Though naysayers didn’t believe it would happen, the market for self-driving vehicles is drawing close. There have been hundreds of successful test drives across multiple vehicle manufacturers, and it’s hailing a new era of automobile potential.
But will these driverless cars really hit the market? Are they a smart investment for the future? Use this guide to help you recognize the potential of investing in autonomous vehicles and the best ones to look at now.
Is the self-driving car viable?
With self-driving vehicles, it’s difficult to understand the potential profit margins and the best positions to take. “Some [companies], like Tesla (TSLA, Financial), are somewhat open about where they are in the development process and when they hope to have something on the market,” says John Rosevear of The Motley Fool. “But others aren't. Among established automakers and their suppliers, details of upcoming new products and technologies have traditionally been held very tightly, kept secret until a few months before launch.”
Their closed-door policy makes it so we don’t know exactly how far along companies are in the race to a successful self-driving vehicle, nor do we have details about pricing, special features or successful testing.
We do know that self-driving technology will become a commodity in the future. In fact, some predict that we’ll have our first self-driving vehicles on the road by 2021, whether on the commercial or personal level.
Will people buy them?
If people don’t buy the cars, you can’t very well make a profit on your investment. If it’s only used on the commercial level and not released to the general public, that will also put a damper on your potential earnings.
One big concern revolving around the success of self-driving vehicles is the price. No consumer price has been stated as of yet, but the technology that goes into creating a driverless vehicle will likely lead to much higher than a typical vehicle. It presents the question of whether consumers will even buy this product once it hits the market.
However, this concern can be put to rest based on past trends. We know that technology prices drop as the tech becomes more competitive and more affordable ways are discovered to produce it. Additionally, thanks to the ease of calculating and qualifying for auto loans, people will very likely purchase these products, even if they can’t necessarily afford them up front.
If (more accurately when) self-driving vehicles become available, you can be relatively certain that consumers and businesses alike will purchase them. The volume of sales and success of the product isn’t clear, but with coveted technology like this, it will attract attention.
Five stocks worth watching today
Those who invest in the technology now will see more profits than those who wait. Getting in now is essential to achieving a high ROI, but how do you know what to invest in?
It doesn’t make sense to bet on a potential winner in the race of self-driving cars. There’s not enough information about who’s ahead in the race to ensure top ROI. However, you can watch the stocks.
1. Waymo
Waymo is a product of Alphabet (GOOG, Financial)(GOOGL, Financial), and it has made some impressive steps toward hitting the road without a human pilot. To date, Waymo has covered almost 2 million miles successfully with its autonomous vehicles in addition to 1 million miles of simulated driving. It has also made headway in developing a cheaper LIDAR technology.
2. Delphi Automotive
A spinoff of General Motors (GM, Financial), Delphi is a major player in autonomous vehicles. Its stock continues to climb steadily as it logs more miles of test driving.
3. NVIDIA
If you want to invest in the technology rather than the manufacturer, consider NVIDIA (NVDA, Financial), which makes a graphics semiconductor technology for safer and more accurate driving. The system is composed of seven strategically placed cameras, and many major manufacturers have been closely watching this tech.
4. Daimler
Daimler (XTER:DAI, Financial) is also an impressive participant in autonomous vehicle development, but its most exciting improvements come in the long-haul trucking sphere. It strives to make both electric and autonomous trucks mainstream under strong management with high ROI. Currently, it will pay a dividend of 3.25 euros ($3.47) per share, a higher-than-average yield.
5. Autoliv
Autoliv makes safety features like airbags, and it has partnered with the likes of Volvo (OSTO:VOLV A)(VLVLY)(VOLAF)(VOLVF)(LTS:0MHW)(FRA:VOL3)(FRA:VOL1)(LTS:0HTP)(OSTO:VOLV B) and Mercedes to develop products for a safer self-driving experience. It is a major contributor in the auto-pilot brake systems that autonomous vehicles use.
Disclosure: I do not own any of the stocks mentioned in this article.
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