ARK Invest Big Ideas 2021: EVs & Robotaxis (deep dive)

TL;DR

ARK Invest’s Big Ideas 2021 projects rapid growth for electric vehicles and robotaxis, with EV sales rising roughly 20-fold from 2.2 million in 2020 to 40 million in 2025. Falling battery costs, improving range, and Tesla’s integrated battery and software capabilities support the forecast, while traditional automakers’ transition remains the biggest downside risk. Read on for the report’s specific cost, adoption, and profit projections.

Transcript

hey i'm stephen and this is solving the money problem if you're new welcome if you're not welcome back so arc invest released their highly anticipated big ideas 2021 report yesterday in this video i'm going to be going through this section specifically on electric vehicles and autonomous ride hailing aka robo taxis big shout out to tesla now just f... Read More

Key Insights

• 🚙 Electric vehicle sales are projected to increase significantly in the coming years, with Tesla at the forefront of the market.
• 🙇 The cost of electric vehicles is expected to decline, thanks to innovative battery designs and economies of scale.
• 👳 Autonomous ride-hailing services could revolutionize urban transport, with potential profits of over $1 trillion per year by 2030.
• 🔋 Tesla's integrated battery technology and its software expertise give it a competitive advantage over traditional automakers.
• ☠️ The adoption of autonomous vehicles depends on successful deployment by companies like Tesla, with a potential adoption rate of 20% by 2025.
• ⚾ Tesla's camera-based approach to autonomy is expected to be more scalable than lidar-based systems.
• 👰‍♀️ The cost of autonomous ride-hailing is projected to be significantly lower than human-driven ride-hailing services, sparking widespread adoption.

Questions & Answers

Q: What does ARK Invest’s Big Ideas 2021 predict for EVs and robotaxis?

ARK Invest forecasts electric vehicle sales increasing roughly 20-fold, from 2.2 million vehicles in 2020 to 40 million units in 2025. It also projects that autonomous ride-hailing platforms could generate more than $1 trillion in annual profits by 2030.

Q: Why does ARK Invest expect electric vehicle sales to grow so quickly?

Electric vehicles are approaching sticker-price parity with gas-powered cars while also improving in range and performance. During the pandemic, global EV sales rose 33% year over year as gas-powered vehicle sales fell 15%, accelerating the shift toward electric vehicles.

Q: What is Wright’s law, and how does it affect electric vehicle costs?

According to Wright’s law, battery cell costs fall by 28% for every cumulative doubling of units produced. Because the battery is the largest cost component of an EV, this decline is critical to reaching price parity with gas-powered vehicles.

Q: What is the biggest risk to ARK Invest’s EV sales forecast?

ARK Invest identifies traditional automakers’ ability to transition successfully to electric and autonomous vehicles as the biggest downside risk. If legacy manufacturers cannot make that transition, EV sales could grow more slowly because fewer automakers would be able to produce the required vehicles.

Q: How does Tesla’s battery technology provide a competitive advantage?

Tesla’s cell-to-vehicle technology increases battery volumetric density by 50%, supporting longer-range vehicles at lower prices. Its direct integration of battery cells into vehicles can also reduce costs and improve efficiency compared with relying on conventional battery-pack designs.

Q: Why is Tesla’s production capacity important to its EV growth?

The presenter argues that Tesla’s limiting factor is production rather than demand and expects it to sell every vehicle it produces for years. How quickly Tesla can ramp manufacturing therefore determines how much of the projected EV growth it can capture.

Q: How large could the autonomous ride-hailing market become?

ARK Invest projects that autonomous ride-hailing platforms could generate more than $1 trillion in profits annually by 2030. The service could reduce mobility costs to one-tenth of the average taxi cost, encouraging widespread adoption and creating profit opportunities for platforms, automakers, and fleet owners.

Q: Why might Tesla’s autonomous-driving approach scale better than other systems?

Tesla uses a camera-based, generalized approach that the analysis expects to scale more broadly, even if it takes longer to achieve full autonomy. By comparison, Waymo’s reliance on lidar and HD maps may restrict it to localized areas, while systems dependent on infrastructure sensors may also have limited scalability.

Summary & Key Takeaways

• Arc Invest expects electric vehicle sales to increase significantly, reaching 40 million units by 2025. The biggest risk to this forecast is whether traditional automakers can successfully transition to electric and autonomous vehicles.

• Electric vehicle sales have shown resilience during the pandemic, while gas-powered vehicle sales have declined. This trend is expected to continue as electric vehicles become more affordable and offer better range and performance.

• Tesla is at the forefront of electric vehicle technology, with innovative battery designs and a scalable production model. The company's advancements in battery technology and its direct integration of battery cells into vehicles give it a competitive advantage over traditional automakers.