Where to Invest in Self-Driving Car Stocks?

The self-driving car sector involves vehicles capable of perceiving their environment and navigating with minimal or no human intervention, utilizing advanced sensors and complex software systems. Investment interest in this rapidly developing industry continues to expand as technology advances. Understanding the various market segments can help identify potential investment avenues.

Vehicle Manufacturers with Self-Driving Initiatives

Many vehicle manufacturers are investing in autonomous driving technology. They combine in-house research and development with strategic partnerships to accelerate progress. Their production capabilities and market presence position them as direct participants in the self-driving revolution.

Tesla has developed its Full Self-Driving (FSD) software with a vision-based approach, relying primarily on cameras and AI neural networks. This system is trained on extensive real-world driving data, using powerful supercomputers like Dojo for AI algorithm development.

Waymo, an Alphabet subsidiary, operates Level 4 robotaxi services in several U.S. cities, including Phoenix, San Francisco, and Los Angeles. Its testing spans millions of real-world and billions of simulated miles.

General Motors, through Cruise, entered the robotaxi market, offering ride-hailing services. Volkswagen Group’s CARIAD software unit develops a unified platform and Level 4 autonomous driving stack, collaborating with Mobileye for ADAS. Toyota, via its Research Institute and Woven by Toyota, pursues AV development, complemented by partnerships like Waymo. Mercedes-Benz integrates AI and enhances ADAS. Ford shifted focus towards advanced driver-assist technologies.

Technology and Software Developers for Autonomous Driving

Beyond vehicle manufacturing, companies focus on creating the foundational software for autonomous operation. These technology providers specialize in advanced software platforms, AI algorithms, machine learning, and high-definition mapping solutions. Their innovations are licensed or supplied to vehicle manufacturers, forming the core technological backbone of self-driving systems.

NVIDIA offers its DRIVE platform, including high-performance AI chips like Orin and Thor. This platform supports advanced driver assistance to full self-driving. Its Omniverse platform aids in simulation and AI training.

Mobileye, an Intel subsidiary, leads in advanced driver-assistance systems (ADAS), providing EyeQ chips and camera systems. It also develops mapping technologies like Road Experience Management (REM) and safety policies such as Responsibility-Sensitive Safety (RSS).

Baidu’s Apollo platform is an open-source autonomous driving solution, using computer vision, deep learning, and sensor fusion. Pony.ai develops safe and reliable software for robotaxis and robotrucks, with millions of kilometers in road testing. Applied Intuition provides vehicle intelligence tools, operating systems, and autonomy stacks for OEMs to develop AI-powered vehicle experiences. Companies like TomTom, HERE Technologies, Voxelmaps, iMerit, and Intellias specialize in HD maps, providing accurate environmental data for precise vehicle localization and navigation.

Component and Sensor Suppliers for Self-Driving Systems

Self-driving cars rely on sophisticated hardware components and sensors. Companies specializing in these parts are an important investment area within the autonomous vehicle ecosystem. These suppliers develop and manufacture components enabling autonomous vehicles to perceive their surroundings.

LiDAR (Light Detection and Ranging) sensors, using pulsed lasers for detailed 3D maps, are supplied by companies like Luminar. Luminar’s LiDAR technology is standard equipment in certain production vehicles, such as the Volvo EX90.

Radar sensors, effective in various weather conditions for detecting object speed and distance, are manufactured by Bosch, Continental, Denso, Aptiv, and NXP Semiconductors. The automotive radar market is advancing with 4D imaging radar and miniaturization for more compact systems.

Cameras are fundamental for visual perception, supplied by companies like Bosch, with its MPC3 multi-purpose camera integrating AI for recognition. Magna also produces advanced camera modules, including front and remote heads, essential for high-performance ADAS.

High-performance computing chips, processing sensor data, are supplied by NVIDIA, NXP Semiconductors, and Infineon. These components are indispensable for real-time decision-making in autonomous vehicles.

Investment Strategies for Self-Driving Stocks

Investing in the self-driving car sector can involve various approaches, from individual companies to diversified investment vehicles. A direct approach involves investing in individual vehicle manufacturers, software developers, or component suppliers. This allows investors to focus on specific companies with strong growth potential.

Exchange-Traded Funds (ETFs) offer a diversified way to gain exposure to the self-driving sector. ETFs are investment funds traded on stock exchanges that hold a collection of underlying assets.

• The iShares Self-Driving EV and Tech ETF (IDRV) tracks companies in electric vehicles, battery technologies, and autonomous driving.
• The Global X Autonomous & Electric Vehicles ETF (DRIV) focuses on autonomous vehicle technology, electric vehicles, and related components.
• The ARK Autonomous Technology & Robotics ETF (ARKQ) provides broader exposure to automated technologies, with autonomous mobility as a significant portion.
• KraneShares Electric Vehicles and Future Mobility ETF (KARS) provides sector-specific investment.
• First Trust S-Network Future Vehicles & Technology Fund (CARZ) provides sector-specific investment.

Mutual funds may also provide exposure to the self-driving sector, typically as part of a broader portfolio. These funds are professionally managed and pool money from investors to purchase diverse securities. For any investment, considering diversification across different companies or segments within the self-driving sector, or across different industries, can align with long-term financial planning.