The Jetsons burned the image of flying cars into our collective consciousness…but that technology might take a while to arrive. The more immediate futuristic automotive tech is that of the self-driving car. For investors, this means looking for stocks to buy that will benefit from the advent of self-driving cars now.
Fully autonomous vehicles that require no human intervention won’t be here until the 2020s — they’re still five or six years out at the minimum — and knowing the way government works, the longest part of the process will be getting all the laws set up.
In the meantime, there’s a flurry of multibillion-dollar companies dedicating tons of resources to bringing self-driving cars to fruition, and bare-bones autonomous driving technology is already commercially available, with Tesla Motors Inc (TSLA) being the shining example.
Without further ado, let’s take a look at self-driving car stocks to buy if you believe in the industry.
Self-Driving Car Stocks to Buy: Tesla Motors Inc (TSLA)
Investing in driverless cars doesn’t get more straightforward than TSLA, the earliest pure-play self-driving carmaker in the space.
Tesla is pursuing the holy grail of tomorrow’s auto industry, which is the idea that self-driving car manufacturers will also operate a ride-hailing or mobility business, thereby double dipping on the benefits of the transformative new technology.
While Tesla hasn’t outwardly stated its goals to operate a ride-sharing company, CEO Elon Musk has hinted at it before. There will be plenty of competition here: Uber and Lyft, as well as several of the companies that follow, are all trying to do the same thing — but the fact that Teslas already have rudimentary autonomous driving features bodes well for the company.
Now that the golden boy is out of the way, the following stocks to buy get a little interesting.
Self-Driving Car Stocks to Buy: Mobileye NV (MBLY)
Broadly speaking, when you’re seeking out the best stocks to buy for the driverless car revolution, you can buy the car manufacturers, the components-makers or the software companies.
Mobileye NV (MBLY) is one of the key software companies in this ecosystem, designing the machine vision tech that will allow your car to notice the biker carelessly weaving in and out of traffic.
Mobileye’s remarkable and necessary software can also notice road markings, traffic signs and traffic lights, barriers, animals — pretty much anything and everything that normal human drivers need to take into account when taking to the roads.
The company’s software must be working, because sales have shot through the roof in recent years, roaring from under $20 million in 2011 to over $240 million in 2015. Analysts expect revenue to grow by over 40% annually in both 2016 and 2017, too.
Self-Driving Car Stocks to Buy: Ford Motor Company (F)
Yep, Ford Motor Company (F). If you didn’t think of the old-school American automaker as one of the driverless car stocks, you’re not alone … it wasn’t the first company that popped into my mind, either.
But Ford’s commitment to the space is real. Last year the company announced the “Ford Smart Mobility Plan,” a vow to dedicate resources and reach the “next level in connectivity, mobility, autonomous vehicles, the customer experience and big data.”
Ford already makes cars with basic autonomous driving features like emergency braking and parking assistance, but it wants to take it further. “Our priority is in making the first Ford autonomous vehicle accessible to the masses and truly enhancing customers’ lives,” said Raj Nair, the company’s CTO.
Ford, like Tesla, is also pursuing the automotive holy grail, saying it wants to be a mobility company too, and “beyond building a vehicle that would be in somebody else’s fleet.”
Self-Driving Car Stocks to Buy: General Motors Company (GM)
Yep, General Motors Company (GM). The Detroit automaker has been even more explicit than Ford in expressing its devotion to a future where self-driving cars and ride-sharing become the norm in transportation.
Unlike Ford, GM chose to partner up for the ride-sharing part of the equation. In January, GM invested $500 million in Lyft, the second banana to Uber in today’s ride-hailing industry. It waxed poetic about a future where customers could order a ride and have it show up at their door without a pesky human driver to have forced social interactions with.
GM’s Chevrolet also partnered with Chinese automaker SAIC Motors to make a fully autonomous electric vehicle by 2030.
The company thinks that could mean big bucks in China, which has large urban populations, undeveloped infrastructure and governments eager to find solutions to ease congestion.
Self-Driving Car Stocks to Buy: Delphi Automotive PLC (DLPH)
Delphi Automotive PLC (DLPH) is actually a spinoff of GM. A components manufacturer, Delphi is hyper focused on the parts that go into self-driving cars, and even showed off its own driverless car tech at the Consumer Electronics Show in 2015.
Last year, some of Delphi’s top engineers took its retrofitted driverless Audi SQ5 on a cross-country road trip, a journey that tested Delphi’s tech in a variety of diverse weather conditions, terrains, traffic issues and obstacles.
The company boasts that the nearly 3,400-mile trip from San Francisco to New York City was “America’s first and longest coast-to-coast drive by an automated driving vehicle.”
The devotion to this technology makes DLPH one of the best driverless car stocks to buy today.
Self-Driving Car Stocks to Buy: Alphabet Inc (GOOG, GOOGL)
Remember how GM is partnering with a Chinese carmaker on an autonomous vehicle, in part because of congestion issues and an infrastructure that isn’t really built out yet? Well, Alphabet Inc (GOOG, GOOGL) is seeking to solve congestion and infrastructure problems too — here in the U.S., without a partner.
If you’re thinking about stocks to buy for the driverless car boom, odds are you’ve considered GOOG, which has been working on driverless cars since 2009. What’s not as well-known is the fact that Alphabet portfolio company Sidewalk Labs is working on an arguably more ambitious goal: Retrofitting today’s urban areas into “smart cities.”
The goals are multidimensional: reducing congestion, easing public health concerns, making housing more affordable and reducing fossil fuel dependency are all on the slate.
Driverless cars will play a big role in this new future, and you can rest assured that Sidewalk Labs — which is working with local governments and funding high-tech urban redesigns — will push Google’s own driverless car tech as part of the agenda. That’s a given considering the company has been lobbying Congress to speed up the process of onboarding driverless cars to public roads.
Google’s self-driving cars have logged about 1.5 million miles with only one machine-caused collision: a 2 MPH fender-bender in which no one was hurt.
Self-Driving Car Stocks to Buy: Autoliv Inc. (ALV)
Finally, there’s Autoliv Inc. (ALV), which, like Mobileye, works on the technology that helps driverless cars actually become driverless. Unlike Mobileye, Autoliv makes the sensors and cameras (rather than the software) that are responsible for spotting those irresponsible bikers.
Thankfully, Autoliv is sticking to what it’s good at (auto parts), and won’t be competing against Tesla, Ford, GM and the thousand other companies that want to actually make the cars themselves. ALV just sells those companies parts.
Some of the cooler products Autoliv makes are night vision cameras that can still “see” everything they need to on the road, and what Forbes describes as “a smart seat belt that can restrain passengers even before a collision occurs.” Forbes also notes that Autoliv has a valuable intellectual property portfolio that the company can license to driverless car manufacturers, which is a far lower-risk way to bet on the self-driving cars trend.
At the end of the day, if you really want to bet on driverless cars, you’ll have to be okay with adopting a long-term time horizon, and should likely also diversify your investments across a few stocks, since it’s difficult to determine one long-term winner when a technology is in its nascency.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.