Driverless Car Investing: 8 Stocks You Shouldn't Sleep On

Written By Jason Stutman

Posted June 18, 2016

When I was 12 years old, I was involved in a rather terrifying car accident.

I remember dozing off in the passenger seat of my father’s Toyota 4 Runner on our way back from a long day of deer hunting in Upstate New York. It was late, and our home in Long Island was still hours away. The next thing I can remember is the sound of tearing metal as we ripped through a guardrail on Route 111 — just a few blocks away from our destination.

As it turned out, my dad was just as exhausted as I was. He fell asleep behind the wheel for just a second, but that’s all it took to completely total the vehicle… and rack up an additional $7,000 bill to fix the barrier we broke through. Fortunately, we were both OK.

I remember how guilty my dad had felt about the accident afterwards. For years, he would randomly apologize to me for putting me in danger. I could tell he was ashamed and that it weighed on his conscience, but I never thought less of him for it for a second. Mistakes happen, and that’s all there really is to it.

Thinking back, though, I can’t help but think how close we actually may have been to cheating serious injury or even death. We were only about a half-mile off the Long Island Expressway at the time my father lost consciousness — just a few minutes earlier, and we would have been in a 60 mph collision.

How to Sleep at the Wheel (Safely)

According to conservative estimates from the National Highway Traffic Safety Administration (NHTSA), there are over 100,000 police-reported crashes directly resulting from driver fatigue every year. According to data from Australia, England, Finland, and other European nations, drowsy driving represents anywhere from 10% to 30% of all vehicle crashes worldwide.

Considering this data, it’s only fitting that in 2014, human fatigue specialist Mark Rosekind was named to lead the NHTSA. It should be of little surprise, too, that Rosekind is now taking what’s arguably the most important action ever in reducing crashes caused by driver fatigue.

In a landmark statement, Rosekind announced on Wednesday that the administration is officially working to pass national legislation for self-driving cars, with federal guidelines expected to be released in July. Rosekind is on record saying that these autonomous vehicles will be, at the very least, twice as safe as human drivers, but that’s likely an understatement.

According to national statistics, the average U.S. driver reports an accident roughly every 165,000 miles driven. Google’s driverless cars, on the other hand, have so far driven over 1.5 million miles (roughly the equivalent of 75 years of typical U.S. adult driving) with only one minor collision not caused by human error.

As to the problem of falling asleep at the wheel, this video of a Tesla driver dozing off in traffic without a hitch just about says it all. Imagine being able to take a short nap on your next road trip when you start to doze off, or perhaps even going to sleep in San Antonio and waking up in New Orleans.

Granted, we’re still a few years away from the point where drivers will completely give up control, but we are certainly approaching this point — and it will change the way people travel forever. After all, Google is already testing the concept of driverless vehicles without any wheel at all. At the same time, Mercedes is developing prototypes where the “driver’s-seat” swivels in a complete 180 degrees.

The simple fact is after years of testing, driverless cars are already proven. The hurdle is no longer technological capability — it’s legislation. The new NHTSA guidelines expected next month represent a major tipping point for autonomous vehicles and will ultimately speed the adoption of what’s likely to prove a revolutionary technology.

Most importantly, having guidelines to work around, automakers will no longer have to hold back due to worries over varying rules and state-by-state legislation. As of today, 15 states have either enacted or proposed laws regarding self-driving cars. This state adoption has been a crucial component of the testing phase, but federal guidelines will be what allow this technology to feasibly hit the consumer market.

Investing in Driverless Cars

As for investment opportunities in the driverless vehicle space, there are a number of strategies you can follow as this technology just now begins to penetrate the consumer market.

The most obvious route is buying stake in driverless automakers directly. This is the low-risk but low-reward option. Companies like Alphabet (NASDAQ: GOOG), Daimler AG (OTC: DDAIY), Tesla Motors (NASDAQ: TSLA), and BMW (OTC: BAMXY) are all heavily invested in the driverless trend. These companies probably won’t be exploding in share value anytime soon, but they’re good positions for the long run nonetheless.

In addition to automakers, you have component providers such as chip firm Nvidia (NASDAQ: NVDA) and advanced-driver-assistance-systems developer Mobileye NV (NYSE MBLY). These are the companies you could consider the Intels and Qualcomms of driverless tech. Sometimes it’s what’s on the inside that counts.

Finally, you have companies controlling and monitoring the data. A connected car creates an estimated 330 times more data each day than a mobile phone. This bodes incredibly well for data center REITs like CyrusOne (NASDAQ: CONE) and data center component providers such as Intel (NASDAQ: INTC).

All this data will also have to be analyzed, which should heighten the demand for M2M (machine-to-machine) communications and fleet management solutions. Insurance companies are seeking accurate, real-time data about accidents, while freight companies want to know where each of their vehicles is at any given moment.

Simply put, the coming driverless car boom won’t just affect automakers — it’s an event that will ripple across the entire tech industry. If you’re not taking a position in this sector, now is your time to start.

Until next time,

  JS Sig

Jason Stutman

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