3 Autonomous Driving Stocks That Are Better Bets Than Tesla


  • Self-driving vehicles are on the verge of becoming widespread, and the technology is likely to be quite lucrative.
  • Aurora Innovation (AUR): Two large entities bought AUR stock over the last year. 
  • Baidu (BIDU): The Chinese firm’s robotaxi business is poised to become huge and profitable.
  • Rivian (RIVN): The company has launched an improved version of its autonomous-driving offering.  
autonomous driving stocks - 3 Autonomous Driving Stocks That Are Better Bets Than Tesla

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Very quietly, self-driving vehicles are on the verge of becoming mainstream. In China, robotaxis have become so popular that their makers are nearly breaking even financially and will probably become profitable in 2025. In the U.S., Amazon’s (NASDAQ:AMZN) robotaxis are being tested in three cities: San Francisco, Las Vegas, and Seattle, while two more, Miami and Austin, will soon be added to the list.

Moreover, after conducting many years of testing in Texas, 20 new self-driving trucks could soon be carrying goods between Dallas and Houston. And I have little doubt that the self-driving vehicle business and autonomous driving stocks will eventually be very lucrative. That’s because, given widespread shortages of drivers and the large amounts of money that they must be paid, companies will be willing to hand over a great deal for automated vehicles.

While Tesla (NASDAQ:TSLA) has made major strides in the autonomous-driving race, it already has a very large valuation, along with major regulatory issues in the U.S., and is suffering market share losses in both America and China. Therefore, I view these autonomous driving stocks as better bets than Tesla.

Aurora Innovation (AUR)

UBER Stock. Uber Layoffs. Self-driving truck stocks: a self-driving truck on the road
Source: Mike Mareen / Shutterstock

Increasing my confidence in Aurora Innovation (NASDAQ:AUR), two major entities in recent quarters significantly increased their investments in the firm.

Hedge fund Dimensional Advisors increased its ownership of AUR stock by 42% to 7.57 million in Q4 2023. As of the end of last year, the fund, which offers many ETFs, had a huge $677 billion of assets under management. And last July, Uber Technologies (NYSE:UBER) bought $75 million more of Aurora’s shares. Uber purchased the stock for $2.70-$3, versus Aurora’s current price of around $2.30.

By the end of the year, Aurora expects its autonomous trucks to be hauling freight in Texas for several huge companies, including FedEx (NYSE:FDX), Uber Freight, and Werner. The company expects to expand rapidly in the coming years, with plans to deploy “thousands” of trucks in only three years. The firm intends to eventually sell trucks equipped with its software and hardware to other firms.

Given the company’s impressive customer list and ambitious plans, along with the substantial purchases of AUR stock, I view the name as one of the best autonomous driving stocks to buy.

Baidu (BIDU)

A rendered image of a self-driving car driving down a tree-lined street, with green radar sensors surrounding the front of the car; AI powering self-driving

China-based Baidu (NASDAQ:BIDU) is the first company that I’ve seen to disclose that its self-driving vehicles are on the verge of becoming profitable. The company’s recent announcement that its Apollo Go robotaxi business is close to breaking even and will probably break into the black next year is quite momentous and bodes very well for BIDU stock. According to IOT World Today, if Baidu achieves the milestone, it will become “the world’s first profitable autonomous ride-hailing platform.”

And illustrating Baidu’s huge commitment to Apollo Go, the firm reportedly intends to deploy 1,000 of its new robotaxis in just one city – Wuhan. Further, indicating that the robotaxi business will indeed be very lucrative for Baidu, the new vehicles cost less than $28,000.

Also importantly, analysts, on average, expect Baidu’s earnings per share to advance to $12.10 next year from $11.40 in 2024. Despite the expected, substantial increase in its profitability and the huge, longer-term potential of its robotaxi business, BIDU stock is changing hands at a very low price-earnings ratio of 9.65 times.

Rivian (RIVN)

The front of a Rivian (RIVN) storefront is seen lined up with Rivian R1T and R1S model trucks out in front.
Source: Michael Berlfein / Shutterstock.com

Rivian (NASDAQ:RIVN) reports that all of its EVs come equipped with software called Driver+. According to the company, Driver+ offers “true hands-free driving with a suite of active safety and driving assistance features — capable of automatically steering and adjusting the speed on your command.”

Moreover, two recent developments indicate that the automaker stands well-positioned to vastly improve its self-driving features over the longer term.

First, the new version of the automaker’s R1 EVs include “a new in-house developed autonomy system,” Seeking Alpha reported. Reportedly significantly more advanced than the previous version, the new offering now includes “11 cameras, five radars, and AI prediction technology.”

And speaking of AI, in a recent note to investors, well-known Morgan Stanley analyst Adam Jonas wrote that “Rivian is ‘uniquely positioned within autos (other than Tesla) on scaling a fully integrated software stack critical to unlocking the AI opportunity.'” Given Jonas’ assertion, I expect Rivian to greatly improve its self-driving technology over the long term.

On the date of publication, Larry Ramer held long positions in AUR, RIVN, and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.         

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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