by James Brumley | June 2, 2014 12:24 pm
Flying cars might still be quite a while away, but we’re rapidly approaching a different futuristic transportation method: driverless cars.
Google (GOOG) continues to make progress with its driverless car technology, although it’s still too early to say when or in what form it might be made more widely available. Still, there’s no denying that Google is at the forefront of this revolutionary technology.
However, while Google is leading the charge into the era of driverless cars, it’s not the only organization looking to leave its mark on the budding technology. There are several ways and several players to benefit from the now-not-so-futuristic idea of autonomous cars. Here are the five stocks most likely to ride — and perhaps lead — the rising tide of self-driving vehicles:
It may not be the only name with a hand under the hoods of driverless cars, but let’s face it — the Google Car is the prototype and the technology everyone else is eventually going to get behind, or take on the near-impossible task of beating.
As of the latest reports, Google has decided to completely remove the steering wheel in the next 100 autonomous cars it plans on building as part of its testing program. The initial prototypes worked well enough, but the vehicles’ engineers determined that allowing a human driver to take over in an emergency didn’t actually make the company’s driverless cars any safer. In fact, the switch-over from driverless to human-controlled apparently made them even more dangerous. Ergo, the steering was proverbially thrown out the window of the Google car.
Translation: The technology works.
What role could phonemaker Qualcomm (QCOM) possibly play in the world of autonomous cars? Well, driverless cars are going to need some way of seeing using computer chips and sensors, and QCOM has certainly proven itself in the world of microchips.
It’s not just digital vision that could make QCOM one of the pillars of the driverless car movement, however. The company’s CEO Kara Swisher recently suggested that autonomous cars would need to communicate with one another while sharing the road. Qualcomm is well-positioned to tap into its know-how to make it happen.
While QCOM might not seem to be the likeliest here, the potential is still enormous.
Speaking of the microchips that will be needed to allow autonomous cars to “see,” if Qualcomm doesn’t become the standard brains of the cars’ navigation systems, then Nvidia (NVDA) might. Its Tegra K1 chip is currently powering the zFAS technology for the Audi (NSU) self-driving Quattro.
The Tegra K1 is small and powerful, which is going to be crucial, given how much computing power will be needed to keep driverless cars (and their occupants) safe. Some believe an autonomous car will process one gigabyte of data every second. That’s a huge amount of data, and huge potential for NVDA.
Could autonomous cars be just the ticket to veer IBM (IBM) back into relevance? As a matter of fact, it could.
While tons of computing power is one of the needs of the driverless car, the software running on that hardware is just as important. As it turns out, not only is IBM waist-deep in the connected-car space, it’s also quietly tiptoeing into the autonomous car arena too.
Specifically, a piece of IBM software called MobileFirst has already turned cars into “smart cars” by wirelessly connecting them to a network. And Big Blue has partnered with German auto parts and component company Continental to take that technology to the next level and develop a system that safely operates driverless cars.
For perspective on just how seriously investors should take IBM as a play on driverless cars, its partner, Continental, happens to be one of the partners working on the self-driving Google car initiative.
While Tesla (TSLA) CEO Elon Musk acknowledges he’s met with Google executives to discuss integrating its driverless navigation technology with uber-cool, all-electric Tesla vehicles, he also acknowledges he doesn’t see a self-driving Tesla hitting the market any time soon. As he put it, his company has bigger priorities than autonomous cars. Still, he likes the idea down the road, though he added Tesla would likely prefer to build its own — and more cost-effective — driving system.
There’s another, less obvious potential upside for Tesla if driverless cars get traction in the near future, though: Most of the autonomous cars being built and/or planned are electric vehicles, which need high-voltage lithium batteries to operate. They’re available, but Tesla is gearing up to be the only U.S. supplier of these batteries with enough size and scale to satisfy the full demand should electric driverless cars (or even human-controlled EVs) become common.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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