 Good day fellow investors! Last week I made a video analysis about Ford. However, in the analysis I used the statical current projections for the car market. Mackenzie estimates that in the next 10-20 years the car market will grow 1.5-2% per year thanks to global developments. However, there are free disruptive trends that are not included in Mackenzie's analysis, which might hurt or which might completely change the automotive environment. And if you're invested in car stocks from Ford, from Fiat Chrysler, GM, BMW, Daimler, whatever, it is essential that you know what can happen to the car industry and point it as a small risk. We'll analyze the free, most important trends that can hit the industry, electric vehicles, autonomous drive and transport as a service and we'll see how one has to position his portfolio in relation to what can happen and we're going to discuss also what's the probability of that happening and what will be the magnitude of the impact to the automotive industry. Let's immediately start. Of course, the rise of electric cars is inevitable. We don't know yet when those will rise, when will be the technological shift that the new technology conquers internal combustion engines. Now it's always ungrateful to make forecasts and I'll just give you an example. Mackenzie in 1980 made an analysis for AT&T about cell phones and Mackenzie said that by 2000 perhaps there will be 900,000 subscribers in the mobile industry. The actual figure was 109 million. So Mackenzie was off just by 99%. So also this figure about electrical vehicles, I can guarantee you one thing, it will be definitely wrong. The key to everything is how a technology gets adopted. At first it takes a little bit of time, then there is exponential explosive growth and then the technology stabilizes and becomes a given, like the mobile industry, like any other technology that we have seen developing the fast. The point is that now things go faster, faster and faster. So how will car manufacturers be affected by the new electrical vehicle trend? Well, every car manufacturer almost has invested in the technology. They are planning how to increase production. Hybrid cars are already there. More and more of them are introducing totally electric cars. So each car manufacturer is ready for the trend and ready to increase production when necessary. We have Tesla who is trying to become the greatest producer, become the first mass car producer, but we'll see how that develops. Nevertheless, everybody is ready. Nissan Note, GM has the bolt, everybody is ready. So this won't really change the industry because the technology spills over, unfortunately, in the car industry. So there is no mode and they will probably hopefully keep the same margins if there is no increased competition in order to gain market share, which could even lower margin. So positive, stable margins, negative, lower margin. So if you want to invest in the electrical vehicle trends, there are other investments than buying a car company because it won't affect their profitability much, hopefully. There is a lot of competition also in the battery industry and everybody can make an electric car because there are only 22-23 moving parts. An example is Zimac's decoration car maker and they just invested 150 million in another battery factory in China. So they are really competing. Everybody is trying to get a piece of the cake, which means lower margins if you look it from an investing perspective. The second trend is autonomous drive. So the technology is already there, cars can drive by themselves. I have been in a Tesla, I have left the steer and it drove me into a corner. So with time, every car will have that. And will there be an advantage between car manufacturers? No. As those are cars, some things have to be standard. Like they have now a GPS system, they will have autonomous standard, autonomous drive at a certain level that is safe for everybody. So that's the second trend that will disrupt the industry, but everybody will have it. So let's again hope margins stay equal. If you're more interested into the autonomous technology, this is the current level that producers have reached. So some have a strong strategy, less execution, some have a big execution and a good strategy. Ford and GM might be the leaders in their environment, but others are quickly catching up. Those who think that Tesla driving by itself is something spectacular, Tesla is below the 10th place in the autonomous drive technology. And now electrical vehicles lower the cost of driving around, lower maintenance, lower everything. Plus autonomous drive, you don't need a chauffeur anymore. You can have a parked car wherever you want. It comes back to your house, which leads to a new emerging disrupting trend, which is transport as a service. So hire a car to drive you everywhere around where you want. And if that technology gets adopted very, very fast and things are changing so quick, just ask a cab driver in the US how things change. This might also change the whole automotive industry environment. Let me show you what's going on. The first thing is the decreased costs per mile. There are some assumptions that if you don't own a car, but you rent it every day, an autonomous drive car, your holding costs, your cost per mile will be a half or one quarter of the current costs. So that's already crazy. Further, there will be much, much less need for cars because we are not constantly using our cars. We are using it very little amount of time. So in a new environment with autonomous drive, individual cars will get obsolete. Their technology will be too costly, which of the cars that they are now. The transport as a service industry will buy cars, but will buy cars in bulk. So automotive producers will have troubles with margin. And there will be a lot of stranded individual ownership that will lower the number of sold cars in the world. Now you might think this is just a crazy strategy. This is just a crazy forecast by some think tank somewhere, but car manufacturers are playing the game. Let's see. This is MOIA from Volkswagen and they have announced that by 2018 there will be an autonomous vehicle ride sharing service in Hamburg in Germany as a test and they hope they have the goal. I'm quoting the CEO of the company. We've set ourselves the goal of taking more than a million cars off the roads in Europe and in the US by 2020. And that's just Volkswagen. So if Volkswagen takes a million cars off the road, Daimler does the same, Ford does the same, GM does the same and everybody does the same. It will be a lot, a lot less cars. And okay, some people are still going to hold their cars. So I don't expect an 80% disruption in the industry. But a big, big deal is if the car global car market doesn't grow at 3%, a big deal is if it grows at 1%. That's a huge difference for stocks and for companies. If it declines 2%, 3%, then you have carnage as it is going on in retail. So it's very important to see this sharing trends Uber, Lyft, DD, whatever. And now car companies that want to get into the market in order not to get disrupted in order to have some control there so that they know they can sell their cars. So the environment might get messy, messy, very messy. This is just the trend. But if I would have car manufacturers in my portfolio with the goal of retiring in 2025, 2030, 2035, I would be very, very careful of how much I own and how I own it. The potential impact on the car industry is huge. It is expected that the revenue of the whole industry will drop by 75%. Oil, there will be no oil spending. The spending for electricity will increase. Platforms for ride sharing will have some profits. Car manufacturing will drop hugely, one quarter of what it is, one fifth of what it is. Insurance, autonomous drive, everything goes well. No more insurance, not such a high level. That income will drop hugely. Maintenance will drop. Everything will drop and other revenues will perhaps increase. Also, there are a lot of social impacts, a lot of positives, of course, but a lot of negatives. From the oil industry, job losses and shrinking government revenues from parking, from taxes, from whatever. So this is a different perspective on the car industry. I think that it will be somewhere in the middle, but the car industry won't grow at 3% over the next 15 years as it was expected, still now by some analysts or as it was expected 5 years ago, but perhaps it won't grow anymore. And that's a huge difference that has a huge impact on sales, on the infrastructure, on the manufacturing that is built all around the world and the costs are going down, down, down and down because we live in such a disruptive, down, down cost environment. Thank you for watching. Looking forward to your comments. I'm really looking forward. How do you see, do you feel you will always own a car or do you feel you will love the sharing idea, where you don't have to think about reparations, about maintenance, about putting fuel into the car and such things. See you in the next video.