelligence. In addition to sharing technology, AVs and robots could benefit from using the same infrastructure, including recharging stations, service centers, and machine-to-machine communication networks. These commonalities might push multiple players to invest in both applications, as already shown by the significant investments in robotics made by selected automakers and high-tech players.

Technology like this acts as a snowball rolling downhill. The Internet changed society as we know it. There is a clear line before and after mass acceptance of the Internet in 1995. If you bought AOL, Yahoo!, Dell, or a number of other select stocks, you could have retired in 1999.

The difference with AVs will be even more profound because we are talking about physical geography.

In addition to transforming the automotive industry, the rise of autonomous vehicles will likely have a profound impact on every sector of society from housing to employment to art. And it will make a select few investors very rich.

Change is good,

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Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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