Friday, October 19, 2018

Big Auto Is Going All In on This Tech




 
Big Auto Is Going All In on This Tech
By Jason Stutman
Written Oct. 06, 2018
In case it wasn’t already clear, the world’s leading automakers made it wholly apparent this week that they’re going all in on driverless tech.
Kicking off a host of autonomous vehicle announcements this week, Japanese automaker Honda Motor Co. announced on Wednesday that it will be investing $2.75 billion into driverless car technology, in partnership with American automaker General Motors.

Specifically, Honda will be dropping $750 million to take a 5.7% stake in GM Cruise LLC, GM’s driverless subsidiary. The remaining $2 billion will help fund a purpose-built autonomous vehicle for GM Cruise.
Coincidentally, Renault-Nissan and Daimler hinted on Wednesday that they plan to expand cooperation efforts relating to autonomous car technology. During a Paris auto show press conference, the CEOs of both companies sat side by side while saying that it would be advantageous to pool their research.
And to put the icing on the cake, Japanese auto giant Toyota has officially joined up with SoftBank to develop self-driving car services. Specifically, the two will develop a platform to operate large self-driving vehicles that could be used as mobile shops, hospitals, and other services.
The joint venture, which will be called MONET (short for mobility network), will start small with initial capital of $17.5 million and a focus on Japan, but long term, the two companies plan to go global.
That service isn’t expected to launch until around the mid-2020s, but it goes to highlight the sheer ambition of today’s tech and auto companies. They don’t just want to automate basic transport; they want to revolutionize mobility entirely.As ambitious as this all may sound, the planets are aligning entirely in the favor of driverless tech. Not only is the world’s first robo taxi service expected to launch later this year, but regulatory barriers are also aggressively being lifted.
On Thursday, the Department of Transportation (DOT) announced a new plan intended to open the floodgates for driverless tech.
Through the National Highway Traffic Safety Administration, the DOT announced that it is “reconsidering the necessity of its current safety standards,” as applied to autonomous technology.
Specifically, the DOT says it is looking to change current safety standards “to accommodate automated vehicle technologies.”
Of course, the loosening of regulatory barriers shouldn’t be too much of a surprise. With Morgan Stanley forecasting that driverless vehicles will eventually grow to an $800 billion market, it’s obvious enough why the U.S. wants to stay ahead of this emerging tech trend.
The timeline is fairly long, mind you, with 75% of global miles expected to be self-driven by 2050, but that future is being spearheaded today with heavy investments in ancillary technology and R&D.
Primary enabling technologies for driverless tech can be broken down into a number of distinct categories, three of which should stand out as the biggest investment opportunities.
First up is telematics software, which encompasses the monitor and control of remote assets. Vehicle telematics specifically lets a company like Uber or Lyft track its network of vehicles. Eventually, telematics will be used to manage networks of driverless vehicles.
The next category investors will want to pay attention to is sensors. Sensors of all different varieties serve to collectively tell driverless vehicles which way is up, what objects are around it, and so on. This includes everything from laser-based radar (LIDAR), cameras, and proximity sensors for visual input to accelerometers and gyroscopes for accurate orientation.
Already, we’ve seen some big winners in the sensor space, the most notable so far being Mobileye, which was taken off the public market by Intel (NASDAQ: INTC) in 2017 for $15.3 billion. That acquisition priced the company at a 36% premium over the market.Last but not least is mobile connectivity. Needless to say, driverless vehicles cannot be hooked up to cables, but more importantly, they consume immense amounts of data.
In fact, a single autonomous vehicle will use, on average, 4,000 GB of data per day, and that’s just for one hour of driving. For perspective, each driverless car on the road will generate as much data as about 3,000 people on their mobile devices.
Moving this much information over our current mobile networks, of course, would be flat-out impossible. Bandwidth bottlenecks will only be prevented by moving past 4G networks.
Of course, that’s exactly what leading ISPs are up to right now, with enormous monetary and infrastructural investments in 5G. This next leap in mobile communications will facilitate not just driverless vehicles but also 3D virtual and augmented reality, mobile ultra-HD video, and even remote surgery.
In the coming months, we’ll be putting together a number of reports on stocks and investment opportunities in driverless tech, including all the investment categories listed above.
If you're looking to hit the sensors angle, I suggest taking a look at recent research on the topic from my colleague Alex Koyfman.
For investments in 5G infrastructure, you'll want to review this free presentation here.

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