In the United States and around the world, the development of driverless technology is rapidly accelerating in terms of both technical sophistication and scale. Companies leading this transformation are poised to expand quickly in tandem. The evolution of autonomous vehicles marks a monumental shift in the transportation industry, potentially offering investors a once-in-a-generation profit opportunity. However, selecting the right companies presents a challenge. The following three stocks are well-positioned to thrive with the rise of autonomous vehicles.
Autonomous trucks are arguably one of the most compelling segments in the driverless field, and Aurora Innovation (AUR) is a pioneer in this space. For carriers in the transportation industry, the profit margin game is crucial. Autonomous trucks can operate around the clock, which is a key driver of business growth. For long-term investors, the company’s recent progress is encouraging.
Aurora Innovation first deployed driverless trucks last April. Subsequently, the company released its first software update, validating driverless operations on the Dallas-to-Houston route; a second update validated nighttime operations; and a third validated the El Paso route. Now, with its fourth software update, Aurora expects to enable the Aurora Driver to navigate autonomously across the South region of the United States.
By the end of this year, Aurora anticipates having over 200 driverless trucks in operation, generating annualized revenue of approximately $80 million. The company’s second-generation commercial suite will reduce the hardware cost of the Aurora Driver by 50% and lay the foundation for achieving annualized break-even gross margins by the end of 2026. Aurora is a high-risk, highly speculative stock, but the driverless era is arriving, and approaching it from the trucking perspective makes great sense for investors.
Investors who wish to ride the momentum of driverless development but are reluctant to hold high-risk stocks or develop technology from scratch should keep a close eye on Uber Technologies (UBER). With its dominant market share in ride-hailing and food delivery, Uber already has a strong business foundation. Uber is unique for investors because it does not risk capital on developing autonomous technology that could fall behind, become more expensive, or prove less efficient. Instead, it leverages its vast user base, logistics data, and existing infrastructure to partner with autonomous technology companies, including the aforementioned Aurora, Alphabet’s Waymo, and even electric vehicle startups like Rivian and Lucid. In fact, Uber has over 20 active autonomous technology partnerships. For risk-averse investors, Uber is a top-tier driverless stock pick.
If you are looking for a stock that could deliver outsized returns, it might be a unique company like QuantumScape (QS). Driverless vehicles are expected to increasingly adopt electric powertrains for several reasons: autonomous vehicles need to operate for long periods, making the lower per-mile cost of electric vehicles economically advantageous; electric drive systems are more responsive, quieter, and better able to power the high-capacity, high-power autonomous sensors and computers. At the intersection of the electric vehicle and driverless worlds, QuantumScape is developing solid-state battery technology that could dramatically improve EV battery density, safety, and performance while reducing costs. Although multiple companies are racing to commercialize solid-state batteries at scale, QuantumScape remains well-positioned to become a key partner in enhancing the profitability of both electric vehicles and autonomous vehicles.
Although Aurora, Uber, and QuantumScape offer distinctly different approaches and long-term visions, all three companies are favorably positioned to thrive as autonomous vehicles become increasingly widespread and drive corporate profit growth over the coming decades.
