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Investing for the future of the auto industry: autonomous mobility

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February 24, 2017, 9:32 am

The century-old automotive business model is facing an unprecedented technological disruption. As the auto industry continues to embrace autonomous, shared and electric mobility, it is fast becoming the face of innovation – and investors are taking notice.

Stephen Stribling

Stephen Stribling

On average, current vehicles are in use for about an hour each day, yet account for almost half of the world’s oil demand and approximately 3,500 deaths worldwide.  With statistics such as these, it is no wonder that companies are creating new ways to improve consumer experience, sustainability and public safety.

It’s important to remember that investing in the autonomous auto industry comes with risks and those interested should conduct lengthy research and possess a great deal of patience before making any decisions.

But for those with higher risk tolerances, consider opportunities beyond just those at the forefront of the movement (major auto manufacturers, mobile taxi services, new electric car manufacturers). Consider those who manufactures the components necessary to the innovation. Look below the surface to the suppliers such as the chip companies, sensor companies, optical companies, satellite companies, and ceramic material companies, just to name a few.

Here are some other growth areas to keep an eye on:

  • Chemicals: If the demand for electric vehicles increases, an increased supply of battery-grade lithium will be needed. Lithium producers could benefit significantly from higher consumer adoption of electric vehicles.
  • Electric Utilities: Electric energy will be in high demand as we shift from pump to plug-in charging. A transition to electric vehicles could be equal to one-third of total U.S. energy demand.
  • Telecommunication Systems: An essential component of the autonomous ecosystem, telecom technology will be relied heavily upon to connect vehicles to each other and to infrastructure.

I fully believe that autonomous vehicles will be a common site in the near future. Seeing how modes of transportation has transformed over centuries from horses to vehicles to trains to planes, autonomous vehicles seems to be the next natural frontier. There are many possible improvements that could open the doors for new investment opportunities.

The speed and extent of the move toward autonomous driving ultimately remains uncertain as it’ll remain largely dependent on external forces such as regulatory developments, the rate of consumer adoption and the competitive environment.

However, while many of the benefits may take time to fully play out, it’s always worth keeping one eye on the future.

Stephen Stribling is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Denver. He can be reached at 303-572-4889 or stephen.l.stribling@ms.com.

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.  Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.

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