By Matt McCallSep 19, 2018
The car as we know it is on the verge of a transformative change not seen since Karl Benz invented it more than 130 years ago. In fact, the whole transportation sector is now poised for its version of 2.0, and I’m not exaggerating when I say this will lead to trillions of dollars in money sloshing around in the coming decades.
When Benz produced the first prototype in 1885, I’m sure he did not fully grasp that his invention was a major pivot point in human history. Cars made us much more mobile. They led us to scour the world in search of iron ore, oil, copper, and rubber resources. They led us to build millions of miles of highways. They led to muscle cars, the Daytona 500, commuter traffic, trucking, the suburbs, food and package delivery, drive-through restaurants – I could go on and on.
We are now on the cusp of a similar demarcation line, the beginning of a new chapter that will again reshape the world we live in. What’s coming is big. That’s why Intel (INTC) bet $15 billion on it. It’s why Alphabet (GOOGL), Apple (AAPL), Tesla (TSLA), General Motors (GM), Ford (F), Toyota (TM) and more are also betting big on it.
A Mountain of Money
When I say trillions of dollars will slosh around, I’m not kidding. Vehicle sales, supplies, and service are already a $7 trillion industry – and one that is about to be changed forever. I guarantee that whatever you can envision right now is only the tip of the iceberg. It’s just like 10 years ago when the first iPhone was released. Very few people imagined how that device would change our world.
There are two main areas of transformation: cars powered by electricity and cars that drive themselves. Investors need to be in both, but if I had to pick one, I would go with autonomous vehicles (AVs). They have huge upside potential.
Consider this: Sales of AVs are expected to go from zero today to 33 million self-driving cars in 2040. The first key year will be 2021. That’s when individuals like you and me will be able to buy AVs. One research firm, IHS Markit, estimates 51,000 vehicles will be sold that year, and then the momentum kicks in. By 2025, sales should grow 1,860% to one million AVs and continue ramping up for the next 15 years. Add it all up and the period from 2021 to 2040 will see annual sales of AVs grow by 660-fold!
Where to Start Investing
Imagine going home from work in crawling rush hour traffic on a Friday afternoon. Instead of your blood pressure spiking, you can sit back and relax in the privacy of your own vehicle. Maybe even have a friend or two with you for an early start on happy hour. After all, you’re not driving. The car is!
It’s fun to imagine various ways we would use AVs, but the important point is that automated vehicles will save lives, time, and money – and that’s why sales are going to take off.
As you can imagine, a ton of components are necessary for a car to drive itself, and right now I think the makers of these parts are the best investing opportunities as the big boys race to get the first AVs to market. It’s the classic “picks and shovels” strategy, and it can make you a fortune.
For example, when you think of cars, you may not be used to thinking about semiconductors. Cars of the future will be loaded with semis that will gather data, process it, share it, and connect to the rest of the world. For example, a driverless car from Waymo, an Alphabet subsidiary, gathers nearly 1 gigabyte (GB) of sensor data per second.
Data is king in AVs. In order for it to move quickly enough, there needs to be an update to the network. That is why the 5G Revolution is so important – another exciting investment theme I will write more about soon.
Without a driver, an AV must be equipped with sensors to detect the environment around it. There could be up to 30 different sensors on each AV to accurately gain a 360-degree view.
In addition, there will be cameras around the outside and interior of the AVs. One of the most important of these technologies will be what is called LiDAR, which is short for “LIght Detection And Ranging.” It is similar to radar, except it uses light from a laser pulse instead of radio waves. The system measures how long it takes for the lasers to come back after hitting an object, and these continuous pulses help create a 3-D map of what is around the vehicle. Growth in the LiDAR market is expected to soar from $325 million last year to $5.2 billion by 2023 and on to $28 billion by 2032. That equates to an 86-bagger!
Waymo has a big and early lead in mapping, which could be a treasure trove of information for the company in the future. There are also a number of large global companies working in software and hardware development. I’ve recommended one major player in my Investment Opportunities service, and other leaders include Intel, Nvidia (NVDA), NXP Semiconductors (NXPI), Samsung, Bosch, and others.
You can see the possibilities, and you can see why I said investing in the disruption of the transportation industry is similar to investing in anything Apple-related 10 years ago. Those who invested in the suppliers made fortunes. The same will be said in 10 years for the investors who understand the AV industry and buy with a long-term approach.
Matt has just recommended three lesser-known companies well-positioned for big gains as the race for autonomous vehicles continues full speed ahead. One is a rare pure play, one is a leader in LiDAR technology and the third is a chip company focusing on the most disruptive industries. Investment Opportunities subscribers can log in here. If you are not a member, you can still get immediate access to his full report on AVs and his three brand new recommendations with a risk-free trial subscription to Investment Opportunities. Click here to learn more and get started right away!
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