ARK Report Highlights Autonomous Logistics and Robotaxis as Cornerstones of Future Mobility

In its annual research report, “Big Ideas 2024,” Cathie Wood’s investment management firm Ark Invest talked about the major trends for this decade.  

The company, whose sole focus is on disruptive innovation, predicts the merging of different technologies, viz. Artificial Intelligence, Robotics, Energy Storage, Public Blockchains, and Multiomic Sequencing to define this decade and be responsible for completely transforming global economic activity. 

The convergence of these technological trends, according to Ark, could create far more impactful macroeconomic shifts than even the first and second industrial revolutions.

As robots revive manufacturing, robotaxis reshape transportation, and AI boosts productivity, Ark projects real economic growth to accelerate to more than 7% during the next seven years.

Moreover, the annualized equity return from these disruptive technologies could surpass 40% during this period, leading their market cap to grow from the current $19 trillion to a whopping $220 trillion by 2030, said Ark in its report. 

Two important trends that we’ll be discussing today are autonomous logistics and robotaxis. 

According to Ark’s research, robotaxis will be transforming global transport with point-to-point transportation to be available in nearly every country at an average price of ~$.50 per mile. Robotaxis projects that it will have traveled 13 trillion vehicle miles in the upcoming years.

In the next decade, the company sees robots changing the economics of physical movement entirely, with the cost of taxi, delivery, and observation falling by an order of magnitude. In 2040, the company sees traveling by robotaxis to be the norm while owning a personal vehicle would be an exception, it said.

Frictionless drone and robot delivery will catalyze the velocity of e-commerce, and the data generated by autonomous mobility systems will provide real-time insights into the state of the world. Those businesses and consumers that harness such platforms will benefit while prior incumbents in the automotive, logistics, retail, and insurance sectors would be upended, predicts Ark. 

Now, let’s take a deeper dive into these two prominent trends!

Autonomous Logistics to Transform Industries 

As the global economy continues to grow, the demand for goods and services also keeps on increasing. This means we need more qualified drivers, which is becoming increasingly difficult.

Leaders of legacy carriers like FedEx and UPS have been facing shortcomings in the modern world of logistics. They are simply not fast enough to meet the rising demand, especially for perishable deliveries. Moreover, infrastructure limitations, complex processes, rigid systems, and rising competition lead to inefficiencies and delays.

However, advances in technology are ready to bridge the gap and transform how goods are transported around the globe.

Due to the dwindling pool of skilled drivers, shipping congestion, delivery disruptions, and the progress the technology is making, companies are turning to autonomous logistics, especially in first- and last-mile delivery, to increase their efficiency, streamline supply chains, and stay ahead of the competition.

Most recently, the tech company ISEE debuted the world’s first autonomous truck yard in Texas for enhanced efficiency and safety.

With autonomous vehicles, drones, and robots handling shipping and logistics operations worldwide more and more, our future should be expected to see remarkable efficiency, increased productivity, less traffic congestion, more safety, and improved sustainability. 

Moreover, as Ark Invest noted in its report, autonomous logistics would also lower the cost of moving goods dramatically by as much as 15-fold during the next five to ten years. 

Such vehicles should also operate at higher utilization rates than human-in-the-loop systems, creating more cost-effective last-mile delivery systems, as per Ark.

Another big benefit of autonomous logistics is real-time insight across the entire supply chain, which, along with customization abilities, allows companies to identify potential problems earlier on and respond immediately. This helps optimize shipping routes, reduce delays and transit time, and improve customer satisfaction.

Most importantly, autonomous logistics has the potential to revolutionize several industries ranging from retail, manufacturing, delivery, and warehousing and distribution to supply chain management, healthcare, agriculture, shipping, construction, and military and defense.

For instance, if we take a look at shipping lanes, they are of immense importance in the global economy, calling for safe and efficient means of transportation. Here, autonomous logistics help companies automate tasks, improve planning, streamline loading and unloading operations, optimize operations, secure communication systems, make better decisions, adjust to market demand, improve emergency response, and increase safety. 

So, it’s pretty clear that autonomous technologies hold incredible promise, and companies across these industries are recognizing their advantages in the logistics sector. 

According to Ark’s estimation, autonomous delivery revenues are projected to scale from essentially zero today to $900 billion in 2030.

While autonomous robots and robots are still in their early stages, the report expects autonomous trucking companies to have logged tens of millions of miles and made millions of deliveries by the end of this decade. At that point, autonomous drones and robots will begin to remove safety drivers. 

The research reveals the tech to be better than humans, illustrated by AI pilots having immense data advantages over humans. This is evidenced by Zipline drones logging more commercial flight miles than humans can achieve and AI, trained through deep reinforcement learning, outperforming professional human pilots in 15 out of 25 instances. In drone races, these AI-controlled drones achieve lap times that are approximately 10% faster.

As advances in AI prove to be superior to human pilots and drivers, it will encourage regulators to allow truly autonomous operations, predicts the report. Many states in the US have started developing legal frameworks for autonomous vehicles, though widespread deployment is still a long way off. 

As such vehicles gain traction and regulatory approval, shopping behavior will change. Proprietary data, in particular, is likely to determine commercial success here, according to Ark, which states that companies with more real-world data should have a competitive advantage. Moreover, verticalization and manufacturing partnerships will be critical to success.

Autonomous logistics would also impact health care by accelerating the delivery of life-saving supplies, particularly in emerging markets that lack road infrastructure. 

In autonomous logistics, Ark puts a special focus on food and parcel delivery, which is expected to be an addressable market worth $1-2 trillion. 

As affordable technology-enabled delivery reshapes consumer habits, food and parcel delivery fees made by drones and robots could be as much as $450 billion in 2030, as per the report. Revenue from autonomous trucking, coupled with drones and robotics, could also reach $450 billion in 2030 by transporting goods cost-effectively and quickly. 

Autonomous logistics is also expected to double the enterprise value of precision agriculture to ~$600 billion at scale, driven by continued automation as well as yield improvements thanks to agricultural biologics. 

While we are not there yet, the future of logistics seems to be autonomous, where packaging, shipping, and transporting goods straight to your door is done without any human interaction.

Robotaxis to “Redefine Personal Mobility”

Self-driving vehicles are all the rage today, with millennials and urban residents the most interested in autonomous vehicles, according to Morning Consult research conducted in Nov. 2023.

Today, robotaxis are fast becoming a reality, with Ark projecting ride-hail to create an $11 trillion addressable market. For now, though, the growth and adoption of robotaxis is rather slow in progress.

Despite some setbacks, such as Cruise getting its permits to operate revoked after being involved in a fatal accident, autonomous car companies are still gradually rolling out in more metropolitan areas.

In cities like San Francisco, the new reality includes hailing robotaxis equipped with dozens of cameras but without a driver. Besides half a dozen cities in the US, regulators in Beijing and Shanghai are also allowing these vehicles to drive without any human intervention. 

As technology advances, autonomous vehicles can offer the benefits of being cheaper, safer, and more convenient than conventional ones. 

According to Ark’s report, autonomous vehicles are actually found to be safer than human drivers, with the former’s estimated accidents being about 80% lower than those associated with human drivers. 

Data provided states that a self-driving Tesla appears to be ~5x safer than that in manual mode and ~16x safer than the national average. Even Waymo’s autonomous cars are found to be ~2-3x safer than the national average.

Moreover, it is estimated that autonomous electric transport would also save about 10,000 US lives in 2030, which are lost every year to air pollution from gas-powered passenger vehicles.

Ark Invest has big expectations from the Robotaxi industry, as it predicts such platforms will generate $28 trillion in enterprise value during the next five to ten years — about 9x of all auto manufacturers in 2023. And those who join this revolution early on “should enjoy the higher prices associated with early adoption,” it said.

Robotaxis could also accelerate the unraveling of the auto loan sector. During the past three years, the increase in interest rate has resulted in car loan payments made monthly by new vehicles rising by ~27%, which led to an increase in defaults on subprime auto loans, the company’s research revealed.

But as EV prices fall, it will decrease the value of gas-powered vehicles, putting the ~$1.6 trillion in auto loans on financial institution balance sheets to be at risk over the next decade.

According to Ark, robotaxis has the potential to completely “redefine personal mobility,” a transformation that is underway thanks to significant breakthroughs in AI. These advancements are beginning to revolutionize urban travel by allowing robotaxis to operate with fewer, less expensive sensors, as noted in the report. Furthermore, Ark anticipates that, with the scaling of robotaxis, the cost of critical components such as electric motors, power electronics, sensors, and power-efficient computing will decline, following its projected learning curve.

With the cost of owning and operating a personal car, adjusted for inflation, not changing since the Model T was introduced to the world by Ford over 100 years ago, Ark estimates autonomous taxis at scale to cost consumers as little as $0.25 per mile, spurring widespread adoption.

Already, Robotaxis are operating in about 20 cities globally, with at least seven cities having fully driverless commercial options. These taxis’ passenger trips annualized at a ~2 million mile rate late last year, as per Ark’s research.

In 2023, Chinese tech giant Baidu was operating at a run rate of 1.6 million autonomous trips, three times that of Google’s self-driving car project, Waymo. As for Tesla, the report notes that Elon Musk’s automotive company is at the top, with access to 280x more driving data than Waymo and 50x more than Baidu. This, Ark noted, gives Tesla an edge over its competitors as the company gets ready to launch its Robotaxi service. In line with this bullish view, Ark Invest purchased $11 million worth of TSLA shares earlier this month.

Despite all the benefits and big projections, Robotaxis are far from becoming a norm as autonomous vehicles still require remote operators to take control in case of emergencies. So, while there might be no human operator in the driver’s seat, some form of intervention is still needed, especially in colder climates when snow becomes a challenge for cameras and sensors. 

Robotaxis also remains expensive due to being packed with advanced software systems and for requiring constant monitoring in addition to huge upfront effort and cost in terms of thoroughly mapping the area when serving a new city. 

This is just the early days, though. Ark suggests that progress in robotics should accelerate with Large Language Models, enabling text-based training, validation, and self-explanations, and with Generative AI, facilitating training and validating safety through simulation. Demonstrating this potential, GPT-4 trained neural networks have been shown to outperform human expert coders on 83% of tasks, with the margin of improvement averaging 52%, according to the report. 

Companies Driving Robotaxis & Autonomous Logistics Trend

In the world of autonomous logistics, the likes of UPS, DHL, TuSimple, Starship Technologies, Robomart, and Fetch Robotics are making a lot of development. Meanwhile, Uber, Lyft, Cruise, Nuro, Baidu Apollo, Didi Chuxing, Tesla, Aptiv, and Zoox are working on advancing the robotaxis field. Now, let’s take a look at two prominent names from both these fields:

#1. Amazon

The e-commerce giant is heavily invested in automating its logistics operations through Amazon Robotics and has been exploring many robots and drone solutions. Its robotics solutions called Digit and Sequoia, in addition to robotic arms like Sparrow and Cardinal, as well as an autonomous mobile robot called Proteus, are helping Amazon deliver to customers faster. In total, 750,000 Amazon robots are at work.

With a market cap of $1.81 trillion, Amazon shares are currently trading at $174.55, up 14.82% YTD. The company recorded a revenue (TTM) of $574.78 bln and has an EPS (TTM) of 2.89 and P/E (TTM) of 60.38.

#2. Waymo

The autonomous driving technology company provides ride-hailing services with an aim to make it safe and easy for people and things to get where they're going. Waymo currently has a large fleet of Robotaxis in San Francisco and is planning to now expand to Los Angeles. It has already begun the trial of its driverless cars in LA as well as on freeways in Phoenix. However, most recently, Waymo's autonomous car hit a cyclist in San Francisco who suffered minor injuries. 

This one is a subsidiary of Alphabet, which is also the parent company of tech giant Google. With a market cap of $1.85 trillion, the company’s shares are trading at $148.90, up 6.66% YTD. The company has posted a revenue (TTM) of $307.39 bln while having an EPS (TTM) of 5.80 and P/E (TTM) of 25.69.

Final Thoughts

So, as we saw, advances in technology continue to make things happen that were once not possible. These innovations have great potential to help consumers have more fulfilling lives. However, we are still early in the logistics and taxis to completely turn autonomous with more investment, research, and technological breakthroughs needed to make it mainstream and gain widespread adoption.

Click here to learn why autonomous taxis are projected to generate $4 trillion by 2027.