If you are anything like the average American, your car sits idle most of the time, depreciating in value. So, reconsider how you travel, advises Heath Terry, who leads TMT Research at Goldman Sachs. In this podcast he discusses the expected large scale transformations in macro- and micro-mobility. Ride hailing is still a luxury for most, but in the USA, if you drive less than 100mi/week, you are better off using Uber than your car. However, growing competition (Uber is now battling Lyft, Kapten, Grab, and Cabify, among others) and increasing driver costs and demands (they can continually switch the firm they drive for) are pressuring profits. It’s no surprise that Uber is diversifying into the food and self-driving sectors, as well as partnering with e-commerce companies on same-day delivery. Terry also sees flying and autonomous cars taking off (pardon the pun) by 2023, but for now he recommends a focus on the large-scale electric vehicle incentive regulation happening across Europe.
Why does this matter? Ride hailing firms largely operate a fluid portfolio of markets and adjust their country presence based on contribution margins and profitability. Whilst Uber thrives in Europe, Incumbents drove them out of China and are now challenging their second largest market, Brazil. In the meantime, regulation is accelerating – New York put a cap on number of vehicles per operator and Germany has severe restrictions on the sector a whole. Long-term, this could slow-down a large scale overtake.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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