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Why investors are chasing autonomous self-driving vehicles?

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2020 was a challenging year for the investment community. However, that didn’t stop the excitement for autonomous, electric and smart vehicles. In fact, it continues to grow. 

There are crucial changes coming to the automotive industry in the next 5 years. New vast opportunities are opening for economic growth in multiple sectors. Driven by the change in the fossil fuel market, as well as governmental injections. In an attempt to recover the economy, governments have devised a strong green agenda focused on new technology and climate change projects. 

One thing is certain – The way we drive and travel will change in the future. Let’s review some of the activities from 2020 and the market developments.

 

The UK Market

Recently, the UK government released a report estimating that connected and automotive vehicles (CAV) will be worth around £42 billion by 2035. Which seems almost unbelievable. Investments and development can provide thousands of jobs in the automotive, as well as other industries. Providing an overall growth in the economy. 

Transport Minister Rachel Maclean said:

The investment in and development of CAVs could truly transform the way people and goods are transported, with innovation like this at the heart of our ambition to build back better.”

One case study is the government’s investment in test mobility services using 5G technology in Milton Keynes. £4 million of funding will be used to create and test driverless shuttles, road and autonomous surveillance vehicles, drones and robots. All of these technologies will have numerous uses in transport, safety, delivery and hospitality.

Overall, the whole market situation looks very promising. The government has already invested £200 million into CAV research and development. In addition, British start-ups have raised millions of dollars in investments on international level.

 

The USA Market

While there is no doubt that the UK is well-placed in the race for CAV development, it’s also worth mentioning what is happening in the US. 

Rivian

Rivian raised $2.65 billion as it prepares for production of its all-electric pickup truck. Expected this summer. The company is now worth more than $27 billion. In 2018 they revealed their electric sport utility vehicles (SUV) and pickup truck. The event attracted lots of attention and investments, including from Ford Motor Company, Amazon and funds managed by BlackRock.

Microsoft

In other news, Microsoft has recently invested $2 billion in GM’s Cruise self-driving cars unit. The aim is to accelerate the automaker’s digitization initiatives, including in artificial intelligence. As well as explore opportunities to streamline operations across digital supply chains and bring new mobility services to customers faster.

Tesla

There is certainly also a lot we can say about Tesla, whose CEO Elon Musk is now the richest person in the world. During 2020, Tesla managed to not only hit its sales targets, but generate a high profit. Though that doesn’t stop the company’s stock share from constantly fluctuating. A definite risk for potential investors. Nevertheless, current investors make billions of dollars in profits. For instance, Baillie Gifford has made $29 billion for its investors in 2020. Analysts expect that Tesla will increase its profit from sales even further this year.

SPAC

It’s worth mentioning the recent extensive use of the SPAC, i.e. special-purpose acquisition company. It’s an alternative route to public markets (instead of a traditional IPO) allowing automotive companies with big ambitions but limited track records to raise money. Especially useful for battery manufacturers or developers of key sensors for self-driving cars. In the US stock market the overall capitalization of these “blank-check companies” approaches $60bn. Given the explosion of electric vehicle makers lately, it isn’t surprising that Lucid is involved in a SPAC which might be valued at $15 billion. Regarding the CAV sector, Luminar Technologies Inc., which makes Lidar sensors (they provide vehicles with a three-dimensional view of the road) raised $590 million from the merger with Gores Metropoulos Inc.

 

As you can see, the autonomous mobility industry is growing and developing fast. It is quickly becoming more and more worthwhile to invest in. Here at Y-Mobility we have extensive experience and a large network of investors interested in funding the future. Innovative technologies could make our transport network more accessible, safer and more efficient. Yet another reason to get involved.

 

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