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Anticipating the Driverless Future of Vehicles

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Anticipating the Driverless Future of Vehicles

With the rapid rise of electric vehicles (EVs) and increased investments in autonomous driving, what was once the future of vehicles is quickly becoming a present day reality.

By 2040, EVs are forecast to account for more than half of global annual car sales. A 2020 Consumer Reports survey showed that 31% of U.S. consumers said they are interested in an EV for their next car purchase, with another 40% saying they’re interested in EVs for a future purchase.

And the drive is no longer fueled by just a few players like Tesla. Every major automaker and several Silicon Valley giants are investing billions in the future of vehicles.

This infographic from eToro takes a detailed look at how a driverless future is taking shape right before our eyes.

Driverless Developments in Electric and Autonomous Vehicles

Investments in future-friendly cars are now commonplace—as are new vehicle releases—but for a long time, automakers hesitated to make the electric transition.

With the meteoric rise of Tesla, now a household name in EVs and self-driving vehicles, it’s now clear to the world’s automakers that the pivot to EVs could pay off. As of June 2021, two 100% electric car companies make it onto a list of the highest valued automakers in the world.

RankCompanyMarket Cap (June 2021)
#1Tesla (100% Electric)$662.1B
#2Toyota$247.0B
#3Volkswagen$149.9B
#4BYD$102.1B
#5Daimler$96.9B
#6General Motors$85.1B
#7NIO (100% Electric)$80.8B
#8BMW$70.4B
#9Stellantis$63.1B
#10Ford$59.7B

And as electric car companies started to climb in value, traditional automakers ramped up their EV investments.

In 2019, automakers invested at least $300 billion in EVs and batteries, primarily those based in Germany ($139.5 billion) and China ($57.0 billion). In 2021, American companies have also stepped up their EV investments, with Ford and GM committing $22 billion and $27 billion respectively to EV investments through 2025.

Autonomous, A.I. piloted vehicles are also on the cusp of further investment breakthroughs. Driverless companies Cruise (backed by GM) and Waymo (backed by Alphabet) completed more than 600,000 miles of autonomous driving testing in 2020 in California alone.

Over the next five years, the autonomous vehicle market is forecast to grow to $557 billion by 2026 from just $53 billion in 2019. It’s no surprise that other companies like Toyota, Amazon, SoftBank, Lyft, and Daimler are all investing in driverless companies.

What The Driverless Future Will Look Like

Over the next decade, the speed and visibility of vehicle evolution will depend largely on location.

In the U.S. and Europe, the current trajectory is towards reduction of impact. As consumers shift from combustion engines to EVs, many are also looking to reduce the need for a vehicle in the first place. The total number of cars in the U.S. and Europe is actually expected to drop by more than 100 million by 2030.

That contrasts with China, where car inventory is expected to surge to 276 million in 2030 from just 180 million in 2017. The country is a leader in EV rollouts, with Tesla even building a factory in Shanghai. China is also leaning heavily on autonomous driving —by 2040, driverless vehicles are expected to account for 66% of total passenger KM driven in China.

In fact, driverless vehicles and shared mobility is a leading driver in modern vehicle investment. An analysis of vehicle investments by more than 1000 companies since 2010 found that e-hailing is the leading cluster of investment, followed closely by semiconductors and sensors required by smart cars.

Vehicle Tech ClusterTotal Disclosed Investment (2010–19)
E-hailing$56.2B
Semiconductors$38.1B
AV sensors and ADAS components$29.9B
Connectivity/infotainment$20.8B
EVs and charging$19.0B
Batteries$14.3B
AV software and mapping$13.5B
Telematics and intelligent traffic$12.4B
Back end/cybersecurity$9.0B
HMI and voice recognition$7.4B

As investments in future-friendly smart cars continue to ramp up, countries already prepared for EVs are likely to benefit the quickest.

A 2020 assessment of countries by readiness for autonomous vehicles found that Singapore leads the world with driverless-ready policies and high road quality. It was closely followed by the Netherlands and Norway, with EVs already accounting for more than 56% of vehicles purchased in Norway.

Though the full rollout of EVs and driverless vehicles will look different depending on the country, it’s certain that the future of vehicles is on the horizon.

How Can Investors Take Part?

eToro’s Driverless CopyPortfolio* gives investors direct access to the driverless and electric megatrend.

Curated by experienced and proven investment teams, the thematic portfolio offers exposure to a broad range of automakers and innovators in transportation, with no management fees.

*Your capital is at risk.
CopyPortfolios is a portfolio management product, provided by eToro Europe Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

CopyPortfolios should not be considered as exchange traded funds, nor as hedge funds.

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An Introduction to MSCI ESG Indexes

With an extensive suite of ESG indexes on offer, MSCI aims to support investors as they build a more personalized and resilient portfolio.

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An Introduction to MSCI ESG Indexes

There are various portfolio objectives within the realm of sustainable investing.

For example, some investors may want to build a portfolio that reflects their personal values. Others may see environmental, social, and governance (ESG) criteria as a tool for improving long-term returns, or as a way to create positive impact. A combination of all three of these motivations is also possible.

To support investors as they embark on their sustainable journey, our sponsor, MSCI, offers over 1,500 purpose-built ESG indexes. In this infographic, we’ll take a holistic view at what these indexes are designed to achieve.

An Extensive Suite of ESG & Climate Indexes

Below, we’ll summarize the four overarching objectives that MSCI’s ESG & climate indexes are designed to support.

Objective 1: Integrate a broad set of ESG issues

Investors with this objective believe that incorporating ESG criteria can improve their long-term risk-adjusted returns.

The MSCI ESG Leaders indexes are designed to support these investors by targeting companies that have the highest ESG-rated performance from each sector of the parent index.

For those who do not wish to deviate from the parent index, the MSCI ESG Universal indexes may be better suited. This family of indexes will adjust weights according to ESG performance to maintain the broadest possible universe.

Objective 2: Generate social or environmental benefits

A common challenge that impact investors face is measuring their non-financial results.

Consider an asset owner who wishes to support gender diversity through their portfolios. In order to gauge their success, they would need to regularly filter the entire investment universe for updates regarding corporate diversity and related initiatives.

In this scenario, linking their portfolios to an MSCI Women’s Leadership Index would negate much of this groundwork. Relative to a parent index, these indexes aim to include companies which lead their respective countries in terms of female representation.

Objective 3: Exclude controversial activities

Many institutional investors have mandates that require them to avoid certain sectors or industries. For example, approximately $14.6 trillion in institutional capital is in the process of divesting from fossil fuels.

To support these efforts, MSCI offers indexes that either:

  • Exclude individual sectors such as fossil fuels, tobacco, or weapons;
  • Exclude companies from a combination of these sectors; or
  • Exclude companies that are not compatible with certain religious values.

Objective 4: Identify climate risks and opportunities

Climate change poses a number of wide-reaching risks and opportunities for investors, making it difficult to tailor a portfolio accordingly.

With MSCI’s climate indexes, asset owners gain the tools they need to build a more resilient portfolio. The MSCI Climate Change indexes, for example, reduce exposure to stranded assets, increase exposure to solution providers, and target a minimum 30% reduction in emissions.

An Index for Every Objective

Regardless of your motivation for pursuing sustainable investment, the need for an appropriate benchmark is something that everyone shares.

With an extensive suite of ESG indexes designed specifically for sustainability and climate change, MSCI aims to support asset owners as they build a more unique and personalized portfolio.

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Tracked: The U.S. Utilities ESG Report Card

This graphic acts as an ESG report card that tracks the ESG metrics reported by different utilities in the U.S.—what gets left out?

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NPUC Utilities ESG Report Card Share

Tracked: The U.S. Utilities ESG Report Card

As emissions reductions and sustainable practices become more important for electrical utilities, environmental, social, and governance (ESG) reporting is coming under increased scrutiny.

Once seen as optional by most companies, ESG reports and sustainability plans have become commonplace in the power industry. In addition to reporting what’s needed by regulatory state laws, many utilities utilize reporting frameworks like the Edison Electric Institute’s (EEI) ESG Initiative or the Global Reporting Initiative (GRI) Standards.

But inconsistent regulations, mixed definitions, and perceived importance levels have led some utilities to report significantly more environmental metrics than others.

How do U.S. utilities’ ESG reports stack up? This infographic from the National Public Utilities Council tracks the ESG metrics reported by 50 different U.S. based investor-owned utilities (IOUs).

What’s Consistent Across ESG Reports

To complete the assessment of U.S. utilities, ESG reports, sustainability plans, and company websites were examined. A metric was considered tracked if it had concrete numbers provided, so vague wording or non-detailed projections weren’t included.

Of the 50 IOU parent companies analyzed, 46 have headquarters in the U.S. while four are foreign-owned, but all are regulated by the states in which they operate.

For a few of the most agreed-upon and regulated measures, U.S. utilities tracked them almost across the board. These included direct scope 1 emissions from generated electricity, the utility’s current fuel mix, and water and waste treatment.

Another commonly reported metric was scope 2 emissions, which include electricity emissions purchased by the utility companies for company consumption. However, a majority of the reporting utilities labeled all purchased electricity emissions as scope 2, even though purchased electricity for downstream consumers are traditionally considered scope 3 or value-chain emissions:

  • Scope 1: Direct (owned) emissions.
  • Scope 2: Indirect electricity emissions from internal electricity consumption. Includes purchased power for internal company usage (heat, electrical).
  • Scope 3: Indirect value-chain emissions, including purchased goods/services (including electricity for non-internal use), business travel, and waste.

ESG Inconsistencies, Confusion, and Unimportance

Even putting aside mixed definitions and labeling, there were many inconsistencies and question marks arising from utility ESG reports.

For example, some utilities reported scope 3 emissions as business travel only, without including other value chain emissions. Others included future energy mixes that weren’t separated by fuel and instead grouped into “renewable” and “non-renewable.”

The biggest discrepancies, however, were between what each utility is required to report, as well as what they choose to. That means that metrics like internal energy consumption didn’t need to be reported by the vast majority.

Likewise, some companies didn’t need to report waste generation or emissions because of “minimal hazardous waste generation” that fell under a certain threshold. Other metrics like internal vehicle electrification were only checked if the company decided to make a detailed commitment and unveil its plans.

As pressure for the electricity sector to decarbonize continues to increase at the federal level, however, many of these inconsistencies are roadblocks to clear and direct measurements and reduction strategies.

National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.

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