Which investment opportunities are available on the road to smart mobility?
March 23, 2023
6 minutes to read
Huge investments are still needed to achieve climate-friendly, stress-free, flexible and (cost-)efficient mobility. And that creates opportunities for investors. A few years ago, we hadn't even heard of shared scooters, low emission zones or fast chargers. Technological advances and ever-evolving needs have transformed how we travel. Back in 1823, our great-great grandparents would usually jump on a horse or boat, or simply walk if they wanted to go anywhere – just like their ancestors had done for thousands of years. In 2023, we have a huge array of methods of transport at our disposal. Whether it's aeroplanes, underground transport systems, cars or bikes, these means of transportation have only been invented over the last two centuries, even though humanity has been living on our planet for hundreds of thousands of years. At the same time, travel times have been reduced through the centuries. In the Roman era, it took 22 days to travel from London to Rome by horse (25 days in winter) . Today, you can make the same journey by plane in 2.5 hours, or take the train in less than 24 hours – whatever the season. More accessible mobility solutions and shorter travel times haven't just served to increase trade and prosperity – they've even laid the foundations for an entirely new economic sector: tourism.
Have we almost reached our destination?
You invest in order to achieve a return in the longer term. Yet if we've made so many huge leaps in terms of mobility in recent centuries, can it still be an interesting area in which to invest? Haven't we seen all the major revolutions? And does mobility still offer investment opportunities, now that it's a given in many areas around the world? The short answer is yes. Mobility certainly offers investment opportunities, as we're still seeking solutions for a large range of issues. The climate is one such issue. In Europe alone, transport accounts for more than a quarter of greenhouse gases and a third of energy consumption (on a global scale, this equates to 15% of greenhouse gases and 30% of energy consumption ). Furthermore, it's the only sector that's failing to reduce emissions. While other industries are reducing their carbon footprints, the transport sector's is on the rise. In addition, exhaust gases can also lead to health problems. According to the European Environment Agency, around 100,000 premature deaths can be attributed to poor air quality each year on our continent. Although newer vehicles are putting less pressure on the climate, we're continuing to eat up the kilometres in the meantime. This brings us on to what's known as the 'Brever-wet' in Belgium and the Netherlands, and Marchetti's constant elsewhere. This traffic-engineering principle suggests that we spend a largely consistent amount of our time travelling. Even if the modes of transport were to become faster and more accessible, our average travel time wouldn't fall; instead, we'd simply travel longer distances. What's more, an increasing number of people (who will want to be more mobile) will come into society in the decades ahead, and greater numbers of transport movements will be required to move goods around. And, of course, we've not even touched on the never-ending traffic jams we get stuck in that drive our stress levels through the roof...
Which paths lead us to the solution?
The challenges we face are clear. Now, we need to tackle them head-on. But in order to do this, we need to take a different look at mobility. We need to say goodbye to building more roads to make mobility climate-friendly, stress-free, flexible, fast and (cost-)efficient. There are several ways forward here, and they also come with investment opportunities:
Electrification is a crucial part of making the transition to smart mobility. This makes sense not only from an environmental perspective, but also increasingly a financial one, too. Nowadays in Europe, the total cost of ownership for a small or medium-sized electric car is already lower than the equivalent cost for a similar car with an internal combustion engine . However, we've yet to see a major shift towards electrification. Although 10% of new cars sold worldwide are electric, there's still a long way to go. At present, barely 1% of all vehicles on our planet are electric . Whether we're facing climate or geopolitical challenges, electrification is certainly one of the roads we need to go down – particularly when we need to reduce our dependency on gas and oil.
From owning to sharing
There are approximately 1.5 billion cars with an internal combustion engine around the world today. Replacing all of them with 1.5 billion electric cars isn't yet a sustainable solution. What's more, a British study showed that – whether they're electric or not – cars are simply parked up 96% of the time . In the long term, we should combine walking, cycling, public transport and shared solutions – and only then use your car if you have no other options. This is the path we need to follow in the long term. To help us do this, infrastructure is one of the key solutions. That doesn't just mean installing more charging stations. It also means, for example, redistributing our roads to create more, wider and safer routes for cyclists and pedestrians, and transforming city centres and residential areas to suit bicycles and shared mobility.
From driving to driverless
Fully driverless cars – which have no need for a steering wheel – aren't yet expected to be on our roads overnight. Nevertheless, companies are working hard to develop this technology, which means it's got huge potential. A study by Tractebel showed that 21,000 driverless taxis in Brussels would be enough to get 330,000 cars and 621 buses off our roads . Fewer vehicles is better for the environment, and would also free up more public space.
How you can invest in smart mobility
Investing in smart mobility means more than just buying shares in Tesla, BYD or XPeng. Here are some other ways you can enter the market:
- Charging infrastructure, battery storage, and efficient and flexible power grids
- Suppliers of semiconductors, sensors or electric drive components
- Raw materials such as lithium and copper (an electric vehicle contains more than twice the amount of copper than a car with an internal combustion engine ), and nickel and cobalt (used in batteries).
- Smart traffic circulation and traffic management technology
- Mobility solutions such as shared mobility and ridesharing platforms
- Autonomous driving technology
- And more...
There are several ways to invest in smart mobility, such as with individual shares, trackers (ETFs) or actively managed investment funds. Which option suits you best depends on your risk appetite, knowledge of the topic and how much time you want to invest.
- Individual shares require the most homework. You select companies that are actively involved in smart mobility and buy, sell and track these shares yourself. This strategy has the potential to generate high returns, but it also entails a higher risk of loss – especially if you only invest in a few shares. That's why it's essential that you do your research and spread your investments across a range of shares.
- Trackers or ETFs track an index of shares related to smart mobility. By investing in a tracker, you can invest in dozens of companies active in your chosen field in one go, without needing to select individual shares. One advantage of this approach is that it takes less time to manage. However, the downside is that a tracker doesn't distinguish between 'good' and 'bad' companies, but instead tracks all the companies in the index.
- Investment funds also invest in a basket of shares involved in smart mobility, but in a more active way. This means there is a manager who makes a selection and tries to separate the wheat from the chaff. The disadvantage is that you pay a little more for this active management than for a tracker.
Are you looking for trackers or funds relating to smart mobility?
- Log in to Keytradebank.be on your laptop or desktop
- Click on Advanced at the top, next to search by instrument name, symbol or ISIN
- Tick Tracker and/or Fund
- Search for the terms mobility, transportation or automotive