The electric vehicle (EV) and bioeconomy are among the sectors that are expected to see tremendous growth, according to investor Azeem Azhar, who is also the creator of the popular newsletter Exponential View.
He said the decline in the price of a ‘new capability’ will lead to tremendous growth in the industry. This includes the cost of EV batteries and the declining cost of genome sequencing with the improvements in the ability to engineer cells, among others.
“If a new capability starts to drop in price, it will be used more extensively by businesses, and that will create new products and services that will meet existing or new customer demand,” he explained, citing the example of the computing sector.
“And so if you think about the computer industry, the thing that declined in price was the price of computation. And as computation drops in price, we start to use computing for other things,” he explained, when met at the DLD Conference last month.
“The major part of the cost of an electric vehicle is the battery, the most expensive component, batteries. Just about 10 or 12 years ago, they used to cost around $1,200 per kilowatt-hour. Today, battery prices are down to about $150, $160 per kilowatt-hour. And we’ve seen the uptake of electric vehicles,” he told TechNode Global in an interview.
He also noted that in the field of energy, the price of storage and the price of renewable energy generation, are also on a declining trend.
“Those are markets that are growing very quickly. And they’re displacing other technologies. Electric vehicles are displacing petrol-powered vehicles,” he said.
Bioeconomy in US is booming
Azeem also noted that the US bioeconomy is booming. Valued at nearly one trillion dollars and predicted to grow globally to over $30 trillion over the next two decades, according to a report by Forbes in September last year.
“So today, if you want to make a particular chemical, for a particular industrial process, you will use an industrial process to make that chemical. In this new bio economy, you will find biological processes that allow you to make that chemical. That’s being enabled, by a better understanding of the gene, the declining price of genome sequencing, improvements in our ability to engineer cells, our ability to do protein engineering, our ability to run many, many optimizations and experiments in simulations,” he explained.
One of the biological technologies is called precision fermentation, of which scientists can get microbes to produce useful products.
“We’ve known that for years. And starting about 40 years ago, we started to get microbes to make synthetic insulin. And that started to drop the price of insulin. We then started to get these microbes to make ingredients for high-end cosmetics, and ingredients for fragrances. Now we’re getting them to make artificial meats for us. And that price is declining constantly so you could see the food industry starting to change. And then there are the second, third order effects beyond that,” he added.
On another matter, given the refragmentation or fragmentation of geopolitics and globalization, Azeem pointed out there could be other winners across Southeast Asia.
“The first instance is how manufacturing supply chains, especially high-value ones will move from China. And it won’t be it won’t be out of China, but it’ll be China and [other countries]. And I think you’ll probably start to see that for Vietnam, Thailand, Cambodia and India, as well,” he noted. “I think there will be a realization that multiple alternative paths will be needed.”
“I think this is quite interesting because it changes the nature of those economies. But the other question is the extent to which the labor cost arbitrage play, which is what allowed manufacturing to move from industrialized Western countries over to Asia is starting to change because of breakthroughs in automation,” he added.
As living standards rise in Southeast Asia countries, the relative advantage they have on manufacturing costs declines, especially if shipping prices are higher, Azeem noted.
“And if the if the automation systems start to get better and better and better, then actually that will, that tends to that will reduce the effective labor cost in, say the US,” he explained.
Southeast Asian countries will therefore need to adjust their development policies, he added.
Azeem Azhar is the writer behind Exponential View which explains how society and the political economy are changing under the force of technology. He brings a unique background to explain the intersection of breakthrough technologies and the economies and societies in which we live. Subscribers include investors, academics, and journalists around the world.
Azeem is also on the board of the Ada Lovelace Foundation, the leading independent research institute focused on the ethics of AI and is a member of the World Economic Forum’s Global Future’s Council on the Digital Economy and Society.
An entrepreneur and an investor in many technology startups, especially in the Artificial Intelligence sector Azeem speaks regularly on television and radio and is a worldwide speaker.
His first book was published in summer of 2021.
Azeem is one of the speakers at the DLD Conference held between January 12 and 14 in Munich, Germany.
Founded in 2005 as an intimate gathering of friends, DLD (Digital – Life – Design) has developed into Europe’s leading innovation conference for visionaries from around the globe.
Co-chairs Steffi Czerny and Yossi Vardi have created an interdisciplinary and internationally connected platform for people eager to change the world in the digital era. The conference aims to connect the unexpected, presenting insights from business and politics, science and art. It also aims to spark conversations that cross boundaries and bring participants together in a common search for answers to the most challenging questions that arise through digital change.
Featured image credits: Free press image @ Daniel Grund for DLD / Hubert Burda Media