Conference Presentation, Panel, Roundtable
How Technology Trends Will Impact Your Portfolio
Milken InstituteScarlet Fu, Nathaniel Barker, Christopher Bartel, Bill Brady, Alex Griffiths, Stephanie von Friedeburg
- Global peak oil demand is expected to arrive sooner due to electric vehicle (EV) adoption, though the transition to replace the current 2 billion-vehicle fleet by 2035 is projected as a "very, very slow burn," with internal combustion engines remaining dominant (1.5 billion vs. 1.2 billion EVs) even under a 30% compound annual growth rate scenario.
- Industry leaders anticipate a massive acceleration in EV innovation, with more occurring in the next five years than the previous 50, alongside targets such as Volkswagen's goal for 25% electric sales by the mid-2020s and a prediction that battery powertrains will be fully interchangeable with internal combustion engines within a decade.
- A significant shift in automotive business models is forecasted over the next 20 years, where asset utilization rises from 4% to 50% and ownership transitions to renting services (daily, weekly, monthly), driven by autonomous vehicles that could reduce accidents by 95%, though early adoption may involve "strange accidents" and regulatory pushback.
- Tesla's disruption is becoming conventional wisdom as it faces increasing competition from BMW, GM, and Ford, creating a self-fulfilling prophecy where high stock prices facilitate cheaper capital raising, while other automakers risk default or acquisition by tech firms if they fail to adapt.
- Investment focus is expected to shift from traditional car manufacturers to the hardware, software, and integrated circuits within vehicles, as legacy companies face risks from "cycle rollovers" and high valuations near $18 million.
- Battery economics remain a critical constraint, requiring costs to reach $100 per kilowatt-hour for widespread utility adoption, while current EV ranges of 200 to 300 miles still constrain long-distance driving in the middle of the country.
- Emerging markets face a $1.5 trillion annual infrastructure gap in power, driving adoption of distributed generation and community-owned battery storage similar to Sweden, though solar costs in Africa have risen from $0.20 to $0.40–$0.50 per unit.
- Robotics and aging populations in the US are projected to drive supply chains to "near shore" and return manufacturing to the US to boost productivity and GDP, while China's automotive growth potential remains high due to a low ownership ratio of 0.1 cars per person.
- Fintech and data analytics are expected to transform financial services, with mobile data enabling credit profiles for the unbanked in emerging markets and machine learning potentially reducing analyst workforces from 14 to 2 or fewer to deliver high-net-worth portfolio quality to smaller investors.
- Consumer banking habits are shifting, with 40% of millennials considering Google for banking and 63% expected to hold no credit card, supported by $34 billion raised in Fintech deals since 2011.
- Tech giants (Google, Facebook, Amazon, Microsoft, Alibaba) are projected to dominate the S&P 500, potentially at the expense of traditional firms like IBM, with the "five or ten years of autonomous cars" serving as a data exhaust source that could subsidize vehicle costs, though profitability sustainability is questioned.
- Google is anticipated to prioritize acquiring user data over building transportation vehicles, while drone delivery for medical supplies may expand from Rwanda to Kenya and Tanzania, facing stricter US regulatory hurdles for replication.
- The retail and parts industries face disruption from 3D printing, which will diminish the need for physical showrooms and inventory by enabling on-demand manufacturing, paralleling traditional retailers like Sears facing liquidity spirals and Walmart/Amazon competing via online acquisitions and physical store tests.
- Higher education is predicted to evolve toward episodic online learning models, with traditional universities like Purdue and Southern New Hampshire expanding internet-based degrees to survive, offering AI-driven customization comparable to small in-person classrooms.
- Reusable rocket technology is expected to sustain SpaceX's cost advantages in satellite launches, with a potential IPO in ten years or upon Mars mission achievement, while autonomous vehicles may eventually replace short-haul flights and Amtrak for mid-distance travel.