Our conviction remains high as emerging technology and innovation transform the industry.

Key points

  • In our view, growth in the mobility ecosystem continues to accelerate, providing numerous investment opportunities for active management.
  • We see strengthening fundamentals for connectivity stocks, based on a recovery in mobility units and content growth from new services.
  • We anticipate continued robust growth for advanced driver-assistance systems (ADAS) content in both hardware and software, as vehicle buyers embrace the enhanced safety of these technologies.
  • Ride-sharing companies are validating their attractive growth with improving and durable business models.
  • We expect the electrification of passenger vehicles to retain momentum in 2024.

As the future of mobility rapidly evolves, we continue to focus on four key segments in the industry: connectivity, autonomous vehicles, sharing, and electrification. Within these segments, we see promising opportunities for investors across a multitude of sub-themes in areas like advanced driver-assistance systems, data analytics, cyber security, electric infrastructure, the battery supply chain, and various other technologies driving the mobility revolution.


As the semiconductor industry emerges from a two-year downturn, we anticipate improving fundamentals for connectivity stocks, based on a recovery in mobility units and content growth from new services. While 5G cellular technology remains a focus in many regions worldwide, we observe new real-time geolocation-based services leading higher content per vehicle. We believe the combination of rising sensor content and tighter integration with cloud-based services should power new options. These functionalities may reduce traffic congestion by predicting traffic patterns and automatically rerouting vehicles based on emerging road conditions.

Semiconductor innovation is also poised to reduce complexity in 2024 as new functions are consolidated into fewer systems. Today’s vehicles may include up to 150 electronic control units (ECUs), adding complexity and cost. The adoption of ethernet-based connectivity and additional system-on-chip technology may simplify networking design within new vehicles while also cutting excessive weight and cost. One such innovator is working with 25 original equipment manufacturers (OEMs) that plan to adopt the company’s platforms to integrate sensor content, delivering improved safety and performance.

In our view, infotainment should be an incremental catalyst for connectivity in the next few years. While OEMs continue to invest in their own software stack, manufacturers are also working with external partners to tightly integrate new software offerings into their platforms by 2025. These integrations could speed the deployment of new artificial intelligence (AI)-based offerings, like chatbots, that may assist and personalise services while in transit. These are no longer mere dashboards with odometers, speedometers and check-engine lights, but instead they effectively operate as command centres for advanced safety management and enhancement and provide a richer travel experience for the vehicle operator.

Evolving connectivity technology that supports these new services may also expand the potential for cyber intrusions. We continue to invest in vendors that can provide extra layers of security across the mobility spectrum. One such vendor offers a platform that has the flexibility to serve a wide variety of endpoints while also preventing, detecting and responding to emerging threats. Another complementary player provides edge-computing resources that support over-the-air security updates and can also protect and repel high-volume distributed denial-of-service (DDOS) based attacks against cloud-based infrastructure that supports mobility fleets.


We anticipate continued robust growth for ADAS content in both hardware, such as cameras, radar and lidar (light detection and ranging), and software, such as cloud, AI and human-machine interface (HMI), as vehicle buyers embrace the increasing safety of these technologies. The industry is transitioning from Level 1 ADAS functionality, which is basic driver assistance and has approximately 40% global penetration, to Level 2 ADAS, which is partial automation with steering driver assistance and has approximately 20% penetration. Uptake rates are also rising for Level 2+ ADAS, which includes eyes-on/hands-off capabilities and has less than 5% penetration, and Level 3 ADAS, which includes eyes-off/hands-off capabilities with restrictions and has less than 1% penetration, especially in premium vehicles where consumers are willing to pay the additional cost for these advanced features. We believe Level 3 could remain a niche area as few automobile OEMs offer it, while Level 1 and 2 stand to become standard equipment as costs decrease.

In our opinion, 2024 should be a year of more testing, validation, data gathering and dialogue with appropriate authorities to gain the trust of the public and to satisfy regulators. We believe the technology works and is advancing, but it is going through understandable growing pains surrounding system perfection, introduction on operating roadways, and ensuring its ability to react in all conditions.

Similar patterns are expected in Europe and the United States, while in China, the government has been relatively more constructive with federal framework requirements for self-driving testing and operations. The world’s largest auto market has been mapping out standards and regulations for autonomous driving and aims to formulate a system that should support assisted and autonomous-driving functions by 2025. In addition, it plans to introduce standards that should support the development of autonomous-driving applications and establish a safety-assurance system by 2030.

Additionally in 2024, we expect to see growing ADAS content, particularly Level 1, in other emerging markets such as India, Indonesia, Thailand and Latin America.

Other areas of mobility that are adopting ADAS and self-driving systems are commercial vehicles, agricultural vehicles, construction vehicles and railway/locomotive networks. These are relatively easier use cases for fully autonomous driving systems, since there is lower risk for safety incidents owing to the fewer interactions with other vehicles or pedestrians/cyclists.


Following a year marked by tight driver supply and higher pricing, 2023 experienced an easing of these pressures through a combination of a weaker pricing and improved driver dynamics. In the third quarter, one ride-share company’s supply hours accelerated to 45% year-over-year growth, while another ride-share company’s management discussed shifting incentive targeting from drivers to consumers. Successful driver recruitment has allowed US ride-share and delivery players to lessen incentives and improve margins despite a challenging insurance backdrop. Over 2023, these insurance cost challenges correlated heavily with auto-parts inflation, which we believe should ease in 2024 in line with broader inflation. We expect a favourable consumer-pricing setup to yield healthy bookings growth in 2024 with fading insurance challenges contributing solid incremental margins as renewals become less costly.

The European market has experienced dynamics similar to the US market but with the added complexity of employment regulation as the European Union (EU) has sought to reclassify ‘gig’ workers as employees entitled to benefits. Most recently, the EU Council and Parliament reached a provisional agreement to classify gig workers as employees as long as two out of five criteria are met—a framework under which it is presumed that ride-share drivers would qualify. This classification, if formalised, may substantially increase per-driver costs and is likely to lead to higher pass-through pricing to consumers or ride-share companies exiting certain markets altogether. Pricing levers and regional operating decisions are likely to maintain profitability potential within the EU, but higher pricing may impede long-term ride-share adoption.

Emerging markets experience varying trends that are highly dependent on regional macroenvironments and international investment. A weaker Chinese economy with fewer employment opportunities and lower structural wages has led to ride-share and food-delivery drivers being among the fastest growing areas of employment in China. The expansion of Chinese supply networks has continued to aid adoption, but the broader consumer environment has forced domestic companies to reinvest more heavily in consumer incentives relative to US and EU players. This comes as internet companies look to expand their market presence in food delivery. In India and Latin America, rationalised competition has structurally improved profitability. A more challenging funding environment for companies has forced profitability focus in India, while Chinese regulation on ride-sharing fees has inhibited the country’s major ride-sharing company from investing profits from China into favourable pricing in Latin America. We expect ride-share trends to remain robust in India and Latin America while we keep a close eye on the Chinese consumer as a key factor for bookings growth.

Overall, sharing continues to evolve as companies navigate the attractive nascent growth with improving business models that are beginning to show durability. The category is expanding as use cases, modalities (modes of transportation) and technology evolves, leading to better solutions for enterprises and consumers.


The transition from internal-combustion-engine (ICE) passenger vehicles to battery-electric-power vehicles (BEV) should continue to roll forward in 2024 in the three key regions of China, Western Europe and the US. We expect growth and penetration should be led by China, followed by Europe and the US. It appears likely that China will continue to lead the world in EV penetration in addition to being the largest vehicle exporter, including the growing EV exports to markets such as Southeast Asia, Russia and Europe. While many believe that Western Europe will continue to show growth in 2024, unless there are new consumer purchase subsidies released, the growth could be similar to 2023 and is unlikely to accelerate. The question of affordability remains in both European and US markets as the availability of low-priced EV models is very limited.

Similar to 2023, we believe US EV penetration may lag among the main three regions as EV consumer incentives linked to the Inflation Reduction Act (IRA) become more challenging in 2024 owing to the restrictions on components originating from Foreign Entities of Concern (FEOCs). This means that fewer EV models may qualify for consumer-purchase subsidies since China is listed as an FEOC and is where most of the battery supply chain resides. Of note, 2024 is also an election year in the US, where both main parties have differing views on the energy transition, including the development of the EV industry and its necessary local supply chain. However, over the mid-to-long term, regardless of political forces, we still believe the US market will continue to transition to EVs. Average pricing is expected to fall as more affordable models are introduced and EV charging infrastructure continues to expand to meet charging requirements, reducing consumer range anxiety.

In Europe, we believe weaker penetration can largely be solved as more affordable models are produced over the next few years, which would lead to solid growth over the mid-to-long term. Europe remains committed to its ICE bans and carbon-dioxide-emissions targets.

In our view, China EV growth in 2024 will continue an uptrend as the market offers a number of models at a wide array of price points, giving most consumers, regardless of income, the option to purchase an EV. This sets China apart from Europe and the US, and we expect the domestic brands to continue to lead the market over the year.

Other areas of mobility with expected increasing electrification in 2024 include commercial vehicles, industrial trucks such as forklifts, construction/mining/agricultural/refuse vehicles, railways, scooters and motorcycles. These areas are smaller in terms of the number of units compared to the passenger-vehicle market but are still critical to the global push for lower emissions in all forms of transportation. A newer form of transportation, eVTOL (electric vertical take-off and landing) vehicles – which operate much like helicopters but are powered by electricity, will be showcased at the Paris Olympics. We will continue to monitor and evaluate the progress of eVTOL companies as we look to possibly invest in the technology in 2024.

Battery innovation will also be closely watched as technology should continue to improve in areas such as energy density, fast charging capabilities and smaller/lighter form factors.

When it comes to infrastructure, EV charging is critical and has been a bottleneck in many countries despite consistent growth in non-residential installations. Unfortunately, consumers remain concerned about a lack of convenient charging stations, and this has been a reason for consumer hesitance in buying EVs. The US IRA and EU Green Deal have capital allocated for the continuing expansion of charging networks, so we expect more progress to be made in 2024.


We believe there is an abundance of opportunities for investors in areas such as ADAS, cyber security and electric infrastructure as mobility technology continues to advance in 2024. Although there may be speed bumps along the way with regulations and EV penetration, mobility-centric companies continue to pivot and evolve, advancing the mobility revolution.


George Saffaye

George Saffaye

Global investment strategist

Robert C Zeuthen

Robert C Zeuthen

Head of secular pod, portfolio manager

Frank J Goguen

Frank J Goguen

Research analyst, portfolio manager

This is a financial promotion. These opinions should not be construed as investment or other advice and are subject to change. This material is for information purposes only. This material is for professional investors only. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those securities, countries or sectors. Please note that holdings and positioning are subject to change without notice. This article was written by members of the NIMNA investment team. ‘Newton’ and/or ‘Newton Investment Management’ is a corporate brand which refers to the following group of affiliated companies: Newton Investment Management Limited (NIM), Newton Investment Management North America LLC (NIMNA) and Newton Investment Management Japan Limited (NIMJ). NIMNA was established in 2021 and NIMJ was established in March 2023. MAR005931 Exp 03/29

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