JULIUS BAER TRACKER CERTIFICATE ON THE FUTURE MOBILITY BASKET
FUTURE MOBILITY - ELECTRIFY YOUR PORTFOLIO
- Electric cars and self-driving vehicles are only the beginning and advances in future mobility could occur more rapidly and on a greater scale than many are prepared for. They are likely to trigger the next energy revolution, which could have a disruptive impact beyond the broader auto business.
- The future of both combustion engines and car ownership itself are affected, especially as the world becomes increasingly urbanised and consumers are potentially shifting their preference from owning to using. Affordable and convenient mobility services based on autonomous taxis are the almost uncontested vision. Asia is the breeding ground for this scenario – as reflected in peaking car sales and peaking oil demand – given the wealth effect, the continent’s dense megacities and its affinity for technology.
- Electrification and autonomous driving are having a huge impact on the current auto business. Battery technology has progressed more rapidly than anticipated and in just a few years, by around 2020, automakers will bring various electric car models to the market that offer long mileage at reasonable costs. Meanwhile, hybridisation, i.e. combining electric motors with combustion engines, is the most popular option to meet tightening emission and fuel efficiency limits.
- Future mobility is providing faster, cheaper, cleaner, safer, more efficient and more customised travel with advances predominantly driven by technological and social forces. We believe the future of mobility is a compelling long-term structural growth story with the potential to deliver superior returns. The main beneficiaries in this field are auto suppliers, especially given their technology competencies. The technology sector seems particularly well positioned as electric mobility, autonomous driving and connectivity will lead to a higher installation of electronics in cars. Batteries are considered another growth story, but one that is more difficult to capitalise on – the high investment needs, cost deflation and numerous new market entrants will increase the competitive dynamics. The manufacturing of batteries could struggle to deliver sustained cash flows and returns to investors. Similarly, battery metals including lithium or cobalt should experience a commodity down-cycle, thus ending the price bounce seen in recent years. Significant investment in these metals is generating sufficient supplies to cover near-term demand.