Self-driving car stocks are the key to profiting from a market poised to grow a startling 33 times larger over the next dozen years.
A September report by PwC forecasts that revenue - from what it calls the "digital mobility services sector" - will grow from $65 billion today to $2.2 trillion by 2030.
For some perspective, that's five times as big as today's smartphone market.
The rush of money into this sector - which includes many areas well outside the traditional auto industry - will present tremendous profit opportunities for driverless car stocks.
And this revolution has already started.
The car you own now probably has some automated driving technology in it, such as corrective steering if you drift out of your lane and automatic emergency braking. Plug-in electric cars represent another piece of the driverless car future.
But that's just a taste of this sector's potential.
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Take a look at the explosion in the money being invested in the self-driving car sector over the past 18 months...
Billions Are Pouring into Driverless Car Technologies
A study by the Brookings Institution in October found that cumulative global investment in driverless car technologies by automakers, auto suppliers, and tech companies has increased eightfold, to $80 billion, since October of last year.
Innovation is happening in every corner of the self-driving car ecosystem, the study said. "OEMs making car parts and advanced sensors and other guidance systems, microchip manufacturers and software companies creating the computers that process information from these sensors, and finally the automakers and fleet operators that ultimately will be the ones to put autonomous vehicles on the road."
This is clearly the start of the broad profit opportunity PwC was talking about. The payoff for the technologies these companies are developing now will show up in their stock prices over the next couple of years.
And Brookings expects the pace of investment in self-driving car technologies "to continue as competitors continue the race toward deployment."
The opportunity is beyond question. But because it is spread over so many areas, investors have a wide range of self-driving car stocks from which to choose.
Here's an overview of the leading candidates in each category...
Self-Driving Car Stocks to Buy Now
- Two Automakers: The obvious choice here is Tesla Inc. (Nasdaq: TSLA), which makes electric vehicles that already include the tech needed to make them autonomous. Tesla's expertise in the batteries that will power most future cars (by 2030, anyway) also makes it a strong play here. The not-so-obvious choice is Ford Motor Co. (NYSE: F). Ford has invested $1 billion in driverless car tech this year alone and says it will have an autonomous car on the road by 2021. Ford's promising vision for the future was also reflected in its $65 million purchase of ride-sharing service Chariot last year.
- One Auto Supplier: The top name here may seem unfamiliar - Aptiv Plc. (NYSE: APTV) - but that's only because it just split off from auto supply giant Delphi Technologies Plc. (NYSE: DLPH) this week. Aptiv is the business that will focus on driverless car technologies. And it's bound to be a global leader in self-driving car tech thanks to several acquisitions over the past few years, such as software firm Ottomatika and 3D LiDAR-sensing company Quanergy in 2015, as well as auto software company NuTonomy in October.
- Two Big Tech Companies: It's no secret both Apple Inc. (Nasdaq: AAPL) and Alphabet Inc. (Nasdaq: GOOGL) have been investing heavily in driverless car tech. Alphabet has gotten more publicity, but don't underestimate Apple's commitment. These tech titans each depend heavily on other businesses as their cash cows now, but realize autonomous car tech could be a major profit driver in the decade ahead. And you know both companies have vast piles of cash to throw at research and development.
- Two Chipmakers: Nvidia Corp. (Nasdaq: NVDA) has been aggressive in making partnerships (more than 200 so far) to supply chips that make driverless car tech possible. In October, it debuted Pegasus, a next-generation hardware platform designed to power fully autonomous cars. Intel Corp. (Nasdaq: INTC) already provides chips for Alphabet's driverless cars and is seeking a bigger footprint in this sector. In August, Intel bolstered its driverless car capabilities by purchasing Israel-based MobilEye.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.