Softbank points the way...
A SMALL STORY in City AM caught my eye, writes MoneyWeek's executive editor John Stepek in his free daily investment email Money Morning.
"UK falls behind in self-driving vehicles race"
Apparently, we're pretty hospitable to self-driving cars, but we're in danger of losing out to other countries.
It's not the idea that we're falling behind that caught my eye.
It was the idea that this technology is now so advanced that there's even a race to be taking part in.
If there's one futuristic invention I'm keen to see in my lifetime (well, other than a pill that keeps you young and healthy forever), it's the self-driving car.
I know that some people really like driving, and good on them – it's not for me to bash anyone else's hobbies. But I'm not a fan. It's a task that is simultaneously risky and boring, which is just an awful combination. And a car is an expensive and unrewarding possession, which is also often an expensive headache to maintain.
So I can't wait for the day when most of us simply hail computerised chauffeurs from our phones whenever we need them, and don't own cars at all.
Now I'll admit, I've also been sceptical that this will happen any time soon. The technology is challenging enough (and technology is always more glitchy than the technologists let on). But the regulatory, insurance and legal issues look overwhelmingly complicated.
But regardless, there is a flood of investment going into this area. According to that City AM article I noted above, KPMG reckons that the UK "remains one of the world's most advanced autonomous vehicle markets." Yet it has fallen to seventh place in the consultancy's rankings for "progress and capacity for adopting the technology."
Meanwhile, Softbank – yes, the Japanese giant – has pumped nearly $1bn ($940m to be exact) into driverless delivery-vehicle startup Nuro.ai, which was set up by a couple of ex-Google engineers.
Softbank is not known for being hugely discriminating or parsimonious, but $1bn is a lot of money, even these days. Nuro only has a handful of vehicles on the road, but they have actually started delivering groceries to customers in Arizona.
Softbank, notes the FT, has also invested in General Motors' self-driving division (Cruise), and owns chunks of taxi disruptors Uber and Didi. Oh and Amazon (alongside others) has just invested in another self-driving ex-Google start-up called Aurora.
I've long thought that Softbank was likely to be at the heart of the next bubble and bust. Its efforts to float its mobile unit in December were not as successful as expected – which rather dented my theory that the IPO might mark the top of the market – but I've still got my eye on the Japanese giant.
A bubble in self-driving vehicles? It'd be a nice juicy one, with lots of knock-on effects for us to get our teeth into. On the "disrupted" side, you've got the effect on oil producers. You've got the effect on existing car manufacturers (already seriously feeling the squeeze). And insurers – what does it mean for them if cars become self-driving taxi fleets, rather than individually owned items with fallible human drivers?
Then on the beneficiaries side, you've got electric cars being developed in parallel. That in turn plays into the "smart grid" and battery storage. Range anxiety is not an issue if most journeys are short ones in local fleets. There's an "internet of things" angle (eventually you'd want all these cars to be connected so they can talk to one another), and therefore a cybersecurity one too, not to mention all those chips and sensors.
Oh and then there's logistics and deliveries. Why does Amazon want to invest in self-driving cars (and drones for that matter)? So it can ditch all external delivery services.
Seriously, this could be a glorious bubble – and one of those ones that has genuinely valuable effects on the rest of us. A productive internet-type bubble rather than an inefficient house-prices-and-banks type bubble.
Will we see self-driving cars on the roads soon? Or a mass takeover by electric vehicles? I don't know. I suspect that the technology is farther away from mass-market usability than the optimists make out. But it's also probably not as pie-in-the-sky as the pessimists warn. A bit like the internet, in other words.
If you're looking for a middle road to investing in the sector, one metal does look set to benefit from the rush. Palladium has been the car-related metal most in the news in recent years as it has benefited (at the expense of platinum) from the collapse in diesel demand (palladium is used in catalytic converters for petrol engines).
Yet if the enthusiasm for self-driving cars continues, then palladium could be supplanted by a rather less glamorous metal – copper. These self-driving vehicles are probably mostly going to be electric. And electric cars use something like three times as much copper as a standard car.
As the FT reports, investment bank Citi reckons that demand from China for copper for electric cars is set to shoot up, because the number of petrol cars is set to fall, while electric car production is set to rise by more than 50%. According to Citi, copper will be boosted by "an electric vehicle story into the 2020s".
It's one to keep an eye on if you are looking for a catch-all way to play a transformation in our transportation. You can invest in copper direct, but I'd avoid that in favour of picking out some copper miners. We'll be writing in more detail about the topic in MoneyWeek magazine in the next few months