Tesla EVs & FSD Are Big Advantage as Ark Invest Expects Autonomous Ride-Hailing to be $1T+ Business by 2030

Photo: @chaserobertsonn/Twitter

ARK Invest has identified five innovative platforms that are developing today and giving rise to new technological breakthroughs. Companies that are leaders and benefit from these technologies can provide opportunities for long-term growth and capital gains. ARK believes that autonomous ride-hailing platforms could generate more than $1 trillion in operating earnings annually by 2030.

On January 26, Catherine Wood, Founder, CEO and CIO of ARK Invest, discussed technology breakthroughs that investors shouldn't miss in 2021 on the webcast, Big Ideas 2021: Technological Breakthroughs Investors Shouldn't Miss. One of the breakthroughs names was Autonomous Ride-Hailing. 

According to ARK’s research, the ridehailing market today generates roughly $150 billion in revenues globally with take rates of 10-30% and profit margins as high as 50% in high performing cities.

Likewise, autonomous ride-hailing could generate 50% margins, but its lower price point should expand the total market from $150 billion in revenues with take rates up to 60%, to $6-7 trillion by 2030.

ARK believes that autonomous ride-hailing platforms could generate more than $1 trillion in operating earnings annually by 2030.

• Auto manufacturers with successful electric vehicle platforms, partnered with autonomous technology providers, could generate roughly $250 billion in earnings annually by 2030.
• Fleet owners that own, house, and maintain autonomous ride-hailing vehicles could generate roughly $70 billion in earnings annually by 2030.
• If the equity market were to discount the opportunity in autonomous platform providers by 2030, their enterprise value could scale to $3.8 trillion in 2025.

Estimated Operating Earnings Across The Autonomous Value Chain:

Source: ARK Invest

Three Autonomous Strategies Are Evolving, according to ARK:

• Tesla’s approach is camera-based. With less accurate sensors than LiDAR, making the path to full autonomy a more difficult problem to solve, cameras do not rely on HD maps and should enable a much more scalable service. Tesla could be the first autonomous taxi network to scale nationally.
• Alphabet's Waymo is using LiDAR and HD mapping. Waymo launched its autonomous network in Arizona but probably will need time and significant resources to scale nationally.
• Many Chinese players, including Baidu’s Apollo, are building out infrastructure sensors to help vehicles identify road signs and traffic. Requiring large infrastructure investments, this approach to autonomous ride-hailing seems to be the most rigid and least scalable of the three.

Source: ARK Invest

If Tesla launches its autonomous ride-hailing service successfully in 2022, ARK estimates adoption could approach 20% by 2025. If Waymo or GM is successful, adoption probably will be limited to 1% during the next five years.

Source: ARK Invest

Thus, Tesla's autonomous technology will give its Robotaxi network an edge. Musk previously said that, for an auto company to be successful, it must succeed in two fundamental technological disruptions. One is electrification, the other is autonomy. In his opinion, electrification alone is not enough. Therefore, Tesla is working hard to develop its full self-driving.

Musk's aspirations and ARK's research that consumers will ultimately prefer ride-hailing services over owning their vehicles converge. If the ARK forecast is confirmed, then Tesla is positioning itself perfectly.

Tesla's Robotaxi fleet has the technology and data to become a top autonomous ride-hailing platform. Its HW3 chip has already collected billions of miles of real data through its neural network. Ultimately, the Tesla Robotaxi network has a real shot at taking most of the pie in autonomous ride-hailing.

H/T @SawyerMerritt/Twitter

© 2021, Eva Fox. All rights reserved.

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Article edited by @SmokeyShorts, you can follow him on Twitter

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