Why You Won’t Recognise the World in 2030

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If you want to know the scale of growth that’s still possible around the world, jump into a rickshaw and take a brief tour of India.

Here’s why. The Wall Street Journal reported this month that the world’s second most populous country is already on a road-building boom. It’s only going to get bigger.

The Indian government plans to almost triple the last financial year’s road growth in the coming year. This is designed to connect India’s vast rural interior and stoke productive domestic growth.

India is already growing strongly. This can only make is stronger, if they do it right. It’s also bound to generate bigger demand for cars and motorbikes.

That’s possibly a lot vehicles, considering size of the Indian market. But perhaps what exactly those vehicles will look like in the future is the bigger question. That’s because there’s every chance they won’t look much like today’s in a short amount of time.

2030: a world you won’t recognise

If you’d like to take an educated guess on that, you could put 2030 down in your diary. That’s the year by which ‘energy disruption guru’ Tony Seba says that conventional energy production and transportation will be defunct.

The world you’ll be living in will look entirely different thanks to solar power, battery storage and electric, self-driving cars. That’s his pitch anyway. Mr Seba is a Stanford University lecturer and entrepreneur from the United States, currently out here in Australia.

Strengthening his case is the recent solar news from the UK. Britain is producing so much (subsidised) renewable energy that power prices briefly went negative on one Sunday this month. Power stations paid to have it taken off their hands.

This comes after major US corporations like Microsoft and Facebook also announced an ‘alliance’ to fund the expansion of solar and wind farms in the United States by giving them contracts.

But it’s the car space that’s the most interesting.

Tony Seba says the car fleet we recognise today is destined to be wiped out as self-driving cars smash the existing system.

They’re going to create a culture of ride sharing and mobility on demand.

Here may very well be right.

Self-driving vehicles are already happening now. The Financial Times reported last Saturday that three self-driving Daimler trucks travelled down one of Germany’s autobahn in a ‘platoon’. Since last year, these trucks have already been cruising around the deserts of Nevada.

The drivers were in the cabins, but didn’t have their hands on the wheel. The trucks can connect wirelessly through WiFi and react to each other’s movement. Self-driving trucks can already cut their fuel consumption by 7%.

We can also note the major tactical shift the car manufacturers are making toward the ride sharing economy led by companies like Uber. I mentioned back in April that BMW was trialling its ReachNow service, where customers could lease a car on a pay per minute basis.

Now comes another important milestone.

The alliances forming and aligning in this global race

Now Bloomberg reports that Toyota has invested in Uber. Nobody’s saying how much in terms of dollars just yet. But Toyota will begin offering leases to the drivers. The fares will pay for the lease payments.

But the broader point from Bloomberg is that the manufacturers are squaring off by forming alliances with ride sharing companies.  Volkswagen and General Motors have teamed up with Gett and Lyft, respectively.

Don’t forget Apple’s recent US$1 billion investment in Chinese ride sharing company Didi Chuxing Technology. The car manufacturers obviously recognise that the market is heading in this direction.

This is competition driving innovation and change. Praise to the market.

The biggest block to change is working out how to fit all the laws and regulations into place. There was some action on this front in the UK last week. This was part of the Queen’s Speech for the State Opening of Parliament.

Driverless cars are about to be put on the road in the UK across four ‘testbeds’ in London, Bristol, Coventry and Milton Keynes. Changes are being introduced so driverless cars can be insured under regular policies.

The law will make it compulsory for insurance companies to cover product liability for driverless vehicles. What’s also intriguing is the UK is moving to legislate on commercial space flight and the use of drones.

The UK government actually looks visionary compared to Australia’s dull election debate on negative gearing and the terminally boring conversation about house prices.

Best wishes,

Callum Newman,
For The Daily Reckoning

Ed Note: This article was originally published in Money Morning.

Callum Newman

Callum Newman

Callum Newman is the editor of The Daily Reckoning and Associate Editor of Cycles, Trends and Forecasts. He also hosts The Daily Reckoning Podcast. Originally graduating with a degree in Communications, Callum decided financial markets were far more fascinating than anything Marshall McLuhan (the ‘medium is the message’) ever came up with. Today Callum spends his day reading and researching why currencies, commodities and stocks move like they do. So far he’s discovered it’s often in a way you least expect. To have Callum’s thoughts and insights on the current state of the currency, commodities and stock markets delivered straight to your inbox, take out a free subscription to The Daily Reckoning here.
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