By Steven Wang, Spring Analyst
I’ve spent the last three months digging into the mobility space and researching emerging innovations such as drones and autonomous vehicles. My research has focused on how investors should approach the future of mobility and how technology will drive how people and things move around in the decades to come.
From ride sharing and electric vehicles to transparent supply chain structures and transportation marketplaces, the last decade has been formative for advances in mobility. The future is coming fast in terms of emerging technologies that will help us and our things get from point A to point B.
I’ve compiled here a summary of my research from my time as a spring analyst at Lerer Hippeau. It is intended to give data-driven insights to anyone interested in writing checks into companies disrupting mobility. I’ve focused specifically on drones and autonomous vehicles to determine growth opportunities in those areas and the possible applications of currently available technology.
Drones initially caught on with consumers thanks to their affordability and use for aerial photography. But, only now are applications for drones drawing attention for various enterprise functions across sectors.
The nascent industry has seen the most activity in the area of drone manufacturing. However, the Chinese technology company DJI has emerged as the clear leader with approximately 70% of market share driven by their in-house production system and supply chain competitive advantages.
As a result, we suspect that growth opportunities in the drone space will shift away from manufacturing and towards industry-specific opportunities.
- Insurance: Drones can aid in underwriting, claims, and risk mitigation by providing quick aerial imaging on homes and buildings.
- Construction: Drones are currently focused on stockpiling and surveying, but integrating drone photography with workflow software could represent a substantial value-add for construction projects.
- Security and public safety: Drones can navigate hard-to-reach places, which allow them to be a viable “first responder” in crisis situations. Other applications include urban planning and public monitoring once drones are able to operate within city limits.
- The current legal landscape: Drones cannot currently operate over people and require a human pilot at all times.
- Long-range autonomous flight is predicted to be allowed within the next five years and public sentiment is accepting of autonomous drones, providing encouraging tailwinds for full implementation within the next decade.
Over the last ten years, substantial investment has funneled into autonomous vehicles (AVs). With their ability to improve safety, reduce congestion, and increase transportation accessibility, AVs can limit human involvement in the future of mobility.
Right now, cars offer only partial automation via features such as cruise control, lane departure systems, and emergency braking. However, near-fully automated vehicles are already being tested by large-scale car manufacturers including GM, Ford, Waymo, Google, and Tesla.
As a result, it seems unlikely that new players in the AV space can overcome the huge capital barrier of constructing fleets of AVs, compared to well-funded technology giants. However, hardware and software applications have room for development.
- LIDAR: These systems are currently expensive and still in their infancy. Creation of an inexpensive, but precise, surveying device will enable efficient mapping of an environmental terrain for autonomous driving.
- Sophisticated AI: These systems must account for nearly every possible driving scenario to address safety concerns. This form of implementation must include special situations, including adverse weather conditions.
- Standardized approval process: Each state has a different process for accepting or rejecting AVs, while LIDAR and AI don’t face the same level of security. AVs and their additional tech would have to be approved together, as a unit.
- On the software and hardware side, wealthy AV manufacturers will likely create these systems in-house, which discourages competitors.
- The public is still wary of AVs and there’s no set nationwide regulatory acceptance of them, so while the sector is well-funded, there’s less momentum for implementation of this emerging technology.
Given the individual challenges facing drones and AVs, the mobility space will likely see increased development of pre-existing technologies.
The “last mile challenge”
- The X Factor: Proven shorter delivery times without added cost.
- Interesting ideas: Innovations in route optimization, micro-warehousing, creative transportation modes (e.g. bicycle, electric scooter), and crowdsourcing transportation.
- Potential challenges: Market may be too saturated, leading to only a marginal value-add for time and costs.
- The X Factor: Deep industry knowledge of internal processes, decreased transportation time (order of weeks/days), clear increase in transparency, and reduction in lost shipments or delays.
- Interesting ideas: IoT automatic sensor integration, marketplaces (fragmented supply and demand sides), route optimization, and fleet management.
- Potential challenges: Industry specific regulation and market saturation.
- The X Factor: High convenience factor with low disruption to civilian life and transportation technologies in line with culture.
- Interesting ideas: Bike sharing, electric scooter sharing and urban air mobility.
- Potential challenges: High initial capital cost and urban regulation.