Q&A Series: From EVs to AI – What's fueling the future of mobility?

The mobility theme has come a long way since electric vehicles first captured investors’ imagination. What began as a story about battery-powered cars has evolved into something far more ambitious: the rise of “Physical AI”, where artificial intelligence is embedded directly into machines that can sense, decide and act in the real world.

To unpack what is really driving the next phase of growth, in this Q&A series, we spoke with the investment team behind the Neuberger Berman Next Generation Mobility Fund. Founded in 1939, Neuberger Berman is a private, independent and employee-owned investment manager overseeing assets across equities, fixed income, private equity and multi-asset strategies for institutional and individual investors worldwide. Its Next Generation Mobility Fund takes a thematic, global approach to the disruption of the transportation and industrial sectors, investing in companies positioned to benefit from the convergence of autonomy, connectivity, and electrification — from AI-enabled hardware and semiconductors to autos, batteries, aerospace, shipbuilding, and energy infrastructure.

Having delivered a standout 68% return over the 12 months to 30 June 2026, the fund offers a timely lens into how a differentiated, stock-picking approach can uncover opportunities extending well beyond the usual global technology universe.

Q1: Electric vehicles were once the defining investment story within next-generation mobility. Today, the opportunity set is much broader. What do you see as the key growth drivers for the fund over the next three to five years?

Yes, calling this a “mobility” fund almost undersells where the opportunity set has moved. EVs were just chapter one. What we’re underwriting today is far bigger: the emergence of Physical AI, where intelligence gets embodied into machines that move, act, and make decisions in the real world. We see three forces driving this over the next three to five years:

• NEV economics: BEV/HEV adoption is now consumer-driven rather than subsidy-driven globally ex-US, as total cost of ownership improves against fossil-fuel price inflation and volatility. The case has gotten stronger with the US/Iran conflict being a real-time reminder of just how volatile oil can be.
• Connectivity: Vehicles were the first “computers on wheels”, but that same shift is now spreading into industrial equipment. For example autonomous mobility in deep-sea drilling, agriculture tractors, construction machinery, mining fleets – anything that moves is being rebuilt around sensors, chips, and connectivity to drive both cost efficiencies and improved human safety.
• Autonomy: This is where it gets exciting. The old bottleneck in autonomy was that you had to map every possible driving scenario in advance, an almost impossible task. But with AI and LLMs, machines now can think through new, unmapped situations. This is a completely different level of capability and we're seeing this play out via Tesla's improving FSD, Hyundai/Kia's partnership with NVIDIA's AlpaMayo, and China's step-up in Level 3+ autonomy (XPeng, Xiaomi, BYD).

Q2: AI optimism has lifted a lot of boats. How much of the fund depends on that tide staying high?

About half of our portfolio sits in the picks and shovels of AI, spanning sub-sectors like power semiconductors, electro-mechanical components, power/thermal solutions, and advanced compute. But what ties this together is they are foundational hardware that intelligent, autonomous machines need to function in the physical world. Although these companies have benefited from the AI hyperscaler capex, they are not tied solely to that trade. We believe content growth in these companies is structural and multi-year.

The other half of the fund is in real-world deployment – autos, batteries, aerospace, shipbuilding, and energy infrastructure. These businesses are driven by their own catalysts like electrification, defense modernization, industrial content expansion etc. which give the fund a differentiated engine of return.

Q3: Trade tensions and export controls are reshaping the global mobility supply chain. Have these developments created more investment opportunities than risks, and how have they influenced your allocations?

Not just trade tensions and export controls, but geopolitical tensions broadly have pushed companies to prioritize more resilient, diversified supply chains, and that shift has created several pockets of opportunity we’ve leaned into:

1.      Subsea offshore oilfield production is seeing accelerating adoption as Middle East uncertainty pushes energy majors toward more secure sourcing

2.      Reshoring across key industries (defense, capital goods, batteries, and metals & mining) is accelerating multi-year capital investment cycles

3.      AI-driven supply chain tightness is creating outsized margin expansion opportunities for ex-China semiconductor and hardware/component players

4.      Korean and Japanese shipbuilding & defense are seeing a resurgence as Western nations diversify new ship production in response to trade tensions

Q4: The fund generated a remarkable 68% return over the past year. Was this the result of stock selection, sector allocation, or favourable market conditions? Which of those drivers do you believe will continue to support returns?

Stock selection has been the main driver. That comes down to the depth of differentiated insight our team brings, with research presence on the ground across Asia and the US. That local network matters in practical terms: I’m based in the U.S. but speak fluent Korean, several of our Taiwan and Hong Kong colleagues come from the semiconductor and tech hardware industry, and we draw on other sector specialists across the team. This lets us identify mispricings early and with real conviction ahead of the market.

Our overweight to Asia has meaningfully supported performance. Portfolio diversification has also helped. Exposure across sectors, not just tech, broadens our sources of return.

Q5: Great themes can still be bad investments at the wrong price. How do you balance long-term conviction with valuation discipline?

While I am highly excited about the prospects for the theme, this boils down to my risk-management framework, where I incorporate both top-down portfolio construction and bottom-up fundamental diligence.

Top-down – diversification across end markets and cyclicality: This has been key to building a multi-faceted portfolio. For example, our energy exposure has outperformed during geopolitical uncertainty, while industrials and semiconductors with global, multi-layered supply chains have suffered. Aerospace & Defense is currently normalizing after a multi-year, COVID-driven supply disruption and has stayed resilient despite inflation and geopolitical pressures hitting shorter-cycle industrials. Likewise, a global auto company may be significantly impaired by Section 232 tariffs, while an industrials gases company may benefit from an expanded pricing umbrella in the same environment.

Bottom-up – hedging valuation through mispriced earnings revisions: Rather than simply monetizing the growth and beta tied to next-generation mobility, I hedge valuation risk by investing where I believe the medium-term earnings curve (and therefore the valuation multiple) is being mispriced by the market.

Q6: Most investors already own a global tech fund. What does the Next Generation Mobility Fund give them that they don’t already have?

Most global tech funds are built around the same core exposure: cloud, software, AI infrastructure. This fund gives investors a more diversified source of return where growth drivers don’t move on the same cycle: electrification, automation, defense, aerospace are distinct from cloud capex and software adoption curves.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.