Autonomous Car Companies To Invest In


Autonomous Car Companies To Invest In

Which companies in the autonomous vehicle space are driving innovation and delivering profits?

Published on 14 December 2017

One of the hottest cutting-edge tech trends to invest in is autonomous vehicles. The Boston Consulting Group forecasts that the self-driving car market will be worth US$42 billion by 2025, and that figure is expected to increase to US$77 billion by 2035.

No wonder then that companies across the automotive industry – from established, global car brands to startups solely focused on autonomous vehicles are racing to get their self-driving products on the road.

Leaders of the pack

Autonomous Cars, Self-Driving Cars, Driverless Cars, Ford, GM, Tesla, Baidu, Renault-Nissan Alliance, Alphabet

Navigant Research recently released a report assessing the strategy and execution of 18 companies that are currently developing automated driving systems.

The firms were profiled, rated, and ranked on 10 criteria to offer an objective assessment of their relative strengths and weaknesses in the global market:

  1. Vision
  2. Go-to market strategy
  3. Partners
  4. Production strategy
  5. Technology
  6. Sales, marketing, and distribution
  7. Product capability
  8. Product quality and reliability
  9. Product portfolio
  10. Staying power

Claiming the top spot in the ranking was US automotive giant Ford, which has been researching self-driving cars as far back as 2005 and already has a 100-strong test fleet in Arizona, Michigan, and California. Ford has made significant investments in the autonomous vehicle space, including US$1 billion in startup Argo AI this year.

Coming in second in the ranking was another American automotive powerhouse, General Motors (GM). Like Ford, GM has invested considerably in the driverless vehicle space, including US$581 million in startup Cruise Automation. GM recently unveiled its first self-driving car, the electric Chevy Bolt, which is currently undergoing testing.

Ranking number three was the Renault-Nissan Alliance, which has installed a self-driving feature called “ProPILOT” in cars produced in Japan that will allow them to drive autonomously on highways.

Aside from these industry heavyweights, there are many other relatively young companies that are making waves in the driverless vehicle space. The most prominent one is Tesla. Since the start of the year, Tesla’s share price has soared from US$217 to a high of US$385 in September. Its current market capitalisation of US$52.3 billion makes it the second most valuable American automaker.

Tesla is a leading innovator in the self-driving space. All new Tesla vehicles are now equipped with the technology needed for full autonomy. This means that the cars are actually learning as they drive as new knowledge and information is constantly being fed back into the system, which is then resent as software updates to the vehicles, helping them get “smarter”.

Internet giants look to get in on the action

Autonomous Cars, Self-Driving Cars, Driverless Cars, Ford, GM, Tesla, Baidu, Renault-Nissan Alliance, Alphabet

Even the tech giants are jumping on the (driverless) bandwagon. Alphabet, the parent company of Google, has a self-driving unit called Waymo. Its latest innovation is a new technology that enables the car to “soften” by releasing tension cables attached to the car’s surface in the event of a collision to safeguard pedestrians.

Alphabet’s share price has rocketed 33.6% higher this year to around US$1,030, and analysts are predicting that this will increase by 17% over the next 12 months – with the average analyst price target standing at US$1,094.

Another internet behemoth looking to get in on the self-driving car revolution is Baidu, the Chinese search engine. Baidu is developing its own driverless car, and has plans to start road trials next year. Baidu is based in China, which is currently the world’s biggest passenger car market and which could potentially be the world’s largest autonomous car market in the future.

Baidu’s share price has soared 41.7% in 2017 to around US$233, and has an average 12-month analyst price target of US$241.

The bottom line

These are merely a few of the numerous companies blazing pathways in the autonomous vehicle space, and there will no doubt be new players emerging in the years to come.

But before you go on a self-driving car stock shopping spree, be aware that companies in this space face a number of challenges primarily linked to government regulation, safety, and consumer perception. As with any new technology, there is some uncertainty about the pace and scale of adoption.

One thing is for sure: the industry is in its sunrise phase and has great potential. Research firm IHS Markit predicts that global autonomous vehicle sales will reach 21 million in 2025 and 76 million by 2035. This future growth potential presents tremendous opportunities for investors.