Even a decade ago, most people never thought about driverless vehicles. Handing over control of your transportation to an artificial intelligence (AI) and letting your car run on autopilot seemed like science fiction that might take place in the distant future.
Well, that distant future is here!
Autonomous vehicles are on the road in Phoenix, San Francisco, and several other cities across the United States, and the automotive industry is changing shape yet again. Of course, this trend is garnering quite a bit of attention on Wall Street.
Across the stock market, companies focused on autonomous driving are experiencing extreme growth in valuations. So, it’s only natural that you want to tap into the gains being created in the sector that combines cutting-edge technology with day-to-day transportation.
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Best Self-Driving Car Stocks to Buy
Driverless transportation technology is exciting, but the industry is still emerging. As in any emerging market, there are several companies jumping into the space with little more than a research and development department, a hope, and a dream.
Blindly jumping into any emerging market, including the autonomous driving and driver-assistance industry, is a dangerous move that could lead to significant losses.
But with so many companies joining the world of driverless cars, how do you dig through the weeds to find the best investment opportunities?
Ultimately, the best stocks in the self-driving car space represent well-established companies that are known for staying on the leading edge of innovation in their space. Here are some of the top stocks to start your research with:
1. Tesla (NASDAQ: TSLA)
Since its inception, Tesla has been on the leading edge of innovation in transportation. A pioneer in the electric vehicles space, the company’s name has become synonymous with futuristic transportation capabilities.
Tesla is known for incorporating cutting-edge technologies into its vehicles. It only makes sense that the company is a key player in the driverless market. Elon Musk, the CEO and founder of the EV giant, was an early proponent of cars that drive themselves, and he jumped on the opportunity to build the technology.
Tesla is taking a unique approach to autonomous driving too. The vast majority of companies in the space use lidar, a laser sensing system that makes it possible to create a complex 3D map on demand as the vehicle moves.
However, in 2019, Elon Musk called lidar a “fool’s errand” and said his company’s self-driving vehicles wouldn’t be using the technology. Instead, the company’s vehicles communicate with a massive database, with each vehicle on the road adding data to it in real time. Through the use of artificial intelligence, these vehicles are able to tap into this database to ensure they are on the right track.
Not only is the company creating autonomous transportation technology for consumer vehicles, but the company is also going one step further.
Tesla is working on rolling out its RoboTaxi platform, a ride-hailing service like Uber. The big difference is that there won’t be any drivers with the company’s RoboTaxi platform. Every car in the RoboTaxi fleet is an autonomous vehicle.
While many question the high valuation on TSLA stock, the fact is investors are willing to pay a serious premium for stocks that represent companies on the leading edge of innovation in an emerging market that could grow to become a blockbuster, and that’s exactly what Tesla is.
As such, the stock is worth your attention.
2. General Motors (NYSE: GM)
General Motors is a traditional automaker and a household name in the automotive industry. For more than a century, the company has displayed its strength and ingenuity, maintaining its leadership since inception.
Moreover, GM has also been a key innovator and pioneer in many transportation-related technologies. As the electric vehicle market took off, the company began offering EVs of its own, and it now has promised to deliver 30 new electric vehicles by the year 2025.
So, with the self-driving vehicle market beginning to emerge, it only makes sense that GM is becoming a big player in this space as well. The company launched a program known as Cruise. (Not to be confused with the Chevrolet Cruze, Cruise LLC is GM’s self-driving subsidiary.)
In January 2020, the company unveiled its first driverless car that comes without a steering wheel. That’s right — you get in the car, punch in the address, and off you go. By December 2020, according to The Verge, the company was testing its driverless cars in San Francisco, one of the most congested cities in the U.S.
At the same time, you’re not just investing in their driverless portfolio when you invest in General Motors. You’re investing in more than a century of dominance in the automobile industry — dominance that, thanks to continued innovation, will likely continue for the foreseeable future. All told, GM is a stock that should be paid attention to.
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3. Ford (NYSE: F)
Ford is another major automaker with a long history of success in the U.S. and around the world. Founded in 1903, the company continues to be a pioneer in the automobile industry.
Of course, the company’s continued innovation has kept it ahead of the competition throughout its history. As with GM, Ford jumped on the opportunity to get involved as EVs began to catch on.
Now, the company plans to make gasoline a thing of the past with launches of electric vans and an impressive electric Mustang known as the Mustang Mach E. And Ford doesn’t plan to stop innovation any time soon.
In fact, the company is actively involved in the development and deployment of driver assistance programs and autonomous cars.
For the past few years, the company has been talking about launching a commercial self-driving vehicles business. The company planned on launching the business in 2021, but due to coronavirus pandemic-related delays, the launch is expected to take place in 2022.
Nonetheless, Ford is leading the way when it comes to driverless vehicle innovation, and with a planned launch of a subsidiary in the space just around the corner, we could see the company’s vehicles with no steering wheels relatively soon.
As with General Motors, an investment in Ford isn’t just an investment in the emerging market surrounding cars that drive themselves; it’s an investment in a company with a history of strong performance in the automobile industry.
The company’s proven ability to innovate and stay ahead of the curve is a testament to the potential of the company in the future, making Ford stock one for the watchlist.
4. Alphabet (NASDAQ: GOOG | GOOGL)
Alphabet, the parent company of Google, may be the last company you’d expect to see on a list of the top autonomous vehicles stocks to buy. The company’s claim to fame is a search engine, after all.
However, Google uses artificial intelligence (AI) in its search and online advertising platforms — the same AI that makes autonomous vehicles possible. So what exactly is the company doing in the driverless car space?
In addition to Google, Alphabet owns a subsidiary known as Waymo, which is focused on the ride-hailing industry. Like Tesla’s RoboTaxi, Waymo provides a digital taxi service similar to Uber or Lyft, but does so without drivers. When you order a ride with Waymo, a car shows up, and off you go.
Google actually is ahead of Tesla when it comes to implementing the autonomous taxi idea. In fact, Waymo One has already launched in Phoenix, Arizona, where the company’s robotic taxis are providing rides to residents and visitors. When you get in the car, a screen shows you what the car is seeing, providing peace of mind while you travel in an entirely new way.
Again, Alphabet isn’t a one-trick pony. When you invest in the company, you’ll be gaining exposure to a robotic taxi service, which is exciting, but you’ll also be gaining exposure to a tech company that has proven its dominance in search and advertising — two lucrative and highly competitive industries that require constant innovation.
All told, Alphabet is an alpha bet!
5. Apple (NASDAQ: AAPL)
Apple is another company that may be a surprising appearance on a list of the best autonomous car stocks. The company is best-known for the iPhone, a device that has captured 65% of the smartphone market as of the fourth quarter of 2020, according to Counterpoint Research.
There’s no questioning Apple’s dominance in the technology industry, but what exactly is it doing in the autonomous transportation space?
Apple is a fairly secretive company, but it’s no secret that it is working on a high-tech car program. As is usually the case with new technologies, the company hasn’t offered many details as to what it’s doing with vehicles, but there’s plenty of speculation.
There are three details known about the car:
- Green. The car will be clean running, meaning that it will come with no emissions and will likely be an electric vehicle.
- Autonomous. It’s also widely agreed that the car will be a fully autonomous vehicle.
- Testing Permit. According to MacRumors, Apple was granted a permit in California to test a vehicle that drives itself, further solidifying the presumption that the car will be fully autonomous.
While little else is known, there are rumors surfacing that the first vehicles out of the Apple Car program will be designed for food delivery operations and robotic taxi services.
Investors are eager to learn more about what the company is doing in the autonomous vehicle space, and any announcement surrounding the Apple Car could send the stock through the roof.
Moreover, investing in Apple gives you exposure to the world’s most popular smartphone and a long list of successful products and services the company features.
All in all, AAPL is a strong pick for just about any tech investor’s investment portfolio.
6. Volkswagen (OTCMKTS: VWAGY)
Volkswagen is the only company on this list that trades on the over-the-counter (OTC) market. In general, the OTC market is reserved for penny stocks with little history and smaller business operations.
However, Volkswagen breaks the mold as a foreign issuer that hasn’t decided to reach for listing on a major U.S. stock exchange. The company has a strong and proven business model and a market cap of more than $138 billion — this isn’t your average OTC stock.
In fact, Volkswagen is a household name even in the U.S. It has seen a strong performance in the global automobile industry for some time now.
This is yet another traditional vehicle manufacturer venturing into the driverless car market. It has no intentions of giving up its dominance and has stayed on top of innovation in its space.
Volkswagen has been active in the driverless industry since the very beginning. It has been among the pioneers in the space, even winning the 2005 Grand Challenge automated vehicle race with its first-generation model.
Since then, the company has continued to perfect its driverless car technology with the goal of bringing autonomous vehicles to the mass market.
As with other traditional automobile manufacturers on this list, an investment in Volkswagen isn’t just an investment in autonomous car technology. The automaker has several decades of leadership in the traditional automobile industry and the potential to continue producing significant returns for its investors.
The bottom line is that Volkswagen stock is worth a look.
7. Baidu (NASDAQ: BIDU)
Baidu is often compared to Google and its parent company, Alphabet. The company hosts the most popular search engine in China as well as an online advertising platform that’s second to none in the region.
However, Baidu isn’t solely focused on advertising and search. The company has its fingers in several areas across the technology industry.
So, it should come as no surprise that this Chinese tech giant is venturing into the self-driving cars arena.
In fact, Baidu is the parent company of the autonomous driving company, Apollo. The company is focused on several areas of the self-driving car sector, including:
- Consumer Vehicles. Through Apollo, Baidu plans to launch a line of consumer vehicles that are fully autonomous.
- RoboTaxi. As with Alphabet and Tesla, Apollo also has plans to launch robotic taxi services, tapping into the ride-hailing industry.
- Minibus. Finally, through Apollo, Baidu is aiming to make major changes in the public transit space. The Minibus is a fully autonomous, multipassenger bus designed to provide a new, more efficient public transportation option.
Importantly, Baidu isn’t only interested in launching its autonomous vehicles in its home region of China. In fact, the company received approval from the California Department of Motor Vehicles in January to test its autonomous capabilities right here in the United States.
When you invest in Baidu, you’re gaining exposure to the driverless transportation industry along with exposure to a leading online conglomerate that comes with the promise of significant gains ahead. So, keep an eye on this stock.
8. NVIDIA (NASDAQ: NVDA)
Although NVIDIA has never made mention of an intention to develop a car of its own, the company’s products undoubtedly make most of these vehicles possible.
The company was the pioneer that invented the graphics processing unit (GPU), a necessity in anything having to do with artificial intelligence and self-driving technology. According to Forbes, NVIDIA and its semiconductors have been part of nearly every major breakthrough in the AI space.
NVIDIA GPUs are present in the majority of AI-enabled, fully autonomous, and driver-assisted vehicles mentioned on this list and beyond.
However, this tech innovator isn’t just a cutting-edge vehicle play — it’s an all-around tech play.
At the end of the day, AI and the ability to process massive amounts of data more quickly are leading to incredible breakthroughs in technology, changing everything from the way people drive to how they shop. The company’s tech plays a major role in the majority of this evolution.
Moreover, as the pioneer behind GPUs, the company’s continued innovation is working well to keep it ahead of its competitors.
All told, NVIDIA has a strong history of producing outsize gains for investors as a result of continued and increasing demand for its top-of-the-line products, whether for use in autonomous vehicles, cryptocurrency mining machines, or high-end AIs that are used to find solutions to some of the world’s most pressing health care challenges.
Ultimately, if you’re interested in investing in tech stocks, NVDA should be on your radar.
9. Toyota (NYSE: TM)
Toyota is another well-known carmaker in the U.S. and on the international stage. The company’s vehicles have been a prime choice for consumers, offering a relative bargain compared to other brands without compromising on quality.
As a result, Toyota has earned a leadership position in the automobile industry.
Toyota, like Ford and GM, is doing a great job of ebbing and flowing with the evolution of their industry. Not only does the company produce various hybrid and EVs, but it’s also quickly making a splash in the self-driving vehicle space.
In fact, Toyota is working on a new project known as Concept-i. The vehicle isn’t just a self-driving car, it’s an innovative mode of transportation that incorporates the latest in cutting-edge technology in every sense.
Once it rolls off the production line, the Toyota Concept-i will not only drive itself, it will offer full artificial intelligence, giving the owner the ability to communicate with it. On the website for the Concept-i, the company mentions the vehicle isn’t just a machine, it’s a pal.
Although it will be a while before the first Concept-i vehicles begin to roll off of the assembly line and onto car lots, there’s plenty to look forward to when it does. In the meantime, Toyota investors can look forward to a continuation of the company’s strong performance, with increasing revenue and earnings expected to stay on track for the foreseeable future.
All in all, Toyota stock is worth your attention.
10. Aptiv (NYSE: APTV)
Aptiv isn’t necessarily a household name, but the company is far from a startup, and it could become a well-known brand soon. Like all other companies on this list, Aptiv is working to create a world-class autonomous transportation experience.
Aptiv’s core focus is autonomous commercial vehicles. Its goal is to take control over the ride-hailing space with its own version of the robotic taxi. However, the company has already done what few in the space have accomplished.
The company was the first to launch an autonomous taxi service, and consumers seem to love the experience. In fact, 98% of the more than 100,000 passengers that have hailed rides using Aptiv rate their experience five out of five stars.
So it’s clear the company is doing something right.
One of the most interesting facts about Aptiv for investors is the fact that it has already achieved profitability. In emerging markets, companies generally spend so much money on research and development and an expanding infrastructure that profits are very difficult to achieve.
To put that into perspective, Tesla has been a pioneer in the electric car market since it launched the Roadster in 2008, but the company didn’t generate its first penny of profits until 2020.
The fact that Aptiv is already profitable in the driverless commercial vehicle space — one that’s just in its infancy — speaks volumes about what the company has accomplished and where it’s headed.
So, if you’re investing in modes of transportation that don’t require a driver, you should be taking a close look at Aptiv.
Consider Investing in Autonomous Vehicle ETFs
Investing in individual stocks gives you complete control over the companies you invest your money into. However, it also takes a significant amount of research and market knowledge to make sound investment decisions. After all, an investment without research is akin to gambling.
If you want exposure to growth in the autonomous car market but are unable to commit the time it takes to do this research, you should consider investing in exchange-traded funds (ETFs) centered around this market.
ETFs are bucket investments that pool funds from investors to make large institutional investments. When gains are achieved, all investors who participate in the fund enjoy their share of the gains.
The idea that someday soon you’ll be able to type an address in your phone, connect it to your car, and allow your car to drive you where you need to go is exciting. So too are the profits that can be made by investing in the industry.
Nonetheless, when investing in driverless vehicle stocks, or any other stock for that matter, it’s important to do your research.
In any emerging industry, there will be tons of stocks that will seem like great investments but have little to offer once you dive in. Investing in these stocks can, and often does, lead to significant losses.
Do your due diligence to ensure your hard-earned dollars are invested in companies with plenty of growth prospects to offer.
Disclosure: The author currently has no positions in any stock mentioned herein nor any intention to hold any positions within the next 72 hours. The views expressed are those of the author of the article and not necessarily those of other members of the Money Crashers Team or Money Crashers as a whole. This article was written by Joshua Rodriguez, who shared his honest opinion of the companies mentioned. However, this article should not be viewed as a solicitation to purchase shares in any security and should only be used for entertainment and informational purposes. Investors should consult a financial advisor or do their own due diligence before making any investment decision.