5 Questions with SmartETFs: The Transportation Revolution

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Viewpoints investors are captivated by investments in a changing world. One area that continues to ignite viewpoint investors’ interest is the revolution toward “smart” transportation. To learn more, we spoke with SmartETFs, creators of The SmartETFs Smart Transportation & Technology ETF (MOTO). MOTO invests in companies that manufacture, distribute, service, offer, support, or enable electric vehicles, autonomous vehicles, transportation as a service, flying autonomous vehicles, and more.

TIFIN Personality: So what really is “smart” transportation?

SmartETFs: When we talk about smart transportation, we mean several things, all of which represent considerable improvements over today’s transportation landscape. Smart transportation is autonomous vehicles (AVs) and electric vehicles (EVs). It is vehicles seeing and communicating with each other. It is ride sharing and transportation as a service which will result in considerable savings for consumers. It is the efficient use of vehicles rather than having them be parked 95% of the time. It is the autonomous delivery of goods or even flying taxis. We see it as better and cheaper public transit. It is hyperloop and other forms of faster, more efficient ground transportation. It is less time in traffic, more inclusive, and thousands of lives saved. It is less pollution. All of which we consider to be pretty “smart.”

TIFIN Personality You hear a lot about the environmental argument for EVs, but it sounds like it’s a lot more than that?

SmartETFs: Correct. The future of transportation isn’t just about benefits to the environment. EV/AVs can improve lives through helping underserved communities, increasing accessibility, enhancing safety and more. Say goodbye to drunk drivers, for example, or people falling asleep at the wheel!

It’s also about giving people more time which they can use productively while in transit, or not needing massive garages and parking in their communities. The AV of tomorrow will likely be built around the functionality on the inside. Perhaps a sitting area, a desk, and place for internal storage instead of a trunk. And all this increased functionality will come at a reduced cost; we expect significant cost savings as the technology improves.

TIFIN Personality: That’s quite a revolution. What do you see the next 5-10 years or so looking like?

SmartETFs: The early stages of the revolution may not look like much. But, if the future of transportation is even partially as it might be then we are about to experience profound changes in the way we live. The transportation revolution could mean that electric vehicles completely replace gasoline powered vehicles…which we think is a rather obvious prediction at this point… self-driving cars become a reality, autonomous flying taxis begin serving customers, and autonomous transportation as a service could mean many, if not most, will not own their vehicles.

Some of this may sound like a fantasy, in particular flying taxis. But many companies are already testing these vehicles. One thing about flying taxis is that the challenge of autonomous flying is in many ways less daunting than the autonomous car.

TIFIN Personality: What are some potential setbacks to this disruption?

SmartETFs: As with most major change, some will be reluctant to adapt. This is most obviously a risk for autonomous vehicles. Public perception and regulatory issues can slow things. But in the long-run, the course is clear and it’s a question of when, and not if.

TIFIN Personality: Who are some of the winners and losers as this space evolves?

SmartETFs: This really depends on how we adopt/deploy the technologies. The most obvious set of winners will be the first few to crack the autonomous vehicle challenge. But we don’t know whether we’ll all buy our own autonomous vehicles or whether we’ll shift as a society to a transportation as a service model. This model is attractive because without a driver transportation as a service takes the cost of transportation from approximately $1.00 per mile to around 10 cents a mile. That’s a huge savings and can mean a revolution in car ownership with consumers abandoning completely the own and drive model in favor of the on-demand service model.

The tech industry will likely be a big beneficiary as the need for semiconductors, cameras, sensing equipment, mapping software and other technologies increases. The shipping/freight industry should see profit margins and shipping volume increase given the lower cost of shipping due to autonomous driving and the lower cost of operating an electric truck.

Automobile manufacturers will have to adjust as EV’s replace ICE vehicles. But they also need to think about how they evolve in an environment of autonomous vehicles. Some automobile manufacturers have a large lead in both areas. Some will be winners… some will not.

But in the end, we see the real winners as the consumers, enjoying safer and cheaper transportation with a lower cost to the environment. There are four groups that have been termed transportation disadvantaged: the elderly, the poor, the disabled and the young. Autonomous vehicles can help bring these groups into society generally and as consumers and/or workers. And that’s good for everyone.

 

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SmartETFs provides compensation to TIFIN Grow, LLC or one its affiliates to be a sponsored fund which provides the fund greater visibility. TIFIN Grow, LLC has a financial interest to promote and market investment solutions from SmartETFs that can conflict with the interests of its clients. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs.

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