Within the automobile sector, one of the high-growth segments in the coming years will be self-driving car stocks. Estimates suggest that between 2021 and 2030, the self-driving cars market is likely to grow at a compound annual growth rate of 63.1%.
Given the growth potential, it makes sense to invest in one of few names in the autonomous vehicle industry. This column will discuss four self-driving car stocks that can make it big in the coming years.
Let’s look at the following self-driving car stocks and the progress made in this high growth potential segment.
Self-Driving Car Stocks: Tesla (TSLA)
Most names in the automobile industry have been struggling, but TSLA stock continues to surge higher. In the last one year, the stock has skyrocketed by 438%. Any profit booking would present a good opportunity to accumulate this innovation driven name in the electronic vehicle industry.
Currently, all Tesla cars have been coming with the autopilot as of April 2019. The features include traffic-aware-cruise-control and autosteer. CEO Elon Musk recently commented that the company has rebuilt the autopilot software. It’s expected to be launched in the next two to four months.
It’s worth noting that Tesla has been raising the cost of self-driving cars with technology improvements. However, these improvements will trigger higher demand for Tesla cars and potentially set it apart from peers.
As the autonomous vehicle market gains traction globally, Tesla is well positioned to benefit. With initiative on multiple manufacturing locations, the company is also lowering cost, which will boost margins. Therefore, investors bullish on self-driving cars need to consider TSLA stock for their portfolio.
Baidu (BIDU)
BIDU stock is also worth considering for investors bullish on the self-driving cars industry. Baidu has increased focus on artificial intelligence and autonomous cars. This is likely to be positive for the company’s growth revival in the coming years.
As of first quarter of 2020, Baidu reported deployment of 100 Apollo-powered autonomous vehicles across 17 cities in China. With Baidu currently being the only top-tier autonomous driving company in China, there is immense potential for growth in the coming years.
In May 2020, Baidu built the world’s largest test ground for autonomous vehicles. Further, it’s worth noting that the company already has more than 100,000 passenger trips.
Clearly, Baidu is on the forefront and I believe that BIDU stock is a potential value creator in the coming years.
Alphabet (GOOG)
Waymo is Alphabet’s self-driving car company. The company was in news in March 2020 when it raised $2.25 billion in its first external funding round. The investment will be used for technology and expanding global operations.
Waymo has already accrued more than 20 million miles on public roads and 10 billion simulated miles. The big funding is an indication of the potential the company holds. I will not be surprised if Waymo is spun off as a separate entity for value unlocking in the coming years.
It’s worth noting that Waymo already has partnerships with Fiat Chrysler (NYSE:FCAU), Jaguar Land Rover, Renault Nissan Mitsubishi and Volvo (OTCMKTS:VOLVF). The company has therefore made significant inroads in the autonomous vehicle market. With the latest round of funding, I expect growth to accelerate.
Ford (F)
F stock has declined by 40% in the last one year. I believe that it’s a good opportunity to accumulate the stock. Not just for self-driving cars, Ford is also interesting with a deep pipeline of electric vehicle launches.
Specific to self-driving cars, Ford has partnered with Argo AI. The company is already testing self-driving vehicles in Pittsburgh, Palo Alto and Miami, among others. With a target to deliver “Level 4” autonomous vehicles for operations by 2022, the stock is worth considering.
Argo AI is an artificial intelligence and robotics company. The company is applying the latest advancements in computer vision and machine learning for self-driving cars. Therefore, there are reasons to be excited about the company’s self-driving car commercial launch.
Even with the current headwinds due to the coronavirus, Ford has ample liquidity buffer of $35.1 billion. This is important as the company is well positioned to invest in innovation driven growth.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. As of this writing, he did not hold a position in any of the aforementioned securities.
