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The company, which manages a $ 3 billion asset, said the auto insurance industry was facing "the biggest threat in its history," Elon Musk and other companies developing autonomous networks.
In the next 5 to 10 years, as motorcyclists increasingly choose to travel on autonomous taxi networks, the auto insurance industry (a $ 220 billion market) will face the greatest threat of its history, the collapse in the number of drivers and accidents. – @GrousARK https://t.co/6VTM5YnVUs
– ARK Invest (@ARKInvest) May 10, 2019
Elon Musk and Tesla could go bankrupt in the auto insurance sector
KRG anticipates that more than half of the kilometers traveled in the United States will be self-sustaining over the next decade. If this prediction is correct, it means a disaster for insurers. For two reasons:
- With fewer drivers on the road, there will be fewer people to insure.
- Autonomous cars will be cheaper to insure thanks to better safety features.
Ark's research points out that 94% of all car accidents are caused by human error. The volume of these incidents would decrease significantly in the future fueled by Elon Musk's fleet of autonomous robotic robots. Even in its infancy, Tesla autopilot technology is seven times less likely to cause an accident than a human.
"The cost to ensure autonomous vehicles will be significantly cheaper thanks to their superior safety profile."
The number of autonomous miles on US roads will increase to 57% over the next decade. Source: ARK Invest
The insurance empire of Warren Buffett will take a hit
The KRG expects that autonomous networks will erase up to half of the auto insurance market by 2030. According to current forecasts, the market will reach $ 300 billion in 2030, but ARK believes it will be more close to $ 150 billion.
Auto insurers are predicting a $ 300 billion market in 2030. When you include stand-alone data, the figure is approaching $ 150 billion. Source: ARK Invest
Warren Buffett is dangerously exposed to this imminent collapse of the insurance industry. A third of his empire is built on insurance with stakes in National Indemnity and GEICO, the second largest US auto insurer.
ARK believes that the biggest success will come from 18-24 years old. Not only are they the most likely to join the fleet of autonomous taxis, but they are currently paying the most important insurance premiums.
"Today, young drivers pay far more than average premiums because they represent a disproportionate number of accidents. As a result, as autonomous vehicles become more widespread, insurers will lose their highest-paying customers first. "
Warren Buffett forgets the threat
ARK then expects car manufacturers to issue their own insurance.
"Traditional insurers will try to offer products for autonomous vehicles, but as the risks extend from drivers to cars, OEMs will likely be able to provide the vehicles themselves."
It's a decision upheld by Elon Musk, who recently revealed his plans for a Tesla insurance plan. Buffett was not convinced, saying he would bet against any car company offering his own insurance.
"It's not an easy deal … The success of auto companies in the insurance industry is probably as likely as that of insurance companies in the auto sector."
Tesla stock at $ 4,000?
It should be noted that ARK Invest is heavily exposed to Tesla. TSLA's shares make up the largest stake in ARK's publicly traded Exchange Traded Fund (ETF) with a 10.35% exposure.
Why does the CIO of a major investment firm say that Tesla's stock will reach $ 4,000? Https://t.co/JpjJHxe2jT
– CCN.com (@CCNMarkets) May 1, 2019
As reported by NCC, the company's chief investment officer, Catherine Wood, has placed an extremely optimistic price target of $ 4,000 on the title of Elon Musk, explaining:
"Our belief in Tesla is so strong that it never left our top position … We learned Tesla's artificial intelligence chip. We saw the specifications. Our analyst, James Wang, is from Nvidia. He said, "Oh, my God." This exceeds the competition. They are at least three or four years ahead of their competitors. "
TSLA shares are expected to open close to 2% during Monday's trading session.
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