Transportation could undergo a significant transformation in the coming decades, and that could create upside for some well-known stocks, according to UBS. Analyst Jarrod Castle put together a long-term look at different transportation frontiers and why the space could create big wins for consumers and investors in the coming years. “We think inter/intra-city transportation will undergo a material evolution in the coming decades, which should provide a number of structural investment opportunities,” Castle wrote in a note to clients. Those opportunities include high-speed rail, electric vehicles, sky taxis, self-driving cars and so-called “last-mile” solutions for shorter transport. While these are long-term trends, UBS projects that there could be major progress and big money made over the next five years. UBS estimates that the electric vehicle market will be bigger than $1 trillion in 2026, compared to between $100 billion and $200 billion in 2021. Ride hailing is expected to nearly triple over that same time frame to $545 billion, while e-scooters are expected to more than double to $1.64 billion. UBS has Uber and Baidu listed as buys under the ride-hailing category, which is an industry that could benefit greatly if self-driving cars can work at scale, while Tesla and Ferrari are in the top group for electric vehicle stocks. Tesla is also among the companies working on self-driving capability. “The technology is still a work in progress, but most governments are supportive of innovation and the benefits that come with SDVs, though they impose strict testing requirements,” the UBS note said. And while electric sky taxis, or vertical takeoff and landing vehicles, are still expected to be small in 2026, UBS projects more than 100 million flights annually by 2030. The vehicles could be a replacement for short-range flights for the wealthy, according to UBS. “Airlines are potentially interested in running an eVTOL shuttle service. We also see some demand for intercity travel to take a share from private jets/first-class train tickets. Lastly, high-income individuals may choose to purchase eVTOLs/utilise a service for personal mobility instead of helicopters. An example of such a market would be Brazil, where helicopter service is often utilised by high-net-worth individuals,” the note said. UBS has a buy rating on French aerospace giant Airbus for this area, but there are smaller, pure-play options on the market like Vertical Aerospace and Joby Aviation that may be more high-risk, high-reward for investors. Smaller vehicles, like electric scooters and motorcycles, are also seen as a growing category. Indian and Japanese companies like Suzuki are expected to outperform for motorcycles and other smaller vehicles, but UBS does list Polaris as a buy. — CNBC’s Michael Bloom contributed to this report.
