We will soon be entering a reality in which you will be able to get into your car and instead of fighting traffic and facing the irritation of your daily commute, you will be able to sit back and let your car do the driving for you. Up until just a few years ago, this scenario was reserved for sci-fi movies. However, in recent years, the concept of a self-driving vehicle has become a reality, with some of the world’s most well-known automotive and tech companies making great strides in the field – and sparking excitement among the investor community.
From the world’s leading car manufacturers to the tech companies that are shaping our daily lives – many entities are contributing to this field, making the autonomous vehicle industry a category of its own. As with all industry sectors, the self-driving car market is also scrutinised from a financial standpoint, and the potential is enormous: According to a study published by Intel1, the market could reach $7 trillion within the next 30 years.
Automakers are speeding ahead
Naturally, the first major players to mention in the autonomous car space are the car manufacturers themselves. Virtually all major carmakers are developing some sort of autonomous driving technology. In the US, General Motors, Tesla and Ford are working on self-driving cars and trucks, in Europe, familiar brands such as Fiat-Chrysler, BMW, Renault and Volkswagen are exploring the technology, and in Asia, Japanese giants Toyota and Honda, Chinese tech powerhouses Alibaba and Baidu, and Indian corporation Tata are just some of the firms planning to build autonomous vehicles.
The self-driving car will be quite different from the cars that are currently on the road – albeit externally similar. The amount of sensors, computing power, car-to-car communication apparatuses, and other components needed will make it an extremely tech-heavy creation, built on foundations laid by both the automotive and the tech industries.
AI takes the wheel
A major component in driverless car technology is artificial intelligence led driving. Recent developments in machine learning, Internet of Things (IoT) and computer vision are making the dream of a car travelling from A to B on its own a reality.
Some of the companies developing such technology include Waymo (a subsidiary of Google’s parent company Alphabet), which has not been secretive about its project, with its test cars autonomously roaming the streets of Silicon Valley. Other companies focus on the hardware aspect, including chip manufacturing giant Intel, which claims to have technology in almost every self-driving test vehicle out there and has acquired Mobileye, a computer driver assistance technology company, for $15 billion.
Of course, there are numerous other forms of technology that are required for self-driving vehicles, including computer vision, GPS software and more – all of which are being tested and developed in various tech companies around the globe.
How to invest in this sector
It is amazing to think how close we are to seeing self-driving cars on the road. According to Intel CEO Jen-Hsun Huang, the first fully autonomous, road-safe and government-approved cars will hit the road by the end of 20201. The industry is expected to mature and establish itself as an $800 billion industry within 15 years from that time, and climb into multi-trillion market cap territory by 20502. The self-driving car could prove to be the biggest development in transportation since the invention of the internal combustion engine – and provides a potentially exciting long-term investment opportunity
To enable our eToro investors exposure to the autonomous driving sector, we will soon be launching the Driverless Smart Portfolio investment strategy. Using this Smart Portfolio, eToro investors can invest in a thematic portfolio comprising leading global companies manufacturing the cars, the hardware and software that will enable them to drive themselves, and the world, into the future.
Sources:
- CES 2017: Nvidia and Audi Say They’ll Field a Level 4 Autonomous Car in Three Years
- Accelerating the Future: The Economic Impact of the Emerging Passenger Economy
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