Connect with us

Markets

Visualizing the Massive $15.7 Trillion Impact of AI

Published

on

For the people most immersed in the tech sector, it’s hard to think of a more controversial topic than the ultimate impact of artificial intelligence (AI) on society.

By eventually empowering machines with a level of superintelligence, there are many different possible outcomes ranging from Kurzweil’s technological singularity to the more dire predictions popularized by Elon Musk.

Despite this wide gap in potential outcomes, most technologists do agree on one thing: AI will have a profound impact on the society and the way we do business.

The Economic Impact of AI

Today’s infographic comes from the Extraordinary Future 2017, a new conference in Vancouver, BC that focuses on emerging technologies such as AI, autonomous vehicles, fintech, and blockchain tech.

In the below infographic, we look recent projections from PwC and Accenture regarding AI’s economic impact, as well as the industries and countries that will be the most profoundly affected.

Visualizing the Massive $15.7 Trillion Impact of AI

According to PwC’s most recent report on the topic, the impact of artificial intelligence (AI) will be transformative.

By 2030, AI is expected to provide a $15.7 trillion boost to GDP worldwide – the equivalent of adding 13 new Australias to the global economy.

A Geographic Breakdown

Where will AI’s impact be most pronounced?

According to PwC, China will be the region receiving the most economic benefit ($7.0 trillion) from AI being integrated into various industries:

RegionEconomic Impact of AI (2030)% of Total
China$7.0 trillion44.6%
North America$3.7 trillion23.6%
Northern Europe$1.8 trillion11.5%
Developed Asia$0.9 trillion5.7%
Southern Europe$0.7 trillion4.5%
Latin America$0.5 trillion3.2%
Rest of World$1.2 trillion7.6%
Total$15.7 trillion100.0%

Further, the global growth from AI can be divided into two major areas, according to PwC: labor productivity improvements ($6.6 trillion) and increased consumer demand ($9.1 trillion).

Industries Most Affected

But how will AI impact industries on an individual level?

For that, we turn to Accenture’s recent report, which breaks down a similar projection of $14 trillion of gross value added (GVA) by 2035, with estimates for AI’s impact on specific industries.

Industry2035 GVA (Baseline)2035 GVA (AI steady state)
Manufacturing$8.4 trillion$12.2 trillion
Professional Services$7.5 trillion$9.3 trillion
Wholesale & Retail$6.2 trillion$8.4 trillion
Public Services$4.0 trillion$4.9 trillion
Information & Communication$3.7 trillion$4.7 trillion
Financial Services$3.4 trillion$4.6 trillion
Construction$2.8 trillion$3.3 trillion
Transportation & Storage$2.1 trillion$2.9 trillion

Manufacturing will see nearly $4 trillion in growth from AI alone – and many other industries will undergo significant changes as well.

To learn more about other tech that will have a big impact on our future, see a Timeline of Future Technology.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Comments

Cars

Tesla’s Valuation Surpasses Ford and GM Combined

Tesla is not only the top valued U.S. automaker, it’s now worth more than Ford and GM combined. Will the rally continue, or will short sellers win the day?

Published

on

telsa gm ford valuation

Chart: Tesla is Worth More than Ford and GM Combined

Tesla has been on a roller coaster ride of market sentiment in recent years, but the electric car company is starting off the new decade on a high note.

The company is not only America’s most valuable automaker, it’s now worth more than Ford and GM combined.

tesla ford gm market caps

Tesla’s valuation has already surpassed the $100 billion mark – a significant milestone for a company that produces a fraction of the vehicles of its direct competitors.

Here’s a comparison of the top selling models in the U.S. for Ford, GM, and Tesla.

RankModelUnit Sales (Q4 2019)
1Ford F-Series233,952
2Chevrolet Silverado163,311
3Chevrolet Equinox92,092
4GMC Sierra68,722
5Ford Explorer51,284
6Ford Escape47,587
7Tesla Model 347,275
8Ford Edge37,621
9Ford Transit36,885
10Chevrolet Malibu34,314

A quick glance at this list is revealing. Though Tesla’s Model 3 put up strong sales numbers, it’s still only a small percentage of vehicles sold by U.S. automakers.

So, what’s driving Tesla’s meteoric growth, and is it sustainable? Below, we’ll take a high-level look at the bull and bear cases for the company.

The Bull Case for Tesla Motors

Tesla posted losses of $1.1 billion in the first half of 2019, but since then, the company has turned the situation around in dramatic fashion.

The automaker had a surprising third quarter with not only record deliveries of 97,000 cars, but also a profit of $143 million. Deliveries broke yet another record in Q4 2019, totaling 112,000 vehicles. These announcements helped improve market sentiment, sending the company’s stock back on an upward trajectory heading into 2020.

tesla bull quotes

Here are three reasons some analysts and media are still bullish on Tesla:

1. Tapping into the World’s Largest Electric Car Market

For a long time, foreign companies looking to manufacture products in China couldn’t do so without working through a domestic partner. Recently though, Tesla became the first major benefactor of a policy change, becoming the first wholly foreign-owned automaker in China.

Gigafactory 3 in Shanghai was completed in October, and was built in just 10 months – an impressive feat. Furthermore, cars have already begun rolling off the assembly lines, as Tesla targets an annual production of 150,000 Model 3s.

Perhaps the best part for a company with historically volatile earnings: Tesla claims the facility was 65% cheaper to build than its production plant in the U.S.

2. Still the Range King

2019 saw many of the more established automakers take their first swings at Tesla.

The United States Environmental Protection Agency (EPA) handed out official range ratings for several new electric cars, but none could unseat the king:

ev range ratings

3. Musk’s Megaphone

Few CEOs capture the attention of media quite like Elon Musk. While his actions can sometimes have unintended consequences for the company – the infamous “funding secured” tweet, for example – Elon Musk’s massive reach allows the company to sell vehicles without spending a dime on advertising.

By contrast, in 2018, Ford and GM spent $2.3 billion and $3.1 billion respectively on advertising in the U.S. alone.

The Bear Case for Tesla Motors

While the second half of 2019 has given Tesla bulls much to celebrate, many investors are remaining vigilant, if not skeptical.

tesla bear quotes

1. Stiff Competition in China

Tapping into the world’s largest EV market is a double-edged sword for Tesla, as they face an onslaught of domestic and foreign competitors.

The Chinese government has also generously supported its own EV industry, handing out over $60 billion in subsidies to over 400 companies. Tesla will be competing against state-owned enterprises like BAIC, one of the largest players in the Chinese EV market.

Western automakers are also gaining a foothold in China as well. Volkswagen and its Chinese joint-venture partner, SAIC Motor, will begin producing cars at two factories in China in the autumn of 2020.

The German automotive giant has also forged partnerships with Chinese battery manufacturers, including China’s biggest battery company Contemporary Amperex Technology (CATL).

2. Getting Ratio’d

Tesla has an extremely high premium on earnings when compared with its more established counterparts in the auto industry.

CompanyTickerEnterprise Multiple* (last 12 months)
ToyotaNYSE: TM8.4x
GMNYSE: GM10.0x
FordNYSE: F14.5x
TeslaNASDAQ: TSLA50.2x

The enterprise multiple (EV/EBITDA) measures the dollars in enterprise value for each dollar of earnings. The ratio is commonly used to determine if a company is undervalued or overvalued compared to peers.

The Bottom Line is… the Bottom Line

Of course, Tesla’s future will be dictated by variables more complex than can be summed up in a tidy pro/con list.

Musk has shown a willingness to sacrifice profitability in the name of growth – Tesla has yet to prove it can deliver consistent, quarterly profits.

It’s hard to be profitable with that level of growth. We could slow it down, but then that would not be good for sustainability and the cause of electric vehicles.

– Elon Musk

After reporting a record number of deliveries in the final quarter of 2019, there’s no doubt that true believers and short sellers alike will be watching the company’s January 29, 2020, earnings call with much anticipation.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

China

How China Overtook the U.S. as the World’s Major Trading Partner

China has become the world’s major trading partner – and now, 128 of 190 countries trade more with China than they do with the United States.

Published

on

How China Overtook the U.S. As the World’s Trade Partner

In 2018, trade accounted for 59% of global GDP, up nearly 1.5 times since 1980.

Over this timeframe, international trade has transformed significantly—not just in terms of volume and composition, but also in terms of the countries that the rest of the world leans on for their most important trade relationships.

Now, a critical shift is occurring in the landscape, and it may surprise you to learn that China has already usurped the U.S. as the world’s most dominant trading partner.

Trading Places: A Global Shift

Today’s animation comes from the Lowy Institute, and it pulls data from the International Monetary Fund (IMF) database on bilateral trade flows, to determine whether the U.S. or China is a bigger trading partner for each country from 1980 to 2018.

The results are stark: before 2000, the U.S. was at the helm of global trade, as over 80% of countries traded with the U.S. more than they did with China. By 2018, that number had dropped sharply to just 30%, as China swiftly took top position in 128 of 190 countries.

The researchers pinpoint China’s 2001 entry into the World Trade Organization as a major turning point in China’s international trade relationships. The dramatic shift that followed is clearly demonstrated in the visualization above—between 2005 and 2010, a number of countries tipped towards Chinese influence, especially in Africa and Asia.

Over time, China’s dominance has grown dramatically. It’s no wonder then, that China and the U.S. have a contentious trade relationship themselves, as both nations battle it out for first place.

A Tale of Two Economies

The United States and China are competitors in many ways, but to be successful they must rely on each other for mutually beneficial trade. However, it’s also the major issue on which they are struggling to reach a common ground.

The U.S. has been vocal about negotiating more balanced trade agreements with China. In fact, a mid-2018 poll shows that 62% of Americans consider their trade relationship with China to be unfair.

Since 2018, both parties have faced a fraught relationship, imposing major tariffs on consumer and industrial goods—and retaliations are reaching greater and greater heights:

trade war china us

While a delicate truce has been reached at the moment, the trade war has caused a significant drag on global growth, and the World Bank estimates it will continue to have an effect into 2021.

At the same time, China’s sphere of influence continues to grow.

One Belt, One Road, One Trade Direction?

China seems to have a finger in every pie. The nation is financing a flurry of megaprojects across Asia and Africa—but one broader initiative stands above the rest.

China’s “One Belt, One Road” (OBOR) Initiative, planned for a 2049 completion, is advancing at a furious pace. In 2019 alone, Chinese companies signed contracts worth up to $128 billion to start Chinese large-scale infrastructure projects in various countries.

While building new highways and ports abroad is beneficial for Chinese financiers, OBOR is also about creating new markets and trade routes for Chinese goods in Asia. Recent research found that the OBOR program’s infrastructure expansion and logistics performance improvements led to positive effects on China’s exports.

Nevertheless, it’s clear the new infrastructure network is already transforming global trade, possibly cementing China’s position as the world’s major trading partner for years to come.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Gen III Company Spotlight

Subscribe

Join the 130,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular