Top 4 Tips to Consider When Investing in Autonomous Cars

By: Bridget Clerkin January 17, 2019
There are several things to consider when deciding to invest in the self-driving car market, like what industries or markets will be affected, and where is the technology headed?
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Got some holiday money burning a hole in your pocket?

Or spent all your money on the holidays, and looking to make some back?

The stock market has long been the arena of choice for investors large and small trying their luck at earning a buck.

But while the financial institution is, at its core, truly a gamble—just ask any major money mover in October 2008—there are a few ways to stack the odds in your favor, making for a much smoother run through the fiscal gauntlet.

Knowledge is power when it comes to investing, with due diligence often reaping rewards for careful investors. And when it comes to emerging technology, like that being used in autonomous cars, staying up-to-date with the cutting-edge information is doubly important.

With the burgeoning industry—already dubbed the “passenger economy”—anticipated to be absolutely astronomical, there’s certainly plenty of room for everyone’s money to go ‘round. But before you dive headfirst into the world of self-driving cars, there are a few considerations you should keep in mind.

Potential Market Size & Shape

Before you set out on a road trip, you likely check a map to see where you’re heading. Similarly, before investing in self-driving cars, you should get an idea of your future surroundings.

The potential market for autonomous tech is anticipated to be huge, with one recent report conducted by Intel estimating the industry will be worth $7 trillion by 2050.

The out-of-this-world total is a soup-to-nuts tally of revenue streams old and new which will receive a boost from the forward-thinking autos—though a lion’s share of the budding financial sector will be derived from the creation of new jobs, technology, and infrastructure needed to support autonomous cars.

Still, any cutting-edge venture has the potential to first designate then kill off any number of outdated industries, and that certainly is the case for autonomous cars—arguably the most disruptive force in the modern age. So keep in mind the types of businesses that may suffer from the emergence of the tech, or may need a long runway to adapt to the coming change.

And that goes double for existing companies attempting to stay relevant—or just stay afloat—in the new age of transportation.

Take a hard look at the business models of any corporation you may be interested in financially backing, and weigh that against what you know about the autonomous car industry and where you feel it’s heading, to determine whether the company will provide a good long-term investment.

Newfangled Technology

person looking at investing information on phone and computer.
It's important to do your research before investing in a new industry, especially when there are still a lot of unknowns.

If you plan on putting money down on a heavily tech-based industry, it would behoove you to know at least some basic aspects of the tech itself—and beef up on both what’s already out there and where it’s anticipated to go next.

Oftentimes, it’s the smallest things that can make the biggest impact on an industry—or reap the mightiest reward for investors—and this also may be true of the burgeoning passenger economy.

Much of the Intel report revolves around the importance of semiconductors—tiny microchip processors essential for the operation of self-driving cars. So important is their anticipated use in the vehicles that the chips alone have been predicted to bring in as much as $7.3 billion by 2025.

If processors aren’t your thing, you may want to explore the concept of LiDAR, the laser-based technology that allows autonomous cars to “see” and is considered so essential to the tech that it was at the heart of one of Silicon Valley’s biggest legal battles in recent years.

And if you’d rather find a company with a goal you believe in—as opposed to a product—there are many up and comers out there chomping at the bit to make an impression, including those working toward truly revolutionary developments in the artificial intelligence needed to pilot the self-driving rides.

Seeing the Sea Change

So much of stock market success hinges on a solid knack for predicting the future, so while you’re thinking ahead about the changing face of technology, keep extrapolating that out to see how far the technological ripple effect will spread.

Supplanting the past 100 years of driving history and the past several millennia of mankind moving himself around in one way or another, autonomous cars have the potential to change almost everything about the world as we know it.

Culturally, some of those shifts will be especially large. For one, there will no longer be the need for people to buy cars at all—and the concept of individual car ownership will virtually disappear.

This means ridesharing will become the norm, so look out for companies in that sector who are beginning to make moves—even ones with seemingly outdated business models. They may be long in the tooth, but their years of experience moving the masses give them a trove of information and access to networks that newer, more valuable companies may soon find indispensable.

Yet that’s far from the only societal transition anticipated in the wake of autonomous rides. From long-distance trucking to license plates, nary an item or industry will go untouched by the tech.

Self-Assurance Insurance

front bumper of car after an accident
If a self-driving car hits yours, who is liable? That's the question many autonomous carmakers are asking.

Indeed, one of the biggest—and most valuable—industries to be impacted by the shift to autonomous driving will be auto insurance. The implications for the traditional money-making sector, however, remain completely unclear.

The problem?

The world hasn’t figured out how to insure self-driving cars yet.

And when investing in the future of transit, knowing who’ll be on the hook for expensive accidents could make a big difference.

So far, only one company—Google’s self-driving spin-off, Waymo—has ventured far enough to introduce a commercial autonomous car-based business. But the company has been cagey at best about its insurance policies on the self-driving taxis it’s currently running in Arizona, and it has been even less forthcoming about a similar pilot project planned for California.

Adding to the confusion is a past full of differing opinions on who should be held ultimately responsible for roadway incidents.

Some have suggested that the industry should look to the example set by Big Pharma, which utilizes a special “vaccine court” to handle cases of death or injury stemming from experimental cures.

Still, others have pushed for a rule to hold car owners accountable for the actions of their robo-vehicles, saying that manufacturers could legally wash their hands of any situation where an auto wasn’t kept up to standards. (This argument, however, fails to take into account what will happen when individual car ownership becomes a thing of the past.)

The perplexing situation shouldn’t stop you from investing in self-driving cars. Just make sure to keep it in mind as things develop to insure your money will be spent well.

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