13 November 2013

There’s a scheme getting underway in Milton Keynes that could be straight out of a science fiction novel. Residents will soon be whizzed around in small, futuristic pods that they can order from their smartphones.

When their vehicle arrives they’ll get a message: “You’re pod is ready and waiting at the entrance of the train station”. They hop in, the roof closes over them, and off they go.

The government is aiming to get this scheme up and running by 2017, but they’ll be testing it out with drivers for a couple of years from 2015. So is this the start of a transport revolution?

Some of the finest minds in the business world are working on projects they hope will change the way we travel forever. They see a world where computer mapping software eliminates traffic jams, commuting times are slashed to a fraction of what they are now, and road accidents are almost non-existent as reliable robots take control.

Genuine innovation in the transport industry has been in short supply in recent decades. We first landed on the moon 44 years ago, but don’t go there anymore. The space shuttle programme has been closed down.

And even crossing the Atlantic by jet takes a lot longer nowadays than it did when Concorde entered commercial service back in 1976.

But there is clearly an appetite for faster, safer and more energy efficient travel. Elon Musk, head of the electric car company Tesla made headlines in the summer with his vision of the ‘Hyperloop’.

This vacuum tube could whisk passengers from San Francisco to Los Angeles in half an hour – a 350-mile journey.

Musk was partly responding to the proposed California high-speed train, which would be the most expensive to build per mile in the world as well as being the slowest bullet train in the world.

Surely Silicon Valley should be able to come up with something more impressive, he reasoned. Musk co-founded PayPal with early Facebook investor Peter Thiel, who once quipped, “we wanted flying cars, instead we got 140 characters”, referencing the microblogging site Twitter.

So maybe some of the technology world’s sharpest minds will begin to focus more on upping the pace of progress in transportation.

The fuels of the future

So far, the big progress being made in personal transport has been more mundane, focusing on car fuel systems. Electric, hybrid drive, gas, bio-diesel, fuel cells; together with increasingly efficient engines these are important and extremely useful areas of gradual improvement.

And subscribers to Red Hot Penny Shares will know the portfolio contains two stocks which are commercialising cleaner and more efficient fuels.

These initiatives should be profitable, bring environmental benefits and, unlike the Hyperloop, they are happening here and now. These new fuel systems are being trialled with customers and could take off over the next couple of years.

Such new fuel technologies could make a lot of money for investors. However, it is fair to say that, while they offer valuable gains, they are incremental in nature. What we really need is for technology to start providing some radical breakthroughs in transport, in the same way that has happened in medical science and IT over the last few years.

The driverless car could do just that. The experiment in Milton Keynes, which aims to have 100 fully-automated cars driving about the town, is part of a scheme to encourage and showcase low-carbon technologies. And that shows that people are waking up to the possible benefits of a highly efficient, driverless transport system.

In the US, Google has been experimenting with a converted Toyota Prius and claims to have completed over 300,000 driverless miles. Three states have licensed robotic cars for tests. The cars have a manual override, but ironically, the only recorded accident occurred when a human rather than the machine was in control.

These cars could add $1.9trn a year to the economy

These cars generate a detailed 3D map of their environment, analyse data from on-board sensors and combine this information with existing high resolution maps to navigate safely and efficiently.

Another of our Red Hot shares is a mapping software specialist, and autonomous cars are part of the huge and growing demand for geographic and spatial data. You can find out more about that, and more about driverless cars, in my new report: The Sixth Revolution.

It’s not hard to see the benefits here. One is that the machine is less prone to road rage and lapses in driving skill or stamina than a human: it should be safer and reduce accidents. Over a million people are killed each year in traffic accidents around the world, the majority of which are down to human error.

Another big potential gain is as a shared-use vehicle. In an urban environment you could order one up to your door when you need it – put in the destination and off you go. No need to worry about the route or getting lost and plenty of time freed up to do something productive.

It might be similar to a taxi, or to a hire car if you need it for longer; but it should be much more efficient if it’s used widely. Governments might even change the laws so that partially sighted people or those without licences could have cars.

Ultimately, huge savings in emissions and time could be made if a road was exclusively used by autonomous cars able to navigate safely at the optimum efficient speed. Given the scale of the transport market, and the promise of saving time and lives, it’s possible to come up with some eye-catching numbers.

McKinsey suggests an economic impact of $200bn to $1.9trn per year in 2025 if the technology is adopted. Such numbers suggest that driverless vehicle technology is at the very least going to get a fair hearing.