Most people are self-driving car skeptics. They just can’t imagine the cumbersome robot cars we see in the media today will ever become good or cheap enough for widespread use.
A big hurdle is LiDAR, the light-based radar technology autonomous cars use to see. Apart from looking like a KFC bucket, the rooftop sensor has been prohibitively expensive. Yet, a few years after introduction, prices are plummeting and new hardware is small enough to hide in body panels.
It is a remarkable development. It also brings self-driving cars closer than you think.
Exponential change is the common denominator of the New Gilded Age. The progression of information technology occurs so rapidly, things that seem impossible become reality. It’s the age of invention, on steroids.
In January, Waymo announced its engineers managed to cut the cost of the LiDAR sensors used in its test vehicles by 90%. A two-unit system carried a $150,000 price tag as recently as 2012.
Two weeks ago, a Silicon Valley startup called Luminar made news with a new gallium arsenide LiDAR sensor capable of recognizing objects with low reflectivity up to 200 meters away. Austin Russell, its founder, above, began working on LiDAR technology before he could drive. Now he is claiming a breakthrough that may mean many young people never need a license.
And last week, Velodyne announced a new, low cost solid state LiDAR system called Velarray. It boasts the same 200-meter range, improved vertical and horizontal fields of view and aims to sell for just a few hundred bucks when produced in mass volumes, according to a press release.
Velarray will work with both self-driving and ubiquitous Advanced Driver Assistance Systems such as adaptive cruise control. It is also small enough to fit in the palm of your hand.
All of that is important. Getting LiDAR technology into the mainstream is a vital first step for self-driving cars. Once that happens, everything will change.
In 2015, Boston Consulting forecast the market for self-driving technologies may reach $42 billion by 2025. While that is a big number, it’s still probably way too small.
Self-driving cars is a paradigm shift. It’s not just about technology. It will lead to completely new enterprises, new business models. It will change obvious businesses like insurance, automotive parts and leisure. It will also change many parts of the economy investors are not yet thinking about.
For example, once cars start down the road to self-driving, electric vehicles (EVs) make even more sense. Lower overall maintenance costs make EVs perfect people movers. That should lead to increased demand for metals like cobalt and copper.
Who knew miners were a self-driving car play?
The New Gilded Age is about turning dreamers loose. They’re free to build new things and dramatically improve old products and services. It’s the sweet spot where advanced modelling, data analytics and software architecture intersect.
It means the ideas we thought seemed far-fetched are possible.
Looking at things with a fresh perspective is important. Winners are hiding in the strangest places. To make it easy and low cost as an investor, you can participate simply by owning the SPDR Technology (XLK) exchange traded fund, which gives you exposure to all the major tech companies at the forefront of change like Alphabet, Microsoft, Qualcomm and Nvidia.
Best wishes,
Jon Markman
