Last Updated on December 29, 2020 by Henry John
There was so much optimism about the progress and development of self-driving cars for decades now. And in the past five years the optimism was so high that in 2015, the Guardian predicted that by 2020, you’ll be a “permanent backseat driver”, and in 2016, Business Insider published an article titled “10 million self-driving cars will be on the road by 2020”.
“It’s 2020. Where are our self-driving cars?” the headline of an article on Vox, published in February 2020, reminding us that the proclaimed year for self-driving cars was supposed to be now, and asking the optimists “where are the autonomous driving cars?”.
If you ask me, I’d say that self-driving cars are here, now, in 2020. Maybe not 10 million of them but we have advanced self-driving features in many cars on the road, today. That Business Insider report in 2016 defined a self-driving car “… as any car with features that allow it to accelerate, brake, and steer a car’s course with limited or no driver interaction”.
Do we have cars with features that allow them to accelerate, brake, and steer a car’s course with limited or no driver interaction? Yes, we do. Tesla, BMW, and Daimler (Mercedes) all have cars on the road that have these features.
Nobody with an in-depth knowledge of the development of self-driving technologies is naïve about the difficulties with developing the technology. We know that these cars (Tesla Model S, BMW 7 Series, and their likes) are not exactly what consumers are expecting to be the complete self-driving cars. And neither was that 2016 Business Insider article.
“Fully autonomous cars are further divided into user-operated and driverless vehicles. Because of regulatory and insurance questions, user-operated fully autonomous cars will come to market within the next five years, while driverless cars will remain a long ways off”, a key take away from the BI 2016 report.
Industry experts and self-driving enthusiasts are, mostly, not denying the fact that driverless cars remain a long way off, and I find this interesting.
More interesting, as an investor, is the fact that stocks of companies that are deeply involved in the self-driving technology market are seeing a significant part of their stock’s valuation being credited to their involvement in the self-driving technology market.
For instance, a significant chunk of Tesla’s valuation and growth this year can be tied down to its development of self-driving technology (the Tesla Autopilot).
Even though the self-driving car technology that will make you a ‘permanent backseat driver’ is yet to come, the investment in the promise of the technology is already ongoing. And many Investors in the self-driving market are already seeing significant growth in their self-driving tech holdings.
If you are looking to invest in self-driving car companies, here are the three most promising Self-driving Vehicle Stocks for 2021:
Aptiv is a global technology company that develops safer, greener, and more connected solutions enabling the future of mobility. The company is focused on developing and commercializing autonomous vehicles and systems through its joint venture with Hyundai, Motional.
They are already providing autonomous ride-hailing services in Las Vegas, with over 100,000 public passenger rides, and have received a 5-out-of-5 star self-driving experience rating from 98% of its passengers. Aptiv was the first company to develop a commercial, autonomous ride-hailing service based in Las Vegas.
Its evolution as a self-driving car company can be traced back to 2015 when the company acquired Ottomatika, a company that provides automated driving software solutions and manufactures products for driver assist and automation features for vehicles. In 2017, Aptiv also acquired NuTonomy, another company that made software to build self-driving cars and autonomous mobile robots.
Aptiv has since been expanding its footing in the global self-driving market, most notable is its expansion to the Chinese market through the establishment of the company’s China Autonomous Mobility Center in 2019.
Over the years, especially since its spinoff from Delphi Automotive, Aptiv has prepared and strategically positioned itself to benefit from the future full self-driving market, and importantly, the company has not overlooked the current semi-autonomous driving market.
Aptiv is in the self-driving business of today, the company is currently selling hardware and software solutions used in semi-autonomous self-driving cars to some of the world largest Automakers.
The company provides electrical, electronic, and safety technology solutions to the automotive and commercial vehicle markets. It operates through two-segment, Signal and Power Solutions, and Advanced Safety and User Experience.
The Signal and Power Solutions segment designs, manufactures, and assembles vehicle’s electrical architecture, including engineered component products, connectors, wiring assemblies and harnesses, cable management products, electrical centers, and hybrid high voltage and safety distribution systems.
The Advanced Safety and User Experience segment provides critical components, systems integration, and software development for vehicle safety, security, comfort, and convenience, such as sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, application software, and autonomous driving technologies.
Aptiv’s 10 largest customers include General Motors Company, Volkswagen Group, Fiat Chrysler Automobiles N.V., Ford Motor Company, SAIC General Motors Corporation Limited, PSA Peugeot Citroën, Geely Automobile Holdings Limited, Daimler AG, Toyota Motor Corporation, and Tata Motors Limited.
The company’s involvement in today’s semi-autonomous driving markets makes it one of the smart-investors’ favorite self-driving stocks for 2021.
2. General Motors
General Motors is one of the largest automakers in the world with over 100 years of history, the company designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, and Wuling brand names.
The Auto Industry has been crying for a revolution for decades, and large traditional automakers have been ignoring the cries, however, that revolution is happening now in form of Electric Vehicles (EVs) and Autonomous Vehicles (AVs).
Revolutionary EV companies like Tesla have spearheaded the EV revolution and are already challenging and threatening the market dominance of large traditional automakers like General Motors.
If large traditional automakers will survive the auto industry revolution, they have to revolutionize their business and do so fast. And one of the traditional automakers revolutionizing their business is General Motors and GM is revolutionizing faster than its peers, on all fronts (EV and AV front).
General Motors has risen to become Tesla’s major competitor, having established a strong technological footing in the Electric Vehicle market. It has promised to have 20 electric vehicles ‘on sale’ by 2023 (far more than Tesla), with the GMC Hummer EV slated for 2021. And the company says, it intends to sell a million EVs by 2025 in North America and China.
Of course, General Motors’ exploits in the EV world is one of the reasons why it has regained spotlight position in a revolutionizing Auto Industry. However, its advances in developing autonomous driving technologies is the reason it’s one of the best Automaker stock to own for 2021 and beyond.
An autonomous driving bet on General Motors (GM) is a bet on Cruise, a majority-owned subsidiary of General Motors. Cruise is a self-driving car company focused on testing and developing autonomous vehicles, a graduate of the Y-Combinator (a startup accelerator), that was acquired by General Motors in 2016.
Before GM’s acquisition, Cruise’s focus was on developing direct-to-consumer kits to retrofit vehicles with limited self-driving capabilities. However, after GM’s acquisition, Cruise has been working exclusively on developing software for making GM’s Chevy Bolt electric vehicle fully autonomous.
Today, GM’s Cruise has risen to be one of the top three self-driving car companies in the world, together with Alphabet’s Waymo and Tesla.
The company, through its commitment to a changing market, has proven to be one of the smart-investors’ favorite self-driving stocks for 2021.
3. Tesla Inc.
Tesla currently has the most sought after self-driving and electric cars. It is the leader in the electric car market and a leader in the self-driving car race. As a company, Tesla epitomizes the future of cars, not just for its self-driving drives, but also for the fact that it’s an all-out electric vehicle company.
As a self-driving car stock, Telsa has lots of advantages. For Instance, when its fully self-driving technology comes to light, Tesla won’t be looking to enter the market, it would have already had a strong footing in the Auto market.
When it comes to semi-autonomous vehicle systems, Telsa has arguably the most advanced system in the world. The Tesla Autopilot (its semi-autonomous driving system) enables Tesla cars with the ability to auto navigate and be summoned from parking spaces and garages. Tesla’s vision for fully self-driving cars is to upgrade the base capabilities of Autopilot into offering full self-driving.
There’s always a steady upgrade to Tesla’s Autopilot system, software, and hardware-wise. And this is making the system get closer to full self-driving capability. The Tesla Autopilot over the years has been gradually featured with Adaptive Cruise Control, Autosteer, lane departure warning, auto lane changing, smart summon and traffic lights, and stop signs recognition among others.
Tesla’s stock has been one of the few success stories in a 2020 market that was heavily impacted by a global pandemic. It currently has a P/E ratio above 1,200 making it an extremely overvalued stock.
No truth-telling investor will say he/she foresaw Tesla’s stock price rising as high as it has in 2020 before the market opened on the 2nd of January, 2020.
Tesla this year has been incredible, it’s getting so much love from diehard customers and investors, and at the moment, it feels like there is nothing capable of crashing Tesla.
Will Tesla’s stock overvaluation lead to the stock crashing hard come 2021 or is it still a safe and good bet for a position in the self-driving market?
Back in September when I answered a similar question (Is Tesla stock going to crash or continue to rise), I noted that “on the short-term, Tesla’s stock could crash (slide) down to as low as $250 per share but the stock will continue to rise long term way beyond $600 per share”. Today, Tesla’s stock has indeed risen way beyond $600 per share as I predicted, however, the rise came faster than I imagined.
Tesla as a company is doing almost everything right, and it’s only normal that investors and customers reward them with loyalty. And there’s little suggesting a potential Tesla crash come 2021 as long as it keeps doing what it is doing and better. With the experienced and incredible management team Tesla has, I reckon they will continue doing better and 2021 will be a much better success stock for the EV maker.
Electric Vehicles (EVs) and autonomous vehicles (AVs) are the future of vehicles and at the moment, Tesla seems to be a carmaker from the future.
The company will begin trading as part of the S&P 500 Index on the 21st of December, after which I expect some investors to take profits off the table, and from historic data, Tesla’s stock price will fall after its S&P 500 inclusion.
If you are considering getting into Tesla for the 2021 ride, wait after its S&P 500 inclusion, to buy the expected dip. And you don’t want to miss out on Tesla if you are interested in investing in the self-driving market long-term.