You have likely noticed that we are living through a time of great change. The Covid-19 pandemic has certainly accelerated change by rapidly increasing the adoption of the internet and e-commerce in our everyday lives. Nevertheless, the internet is just one part of the modern industrial revolution and there are plenty more technologies that will function as a platform for change and will foster great leaps in economic productivity. It helps to look back at the last industrial revolution to really understand the magnitude of the change that we are currently living through.
The last industrial revolution was brought on by three revolutionary technologies that reached maturity at the same time. These technologies were fossil fuels as a new form of energy generation, the internal combustion engine (ICE) as a new form of transportation, and the telephone as a new form of communication. Each of these technologies created countless jobs, trillion-dollar industries, and changed the world as we know it. Do you see any similarities with the technologies reaching maturity today?
Just like fossil fuels, the internal combustion engine and the telephone changed our world during the 20th century, I expect renewable energy, new energy vehicles and the internet will change our world in many of the same ways. To make matters more interesting, there are even more revolutionary technologies reaching maturity today than there were in the 20th century. Artificial intelligence, genetics, blockchain, energy storage and robotics are other examples of revolutionary technologies that are reaching maturity, or have already reached maturity. The combined effect of all of these technologies reaching maturity at the same time will bring about a period of innovation, and economic productivity, unlike anything in history - as Cathie wood explains so well in this video.
I expect renewable energy to change the world during the 21st Century in many of the same ways that fossil fuels changed the world during the 20th century. Solar energy and wind energy have recently become the cheapest forms of energy generation, according to reports, and trends indicate that they will only get cheaper. As renewable energy prices continue to decline, hydrogen will also become increasingly viable as an energy source. Combined, I believe, solar, wind, geothermal, hydrogen, and grid-scale energy storage have the potential to completely disrupt how we consume energy - from how you heat your home, to how you get around, and everything in between.
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As renewable energy gets cheaper, and the technology supporting lithium batteries and hydrogen fuel cells continues to mature, new energy vehicles will become increasingly competitive against fossil fuel vehicles. Even with current energy prices and battery technology, electric trucks seem competitive against diesel trucks, as outlined in this Youtube Video by Undecided. A study that only examined fuel costs found that the average cost to operate an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117. You may be wondering, "why aren't electric trucks in production already?" Unfortunately, it seems that battery shortages will constrain the supply of electric trucks for the foreseeable future. Nevertheless, electric cars and trucks are just the beginning. Any form of transportation could theoretically be decarbonized using new energy technology. Airbus aims to develop a net-zero emission commercial airliner by 2035 - using hydrogen. The world's first hydrogen powered train is already running in Germany. Not to mention, several companies are working to develop hydrogen fuel cell powered cargo ships as a means to decarbonize global shipping.
Electric vehicles have much simpler designs and significantly less moving parts than internal combustion engine (ICE) vehicles. Whereas ICE vehicles have over 2000 moving parts, electric vehicles typically have only around 20 moving parts. Not to mention, electric vehicles have no exhaust system, less need for cooling, and don't need to change "oil, fan belts, air filters, timing belts, head gaskets, cylinder heads and spark plugs." All of these factors contribute to making electric vehicles significantly cheaper over time than ICE vehicles - in addition to cheaper fuel costs.
To be fair, electric vehicles do have one massive expense that ICE vehicles do not, the battery pack. In some cases, this can be very expensive if it is not under warranty. Fortunately, many of the biggest electric vehicle companies are finding ways to remove this burden from the consumer. Tesla is starting its own insurance company and Nio was the first to allow consumers to lease the battery pack, thereby completely removing the burden from the consumer. If you subscribe to the "Battery Pack as a Service" you will get a new battery pack if it falls below certain parameters. Additionally, Nio car owners can use [Video]Nio Battery Swap Stations to quickly swap or upgrade batteries whenever they want. (Note: Tesla vehicles cannot upgrade batteries after purchase.) On the other hand, this leasing system enables Nio to generate an additional revenue stream by using the batteries in the battery swap stations as energy storage. In other words, Nio is happy to take responsibility for all of the batteries in its cars because they may use the extra car batteries to store energy when energy prices are low, and sell energy when energy prices are high.
By now, most of us will agree that the internet has completely changed our world and has cemented itself is our new means of communication - and more. But how did we get here? It seemed obvious in the year 2000, during the infamous dot-com bubble, that the internet would change the world. But why did it take so long?
One of the biggest obstacles that the internet needed to overcome was a lack of infrastructure and lack of incentives for monopolistic internet providers to upgrade that infrastructure. By 2008, the average internet speed in the U.S. was just under 5 Mb/s - not even enough to have a video call. The average internet speed remained unchanged for years, given that Internet Service Providers (ISPs) had no incentive to upgrade it - until Google finally gave them a little motivation. In 2010, Google launched Google Fiber, a fiber optic internet service that provided internet speeds up to 1 Gb/s, 1000x faster than current internet speeds at the time. Understandably, ISPs were never excited about the idea of improving the internet infrastructure. It would mean that the thousands of miles of co-axial cables and DSL cables laid underground around the country would have to be replaced with more expensive fiber optic cables. Fortunately, after Google launched Google Fiber, ISPs realized they had no choice but to begin improving the internet infrastructure - or someone else would do it. Over the next 6 years, the average internet speed in the U.S. increased by more than 3-fold, increasing from just under 5 Mb/s in 2010, to over 15 Mb/S in 2016. [Source] The average internet speed is only expected to increase as more infrastructure transitions to fiber optic cables and as the IT infrastructure learns to use the full potential of fiber optic data transmission. According to Fastmetric, fiber optic cables have a theoretical limit of 10 Gb/s data transmission while cable connections and DSL connections have a theoretical limit of 300Mb/s and 75 Mb/s, respectively.
Although it is hard to confirm, many believe Google never intended to compete with ISPs but instead simply wanted to motivate them to improve internet speeds. Faster internet speeds would not only benefit Google's existing platforms, by allowing them to serve more engaging content, but also enable them to expand into other products such as video calling, IoT devices, and much more. Some would say, Google Fiber was the most successful failure in internet history - and I would agree.
Going forward, it is likely that emerging countries will not have to experience the same infrastructure struggles and instead may be able to take advantage of new innovative technologies to gain access to high speed internet. Most notably, SpaceX has already launched a beta for its new Starlink Internet Service which allows users to get internet speeds between 50 -150 Mb/s - and is expected to eventually work anywhere in the world. There are also several other innovative companies looking to launch similar satellite networks such as AST Spacemobile and Amazon. Considering that half of the world still does not have internet, these innovations could have a major impact on global access to internet, and therefore may provide significant growth opportunities for internet companies.
As Cathie Wood outlines in this video, one of the characteristics of innovation is that it spawns more innovation. Many emerging disruptive technologies of today, would not be possible without innovations that started decades ago. All of the emerging disruptive technologies such as genetics, AI, blockchain, energy storage and robotics would not be possible if it weren't for other disruptive technologies that started development decades ago. For example, AI is heavily reliant on computing power and vast amounts of data. Developments in semi-conductor manufacturing and design have provided great leaps in computing power. Meanwhile, the internet has created massive amounts of data and has made it more accessible than ever. Combined, these two disruptive technologies provide a ripe environment for AI to make great leaps forward.
Just like AI, many disruptive technologies of today are benefitting from disruptive trends that started decades ago. The world is changing. Are you ready?