An economic revolution is coming

The significance of next week’s Tesla event… what it means for self-driving… how it will change the automotive ecosystem… an urgent event with Luke Lango

People call it a technological change…it will be more like an economic revolution.

Next week, Tesla is holding an event that has the potential to radically reshape huge parts of our economy and your portfolio.

Yes, that’s a great statement. I don’t write it lightly.

If you read Digest regularly, you know I try to keep a measured tone. But what is about to arrive at our door will not be “measured”. It’s the next technological step that—if it works as claimed and spreads across our economy as it likely does—will redirect the flow of trillions of dollars this decade.

Disturbances? Yes, I’m coming.

Opportunities? They are also on their way.

We’ve reached one of those tournament moments that push our world in a different direction, changing the playing field forever.

Let’s go through together…

A week from tomorrow, Elon Musk and Tesla will hold the “We, Robot” event.

The company is expected to unveil its first dedicated robotaxi. This is being heralded as a “game changer” for the future of autonomous transport.

And if you’re not sure why this is going to be the economic A-bomb I just painted it in, stay with me…

“We, Robot” is expected to reach a watershed moment for Tesla, as the company introduces its first dedicated robotaxi, tentatively named “Cybercab.” Tesla is also expected to show revolutionary advances in fully autonomous driving (FSD) software and artificial intelligence as the company pushes toward a future where human drivers are obsolete.

At the heart of this transportation revolution is convenient, driverless travel at a fraction of the cost of traditional services.

If it’s all it’s cracked up to be, this will make waves across the automotive, technology and investment sectors.

The end of an American love story?

Americans have a long-standing love affair with their cars. They’ve been featured in songs, movies, and pop culture in general for decades.

But you know what Americans love even more than cars? Being able to put food on the table…which has become more and more expensive over the past four years.

What happens when we give Americans (and the world) the option to have all the conveniences of owning their own car without the same expense?

Well, we’re about to find out.

Consider what a Tesla robotaxis launch would mean…

With the touch of a button, you can have a car at your disposal, 24/7, for a much lower all-in cost than owning a car (or supposedly calling an Uber).

Today, car ownership can be a major financial burden. AAA reports that last year the average annual cost to own and operate a car in the US was about $10,000. A fully autonomous, reliable and always-present robotaxi would save consumers thousands of dollars by eliminating the need to own a car.

Yes, there will be plenty of Americans who will still want theirs. But if you’re one of the 66.2 percent of Americans living paycheck to paycheck today (according to MarketWatch in August), aren’t you seriously considering giving up your car to free up thousands of dollars a year?

According to a 2022 study by McKinsey & Co., 25% to 30% of urban dwellers would consider using shared autonomous vehicles as their primary mode of transportation if they were widely available. And if 25% to 30% of Americans decide to stop buying cars, prepare for a financial earthquake.

Consider the economic and investment chain…

First, and obviously, we have the major automakers who would be rattled by this size of the drop in auto demand. We’re talking unprecedented disruption that would require a pivot to the business model and possibly massive layoffs.

“Wait, Jeff, you’re not thinking straight.” Less car ownership does not mean less cars. Manufacturers would only create self-driving cars, so the need for the same number of jobs would remain.”

Serious? Cars are parked 95% of the time. If you simply “rent” your car, when you’re done with it, it’s quickly driven away to serve someone else. Such collective ownership of machines will radically explode the efficiency of machines, reducing the number needed, which would impact the number of workers needed.

Now consider the side effects…

With 25% to 30% fewer drivers (at first – expect this percentage to grow), what is happening to the auto insurance industry?

According to Benzinga, US auto insurance premiums total over $308 billion a year. So what happens to far fewer car owners? Are we losing a lot of insurance jobs? Or is the insurance model shifting from vehicle coverage to some sort of individual trip-based coverage? What would be the impact on business models?

Then what about auto mechanics and chain repair shops like Pep Boys and Firestone?

With a massive reduction in the number of vehicles on the road, we could see a dramatic drop in demand for those businesses.

Note that autonomous electric vehicles, such as Tesla’s robotaxi fleet, have fewer moving parts than internal combustion engines. So it’s not just “fewer people driving” but “fewer cars on the road requiring traditional car maintenance”.

So what about the goods?

Well, there are major crosswinds.

On the one hand, vehicles require large amounts of steel. With 30% fewer people owning cars, that could mean a big reduction in steel demand.

But would this demand shift to autonomous vehicle charging stations and building infrastructure?

We could ask similar questions about aluminum, copper, lithium, and rare earth metals. Does this help or hurt related mining businesses? How about mining jobs?

Here’s one you may not have seen coming…

What about real estate?

If 30% fewer Americans own cars, we’ll need a lot less public parking. Think downtown Manhattan, Los Angeles or Chicago. Consider the potential economic value of a square block that, until now, is a parking lot.

Does this become a new high-rise residential tower that adds to the supply of apartments, reducing pressure on rental rates?

Is it becoming new mixed-use retail, resulting in new jobs?

Now, getting back to vehicles, forget about consumer cars… What happens when autonomous driving hits our trucking industry?

In the US, this is a $216 billion market with approximately 3.5 million drivers. Do you think “robo trucks” could be disruptive there?

Now consider the investment implications…

What will be the impact of all this on the stock prices of not just Tesla, but Ford as well…Alphabet (which owns Waymo, another self-driving company)…Uber…Geico Insurance…Advance Auto Parts … US Steel… Freeport-McMoRan… Greystar Real Estate Partners… Knight-Swift Transportation Holdings… the list goes on…

And what about the stocks of the companies that make the components for the Tesla fleet or robotaxis? All the sensors and semiconductor chips? Plastics? Electronic circuits?

Think about the affected supply chains for all the sectors I mentioned above.

But we’re just scratching the surface…

What makes Tesla’s “We, Robot” event so groundbreaking isn’t its impact on the auto industry—enormous as that will be. It’s what it means for the global economy in general.

Consider what’s at the heart of this robotaxi…

Technology that replaces the need for people.

Does this remind you of anything?

Maybe the International Breakers Association strike that began yesterday, with dockworkers demanding assurances that the United States Maritime Alliance will never replace human workers with automation?

Maybe the Screen Actors Guild/Writers Guild of America strike in 2023, with Hollywood workers demanding protections against the growing capabilities of artificial intelligence?

In 2013, Amazon used about 1,000 robots in its warehouses. Last year, this number reached 750,000.

Think about the future impact of AI and automation on, well, everything…

It’s already affecting jobs for customer service agents… paralegals and paralegals… accountants… medical diagnosticians… radiologists… financial analysts… journalists… recruiters… underwriters.. .and marketers… to name a few.

Should we expect it to stop?

Bottom line: we’ve reached the economic/investment Rubicon.

Next Monday, October 7th at 10AM EST, our tech expert Luke Lango is holding a hotline to discuss Tesla’s robotaxi event and its economic/investment implications.

Here is how Luke describes it:

In that show, I’ll break down all the recent revolutionary developments in the autonomous vehicle industry, including how robotaxis are set to completely transform transportation, save millions of lives, and potentially put up to $30,000 a year in passive income in your pocket.

We’ll also dive headfirst into the highly anticipated launch of Cybercab, which could unlock a whopping $9 trillion in value — more than all of Elon Musk’s companies combined.

We’ll bring you more details on this in the coming days, but to book your place now, just click here. In my opinion, it will be one of the most important events that our company organizes this year. You need to know what’s coming and the likely impact.

As we wrap up, consider this…

Tesla is one of the most transformative car companies in history, right? Well, what does it tell you that Musk no longer thinks of Tesla as a car company?

In April, on Tesla’s earnings call, he made this clear:

We should be considered an AI robotics company. If you only value Tesla as a car company – it’s just the wrong frame…

If someone doesn’t believe Tesla is going to solve autonomy, I don’t think they should be an investor in the company. And we will. And we are.

Tesla’s “We, Robot” event on October 10 marks the beginning of a new era for autonomous transportation

It is one that will have far-reaching implications throughout the economy.

By making autonomous vehicles a reality, Tesla opens the door to tectonic disruption, though it similarly offers vast new opportunities. Luke thinks he’s seen one of them, so I encourage you to sign up here for his October 7 show.

Bottom line: Tomorrow’s technologies are about to penetrate today, and the change will be unlike anything we’ve seen before.

Have a good evening,

Jeff Remsburg