Who wants a faster horse? · Solar Wind Coal Gas $/MWh 0 20 40 60 80 100 120 Solar Wind Coal Gas...

Who wants a faster horse?Living in an age of disruption

August 2020

0

Gerard ReidCo-Founder & Partner, Alexa Capital

Confidential – August 2020

CONTENTS

A step back in time

A look at the future

Implications

1Confidential – August 2020

LET’S NOW GO BACK TO 2010 AND TRY TO PREDICT SOME OF THE MAJOR THINGS GOING ON TODAY IN THE WORLD OF TRANSPORT


COULD YOU HAVE PREDICTED THAT MOBILITY TESLA WOULD BE THE MOST VALUABLE CAR COMPANY IN THE WORLD?

EVs Incumbents

Source: Bloomberg

$287 billion

$22 billion

$43 billion

$180 billion

$40 billion

$34 billion

$81 billion

Automobiles


COULD YOU HAVE PREDICTED THAT OIL PRODUCERS WOULD HAVE TO PAY PEOPLE TO TAKE THEIR OIL?

Source: Bloomberg

Oil


WHO COULD HAVE PREDICTED THAT YOU COULD COMMERCIALLY FLY AN ELECTRIC PLANE?

Planes


WHO COULD HAVE PREDICTED THAT YOU COULD BUY A SELF-DRIVING CAR?

Source: Tesla

AI


COULD YOU HAVE PREDICTED THAT A PRIVATE COMPANY SPACEX WOULD REVOLUTIONISE SPACE TRAVEL?

Space Travel


COULD YOU HAVE PREDICTED THE EXTENT OF THE PRESSURE TO DECARBONISE?

1. The evidence on climate risk is compelling investors to reassess core

assumptions about modern finance

2. Investors are increasingly reckoning with these questions and recognizing

that climate risk is investment risk.

3. Because capital markets pull future risk forward, we will see changes in

capital allocation more quickly than we see changes to the climate itself’

Larry Fink, CEO Blackrock

Climate Risk


COULD YOU HAVE PREDICTED THAT MICRO-MOBILITY WOULD BECOME SO POPULAR?

Shared Mobility

0m2m

5m

13m

18m22m

28m

35m

84m

2010 2011 2012 2013 2014 2015 2016 2017 2018

Station-based bike share Dockless bike share E-scooter share

84m of shared micromobility trips taken in the US in 2018

Source: NACTO


CONTENTS

A step back in time


Implications


ELECTRICITY IS BECOMING THE WORLD’S MOST IMPORTANT ENERGY SOURCE

1. Electricity


DRIVER #1: OUR DIGITAL WORLD CAN NOT SURVIVE WITHOUT ELECTRICITY!

Electricity


DRIVER #2: PHYSICS AND ECONOMICS ARE DRIVING AUTOMOBILES TOWARDS AN ELECTRIC FUTURE

77% efficiency

ICE Hybrid EV

28% efficiency25% efficiency

Engine

&

transmission

Thermodynamic

lossesPlant to

tank

Oil Engine

&

transmission

Thermodynamic

losses

Plant to

tank

Oil Li-ion

batteries

Battery

chargerGrid lossesRenewables

6 litres per 100km 4.5 litres per 100km

€6.50 €4.50$4.80 $3.64

15.5kWh per 100km

€4.65

€1.08

$1.75

$1.35Commercial

Retail

Source: Alexa Capital 13Confidential – August 2020

Electricity

DRIVER #3: ECONOMICS ARE ACCELERATING BUS FLEET ELECTRIFICATION

Electricity

Purchase price

Equipment replacement

Maintenance costs

Fuelling costs Total cost

Source: Alexa Capital

330

190

150

40

105

210

109 393

694

833

0

100

200

300

400

500

600

700

800

900

£’ 0

00

Lifetime Cost of Single Deck Electric vs Diesel Bus

Electric bus

Diesel bus

Upside with

falling energy prices


IN ADDITION, BATTERY COSTS ARE GOING TO FALL FURTHER IN THE NEXT YEARS AND PERFORMANCE AND LIFETIME IS GOING TO IMPROVE


91.3

73.5

63.8 62.3 61.3

85.480.8 80.1 79.7

79.4

71.7 70.6 69.8

0

10

20

30

40

50

60

70

80

90

Benchmark Material pricingdecrease

Energy densityincrease

Production rateincrease

Scrappagedecrease

$/kWh

by 10%

by 20%

by 30%

Source: BNEF & CATL

Electricity

1000+km range EVs are in sight!

DRIVER #4: LOW COST RENEWABLES...

Electricity

Source: Alexa Capital 16

LCOE by technology in different markets

0

10

20

30

40

50

60

70

80

90

100

Solar Wind Coal Gas

$/M

Wh

0

20

40

60

80

100

120

Solar Wind Coal Gas

$/M

Wh

0

20

40

60

80

100

120

140

Solar Wind Coal Gas

$/M

Wh

0

10

20

30

40

50

60

70

80

90

Solar Wind Coal Gas

$/M

Wh


DIGITALISATION 2.0 IS THE KEY TECHNOLOGY DISRUPTOR OF THE NEXT DECADE, AND WILL TRANSFORM THE WAY WE THINK ABOUT ENERGY & MOBILITY

17

Impact of Big Technology Shifts on Economic Development Cloud

computing

Big Data

AI

IoT

5G

Digitalisation 2.0

Digitalisation


DRIVER #1: ECONOMICS

Digitalisation


DRIVER #2: EASE OF USE

Digitalisation


DRIVER #3: COVID-19 IS ACTING TO ACCELERATE THE DIGITAL TRANSITION

Digitalisation


INNOVATION WILL ACCELERATE

Innovation


DRIVER #1: ARTIFICIAL INTELLIGENCE – SELF LEARNING COMPUTERS

Innovation

DRIVER #2A: COMPETITION FROM CHINA NOTING THAT THEY ALREADY DOMINATE THE GLOBAL EV VALUE CHAIN

23Confidential – August 2020Source: Alexa Capital /Roland Berger

0%

10%

20%

30%

40%

50%

2010 2017

Electric vehicle sales

0%

10%

20%

30%

40%

50%

60%

2010 2017

Li-ion battery capacity

0

40,000

80,000

120,000

2010 2017

Electric bus sales

0%

30%

60%

90%

2010 2017

Electric scooters sales

0%

30%

60%

90%

2010 2017

Rare earth metals

0%

20%

40%

60%

2010 2017

Graphite

Innovation

DRIVER #2B: THEY ARE LEADING THE WAY IN KEY NEXT GENERATION TECHNOLOGIES…


China

Source: WIPO, Oliver Wyman

Patents applications in China and the US

CONTENTS

A step back in time


Implications


1. THE FIRST MASS USAGE OF ARTIFICIAL INTELLIGENE WILL BE IN VEHICLES


2. MY DAUGHTER WILL NOT LEARN TO DRIVE


67

55

36

31

1613

3. VALUE IN TRANSPORT IS MOVING FROM PRODUCTS TO NEW MOBILITY SERVICES

28

VALUATION OF THE BIGGEST EUROPEAN CAR MANUFACTURERS VS UBER

in billion $


4. VALUE IN THE AUTOMOBILE IS GOING TO SOFTWARE AND DIGITAL HARDWARE

TODAY TOMORROW

80/90% hardware

10/20% software

40% hardware

50% software10% digital hardware


5. EVERY CAR SOLD WILL BE FULLY ELECTRIC WITHIN A DECADE


6. BIG OIL AND BIG AUTO WILL BECOME MAJOR PLAYERS IN ELECTRICITY?

5. Big Oil and Autos


Private & Confidential – Page 32

7. WE WILL SEE NEW FORMS OF TRANSPORT

THERE IS AN OPPORTUNITY TO CREATE GLOBAL CHAMPIONS AS AT THE START OF THE 20TH

CENTURY


Who wants a faster horse? · Solar Wind Coal Gas $/MWh 0 20 40 60 80 100 120 Solar Wind Coal Gas...

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