The connected car is already here: Witness Tesla's (TSLA 3.01%) over-the-air updates and General Motors' (GM 0.90%) 4G LTE in-vehicle Wi-Fi.
But that connectivity will only get better -- and will eventually lead to self-driving cars.
That, of course, will utterly transform the investing landscape. In the following video, I talk with Cisco's (CSCO -0.42%) director of smart connected vehicles, Andreas Mai, about which industries will be hit the hardest. They're all obvious, but they will be changed in ways you might not imagine.
Why Warren Buffett calls this automotive transformation a "real threat"
The connected car is just a small part of a major technological shift is happening in the automotive industry. Most people are skeptical about its impact, but Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to ride this megatrend. Click here to access our exclusive report on this stock.
Transcript:
In a world... where cars are connected with each other and everything else... and even drive themselves... well, the investing landscape will change dramatically.
What's more, that world will be here sooner than you think.
Let's consider some industries that will be utterly transformed. Yes, the auto industry itself is a given, but in ways you might not think.
"This is transforming the automotive industry as we know it, because suddenly the focus moves from building cars to selling travel time well spent."
What Andreas Mai is referring to is the auto company of the future. In the near term, carmakers are working to make connected vehicles rolling entertainment and communication centers. But think about longer term, when the roads are dominated by self-driving vehicles. Cars may be a commodity that you order to pick you up at your door and drive you to work... and you may care as much about the make and model as you do when you hop into a cab. Which is to say, not much.
Safer self-driving cars will also greatly affect two other industries.
"We are seeing the transformation of the insurance industry. We have connected vehicles that do not crash that often and eventually autonomous vehicles that hopefully never crash. You need to reduce the risk premiums that we are paying with our car insurance companies. So, their business model is transforming."
And when might we see self-driving cars on the road?
"It's also a function of if you have connected roads, and everybody has a connected vehicle, you can modify the way tolls are collected. It's an automated process, so these toll entries that we spend time going through every day ... for some of us they will just go away, because you know where you are and you can charge for whatever stretch of road you are using."
Mai says the adoption of self-driving vehicles hinges less on the technology -- which is pretty much here already, but more on governments getting their act together.
"I would see it as a competition, not only of technologies, but also a competition of cities. If we had dedicated lanes or dedicated sectors ... like we have for other modes of transportation ... that were exclusive to autonomous vehicles, we could see these vehicles used on our roads in the next five years.
"But as soon as you mix autonomous vehicles with bad drivers -- which essentially we all are -- then the feed off making autonomous work is much more complex. So, I think it's a combination of the technology carmakers put into the vehicles, but also the willingness of cities and governments to set aside space for autonomous vehicles."
So, all we're waiting on is for local, state, and federal governments to get things done. Insert your own joke here.
Reporting from the Connected Car Conference in New York City, I'm Motley Fool analyst Rex Moore.
