It’s no longer as question of if driverless cars will ever come. It’s now a question of when.
You just have to look at how the government is taking the matter of an autonomous future seriously to understand that driverless cars are coming.
U.S. Transportation Secretary Anthony Foxx said in a recent press release that, “We are witnessing a revolution in auto technology that has the potential to save thousands of lives.” That was followed by an admission that proper regulation has to be put in place to achieve the potentials that driverless cars offer.
It means it is time for us as investors to consider the companies that are well-positioned to make it big in the upcoming revolution in the auto industry.
In the actual scheme of things, though, just about every major automaker is making big move towards bringing driverless cars to reality. With that in mind, it may be a little difficult to come up with an ultimate list of the best-positioned companies. The trick would be to combine their current market standing with their history of selling cutting-edge devices and their autonomous strategy to make an educated decision on where to invest.
In addition, with the concept of driverless cars having a lot to do with technology, you should note that tech companies could also be direct plays on driverless cars.
What’s more, it’s worth mentioning that a company could be making big move toward driverless cars, but doesn’t provide adequate exposure to U.S. investors. So we’re concerned about those that are well-positioned and offer exposure to American investors. That said, here are three well-positioned direct plays on driverless cars.
Driverless Car Stocks to Buy: Alphabet Inc (GOOG, GOOL)
While not a traditional automaker, Alphabet Inc (GOOG, GOOGL), the parent company of Google, is clearly in the lead to bring driverless cars to reality.
According to data obtained from California Department of Motor Vehicles, GOOG has the highest number of test permits for driverless cars in the state — 73 permits. Second-positioned Tesla Motors Inc (TSLA) only has eight test permits.
To confirm that Google is the clear leader in the race for driverless cars, the data further reveals Google has 230 approved human test drivers for self-driving vehicles in California, way ahead of second-placed Cruise Automation with 29 human drivers.
It is worth noting that General Motors Company (GM) recently acquired Cruise Automation for a reported $1 billion.
Google currently tests its driverless cars in California, Texas and Washington. Google hopes to bring its autonomous vehicle to market in 2020.
Time will tell if GOOG plans to sell driverless cars over the long-term or it wants to be an ultimate provider of autonomous technology and related services — just as it has monopolized the search engine business.
In any case, it is certain that GOOG will be a first-tier name in the autonomous vehicle industry.
Driverless Car Stocks to Buy: Ford Motor Company (F)
Ford Motor Company (F) announced in January that it plans to triple its autonomous vehicle development fleet this year to a total of 30 autonomous vehicles, claiming that this move makes its fully autonomous fleet the largest of all automakers.
That would obviously exclude Google, as it’s not an automaker.
Ford stock also recently announced the formation of Ford Smart Mobility LLC, a subsidiary that will design and market mobility services. This move is centered on Ford’s plan to become a complete mobility company, and not just an automaker. This would involve car sharing.
Ford was also the first automaker to test its driverless vehicle at Mcity, the first full-scale simulated, albeit real, urban environment built to test driverless cars in at the University of Michigan.
These moves combined just go to show just how committed Ford stock is to being a big part of the autonomous vehicle revolution.
Unlike Google, though, Ford already has a strategy for gaining from autonomous technologies, and that’s a reason to love it. Ford is already employing autonomous technologies in the vehicles it makes.
The company states that, “Adaptive cruise control, active park assist, lane-departure warning, lane-keeping aid, pedestrian detection, Pro Trailer Backup Assist and vehicle-to-vehicle connection technology [are] already available on millions of Ford vehicles today.”
The reason to appreciate this is that, as revolutionary as fully autonomous cars are, they won’t go mainstream for a few decades to come. But since the tech employed in driverless cars can offer improved safety in our traditional autos, automakers that go this route — like Ford stock –will benefit first.
Driverless Car Stocks to Buy: Nvidia Corporation (NVDA)
It’s not obvious, but Nvidia Corporation (NVDA) is a big part of the advancement in driverless cars. The Tegra processors from NVDA have been powering some of Google’s autonomous vehicle technologies in recent years.
And NVDA is continuing to progress in the autonomous vehicle space. At the Consumer Electronics Show this year, NVDA introduced its second-generation self-driving vehicle software tech — the Nvidia DRIVE PX 2. NVDA says the DRIVE PX 2 is the world’s first and most powerful “engine for in-vehicle artificial intelligence.”
This new tech allows for deep learning processing that help to quickly understand how to deal with challenges of routine driving. The tech can process 24 trillion deep learning operations in a second, according to Nvidia.
You’ll understand how important this is when you consider that more than 50 automakers and related companies have adopted NVDA’s artificial intelligence platform for developing driverless cars. Ford is one of those automakers.
And with a trailing-12-month price-to-earnings ratio of 31 compared to the industry average of 75, NVDA stock looks fairly valued.
