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Charging towards an electrified future

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ANDREW DITTBERNER, Chief Investment Officer at Old Mutual Private Client Securities, explores the vast investment opportunities in the electric vehicle value chain.

As vehicle manufacturers continue to face unprecedented challenges, due to disruptive technology and a higher level of environmental consciousness, the growing list of countries that have committed to going electric-only is a good indication that the demand for electric vehicles (EV) is set to boom. 

As such, the automotive industry is in the midst of a significant transition – one that offers a promising investment opportunity. Just as the internal combustion engine (ICE) displaced horses as the means to propel vehicles in the late 1800s, the electric engine is set to be the largest disrupter in the automotive market 120 years later.

This promising outlook for the electric car has already had an impact on many industries, shining a spotlight on potential investment avenues such as lithium-ion batteries and the elements used in their production. For example, with an increasing list of countries now introducing bans on petroleum and diesel-fueled cars, the rise of electric vehicles has contributed to the soaring price of cobalt – a key ingredient in the lithium-ion batteries used in electric vehicles.

According to Bloomberg, Samsung has joined Apple in taking an unprecedented step by reportedly negotiating directly with a mine in the Democratic Republic of Congo to secure cobalt supplies. “The element is an essential component in the rechargeable batteries used in smartphones, but increasing competition — mainly from electric car manufacturers — has made an already-scarce element even more valuable.”

Companies that we see as offering investment potential in this respect include Glencore – a large producer of copper, nickel, and cobalt, all of which are critical elements in the manufacturing of electric vehicles – as well as Anglo American Platinum, the world’s largest primary producer of platinum.

Earlier this month, Glencore Plc agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM Co Ltd. Currently the largest purchaser of cobalt in the world, China is vying to be the leading manufacturer of electric vehicles. The deal between Glencore and GEM will see China purchase 50% of the global supplies of cobalt by the end of 2018.

While there may be questions around the relevance of platinum with the onset of EVs, the mass adoption of pure EVs is still many years, if not decades, away. As a result, platinum and its derivatives will remain critical in reducing carbon emissions through their use in catalytic converters, in both the ICE as well as in hybrid EVs that make use of both fuel and batteries.

Other stocks to watch that may not necessarily be obvious candidates to benefit from the ongoing transition in the automotive industry include Alphabet (Google) – who are currently investing large amounts of capital in the autonomous vehicle market and Continental – who produces technologically enhancing products ranging from electric mobility and automated driving components to vehicle infotainment systems.

The onset of electric vehicles, however, has not happened overnight. Although their origins can be traced back long before the invention of the internal combustion engine, it was only in the 1960s following the need to reduce exhaust emissions along with our dependency on crude oil, that the electric vehicle came back into vogue.

A significant driver of the more recent push for EVs is the Electric Vehicle Initiative (EVI) – a body that was established in 2009 with the purpose of bringing together representatives from member governments and partners bi-annually to share knowledge on policies and programmes that support EV development. Ten countries are currently members of this initiative – including China, the United Kingdom, the United States and South Africa, among others – representing the vast majority of the global EV market.

This initiative recently launched the EV30@30 campaign, which set the ambitious goal of 30% market share for EVs in the member countries by the year 2030. 

Although some motor vehicle manufacturers have committed to phasing out petrol and diesel-only vehicles by a specific date, we believe that investors should treat the transition as a longer-term, global megatrend, as opposed to an overnight development. Abandoning traditional motor vehicles in favor of elective vehicles will happen, but it may occur over a much longer timeframe than originally anticipated. 

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Auto rivals team up for connected car demo

Rivals BMW, Ford and Groupe PSA, maker of Peugeot and Opel cars, have teamed up with the 5G Automotive Association (5GAA), Qualcomm Technologies and Savari for Europe’s first live demonstration of C-V2X direct communication technology operating across vehicles from multiple auto manufacturers.

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The live demonstration also featured a live showcase of C-V2X direct communication technology operating between passenger cars, motorcycles, and roadside infrastructure. C-V2X is a global solution for vehicle-to-everything (V2X) communication in support of improved automotive safety, automated driving and traffic efficiency.

The demonstration exhibited the road safety and traffic efficiency benefits of using C-V2X for Vehicle-to-Vehicle (V2V) collision avoidance, as well as Vehicle-to-Infrastructure (V2I) connectivity to traffic signals and Traffic Management Centers (TMC). C-V2X was operated using real-time direct communications over ITS spectrum and demonstrated its ability to work without cellular network coverage, and underscores its commercial readiness for industry deployment as early as 2020. Superior performance and cost-effectiveness compared to other V2X technologies, along with forward-compatibility with 5G, make C-V2X direct communications a preferred solution for C-ITS applications.

Six demonstrations were shown including: Emergency Electronic Brake Light, Intersection Collision Warning, Across Traffic Turn Collision Risk Warning, Slow Vehicle Warning and Stationary Vehicle Warning, Signal Phase and Timing / Signal Violation Warning and Vulnerable Road User (pedestrian) Warning. The vehicles involved included two-wheel e-scooters provided by BMW Group, and automotive passenger vehicles provided by Ford, Groupe PSA, and BMW Group, all of which were equipped with C-V2X direct communication technology using the Qualcomm® 9150 C-V2X chipset solution.  V2X software stack and application software, along with roadside infrastructure, were provided by industry leader, Savari.

C-V2X is globally supported by a broad automotive ecosystem, which includes the fast growing 5GAA organization.  The 5GAA involves over 85 global members comprised of many leading automakers, Tier-1 suppliers, software developers, mobile operators, semiconductor companies, test equipment vendors, telecom suppliers, traffic signal suppliers and road operators.  

Cellular modems will be key to the C-V2X deployment in vehicles to support telematics, eCall, connected infotainment and delivering useful driving/traffic/parking information. As C-V2X direct communication functionality is integrated into the cellular modem, C-V2X solutions are expected to be more cost-efficient and economical over competing technologies, and benefit from accelerated attach rates.  C-V2X direct communication field validations are currently underway in Germany, France, Korea, China, Japan and the U.S.

C-V2X currently stands as the only V2X technology based on globally recognized 3rd Generation Partnership Project (3GPP) specifications, with ongoing evolution designed to offer forward compatibility with 5G.  C-V2X also leverages and reuses the upper layer protocols defined by the automotive industry, including the European Telecommunications Standards Institute (ETSI) organization. C-V2X includes two complementary transmission modes: 

  • Direct communication as shown in this demonstration for V2V and V2I use cases
  • V2N network communication, which leverages mobile operators for connectivity and delivers cloud-based services, including automated crash notification (ACN, as mandated by eCall), hazard warnings, weather conditions, green light optimal speed advisory (GLOSA), parking spot location, and remote tele-operation to support automated driving, to name a few.

“This demonstration builds on the successful C-V2X showcase we organised with our members Audi, Ford and Qualcomm in Washington DC in April, said Christoph Voigt, Chairman of 5GAA.

“We are excited to witness the growing momentum behind this life-saving technology and to see our members working together to deploy C-V2X, and to make it hit the road as soon as possible.”  

“The BMW Group introduced the first C-ITS use cases already in 2013 with the market introduction of the BMW i3. Today most of envisaged C-ITS use-cases are already institutionalized. With the implementation of C-V2X, the BMW Group accomplishes the last set of the puzzle with a practical path to C-ITS showing quick benefits,” said Christoph Grote, Senior Vice President Electronics, BMW Group. 

“With its ability to safely and securely connect vehicles, along with its evolution into 5G, C-V2X is integral to Ford’s vision for future transportation in which all cars and infrastructure talk to each other,” said Thomas Lukaszewicz, Manager Automated Driving, Ford of Europe. “We are very encouraged by preliminary test results in Europe and elsewhere which support our belief that C-V2X direct communications has superior V2X communication capabilities.”

“We’re moving forward with seamless communication between cars and their environment for enhancing road safety, as well as our customers’ safety,” said Carla Gohin, Group PSA’s Vice President for Research and Advanced Engineering. “Following the first European C-V2X direct communications demonstration we hosted with Qualcomm Technologies last March, we’re pleased to work with leading automotive and technology companies today to highlight that C-V2X interoperability is a reality.” 

“This demonstration of interoperability between multiple automakers is not only another milestone achieved towards C-V2X deployment, but also further validates the commercial viability and global compatibility of C-V2X direct communications for connected vehicles,” said Enrico Salvatori, senior vice president & president, Qualcomm Europe and MEA. “We look forward in continuing to work alongside leaders in the automotive industry, like the 5GAA, BMW Group, Ford, Groupe PSA and Savari, to help advance the automotive industry’s shift towards a safer, connected and more autonomous future.” 

“As one of the V2X pioneers, our company is extremely pleased to continue to help enable the next step in the V2X revolution that we helped start back in 2008,” said Ravi Puvvala, CEO of Savari. “For the last year and a half, the Savari team has worked diligently alongside the dedicated C-V2X engineers in the 5GAA partnership. The resulting string of increasingly impressive demonstrations is continuing to convince the world that C-V2X will soon be deployed around the world.”

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Fleet management in 360

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An on-board dual camera system from global fleet management vehicle recovery and insurance telematics provider, Cartrack, reduces the costs of managing vehicle fleets, while creating new ways to motivate drivers and improve their on-the-road performance.

Historically, commercial drivers within fleets have been far removed from active management and oversight, with limited tools available in helping fleet owners understand how their drivers actually behave on the road. This lack of visual tracking ability has seen fleet managers struggle to achieve meaningful driver skills development, while also leaving companies vulnerable to poor operational performance and financial losses resulting from accidents.

Cartrack’s Drive Vision system is dramatically changing this status quo.

Drive Vision is an on-board dual camera system that records video footage with a 120-degree exterior view of the road ahead, and a 160-degree view inside the vehicle cab. Not only can fleet managers actively monitor all the footage that they wish, the system also records specific events such as speeding, harsh braking or an unforeseen action from a third-party.

Drive Vision’s video is continuously captured and then made available to users in two ways. The footage is either buffered in the unit’s memory card for up to five days, and selected time slots can be downloaded by the user via a web interface. Alternatively, footage is also automatically downloaded to the system when specific events occur, such as speeding or a collision.  The captured footage is stored at a web address and is immediately accessible to the client at any time. In addition, the data centre’s driver exception reporting mechanism can review the footage against a client’s pre-determined driver behaviour stipulations, creating a balanced and flexible driver performance assessment tool.

Cartrack CEO, Andre Ittmann, notes why Drive Vision is so useful for companies.

“There are two key strategic benefits to the technology.  Firstly, the company has a clear visual record of events in the case of an accident or legal dispute. Achieving this kind of detailed view hasn’t been possible before, and it can dramatically reduce the costs around incidents and accidents, on an ongoing basis. Secondly, Drive Vision is a highly functional, event-based coaching system. It therefore allows fleet managers to develop a culture that rewards excellent or improved performance, while also giving them the power to actively close skills gaps. “

Ittmann also notes that fleet video footage allows the company to monitor and manage aspects of its service and market performance, including the driver’s ability to access a work site, thereby ensuring timeous arrivals at designated locations and the ability to oversee passenger count and conduct.

Ittmann concludes that Drive Vision offers untold long-term advantages for companies.

“Beyond simply gaining a more efficient means to discipline errant drivers, Drive Vision also empowers fleet managers to proactively implement measures that will result in long-term benefits for their company. Ultimately, the company can also reduce costs related to driver mismanagement while simultaneously improving a driver’s skills and their performance on the road.”

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