Is it wise to make an investment in self-driving automobiles now?

Despite numerous unwelcome delays, self-driving car technology may be about to undergo a sea change

How can you get noticed?

If you search for self-driving cars on Google, you'll soon discover that the technology is now a reality rather than a sci-fi fantasy.

Most large tech companies keep at least a half-eye on this field. Tesla is a clear contender, and Nvidia is creating chips especially for the market for self-driving cars.

An estimated 150,000+ rides are completed each week by Waymo, Google's self-driving car division, which brings in between £50 and £75 million annually.

According to Baillie Giffords Scottish Mortgage Investment Trust investment specialist Hamish Maxwell, "we see three seismic automotive shifts gathering speed." "The transition to electric engines from traditional ones. transitioning from car ownership to ridesharing. as well as the transition from human-to-automotive vehicles.

"There is a huge potential for self-driving cars," he continues. With potentially huge returns for investors, the trend is poised to transform travel.

According to Maxwell, car sales are already valued at over £2 trillion a year and are projected to grow to £4 trillion by the 2030s. In addition, there is the £4 trillion freight industry and the £5 trillion ground transportation sector to consider.

"We estimate the market for robotaxis is ~£10 trillion globally," Tasha Keeney, ARK Investment Management's director of institutional strategies and investment analysis, tells BFIA.

This is because autonomous technology can increase utilization rates, which will lower the cost per mile significantly compared to the current human-driven ride-hail rate. Robotics may eventually take over urban transportation, and this could grow the ride-hailing industry well beyond what companies like Didi and Uber have made it.

The technology known as autonomous vehicles, or AVs, or self-driving cars, is poised to upend all of these, and the revolution may be closer than you might think.

How far away are autonomous vehicles?

Self-driving automobiles are already a reality in some places.

In some US cities, such as Phoenix, Arizona, and San Francisco and Los Angeles, California, Waymo and other companies already run robotaxi fleets.

Although they are not currently available in the UK, they are nearby. Self-driving cars will be on UK roads by 2026 thanks to the Automated Vehicles Act, which was passed in 2024 under the previous administration.

Maxwell believes that a turning point is coming when people, not just regulators, will discover that self-driving cars are far safer than alternatives that are operated by humans.

He envisions quick adoption after that.

He states that he does not anticipate a gradual advancement towards 2034/2035. "There will come a time, and I believe it will be soon, when society finally acknowledges that I understand.

Data is the essential variable. Autonomous vehicles' artificial intelligence systems can advance their current capabilities more quickly the more miles they have to learn.

They now cause fewer accidents per mile than cars driven by people. But the bar is essentially higher because of ethical concerns about autonomous car safety.

According to Maxwell, "it raises strange philosophical questions about robot decision-making versus human decision-making." "There must be a significant increase in safety, and I believe we are already reaching that point.

How to finance autonomous vehicles.

As AV technology develops, a number of industries and businesses may profit.

"Aside from robotaxis, we see autonomous technology in many different forms, such as drones, robots that roll on sidewalks or streets, and semi trucks," Keeney says.

"Like robotaxis, we anticipate that autonomous logistics will reduce delivery costs by about 60 to 90 percent across all form factors. Many self-driving trucking companies plan to launch fully autonomous routes this year, and drone delivery is starting to gain traction with major retail and e-commerce partners.

Because they are publicly traded, some of the biggest names in self-driving car technology are easily accessible to do-it-yourself investors. The majority of investment platforms allow you to purchase their shares, which you can then keep in an ISA for stocks and shares.

Among these, Tesla (NASDAQ:TSLA) is arguably the most famous. But because of what its CEO, Elon Musk, has done, it is a somewhat contentious stock.

One of the main offenders for making excessive promises and falling short of them in regards to advancements in self-driving technology is undoubtedly Musk. When he told the Financial Times in 2013, he first laid out a timeline for Tesla's complete self-driving technology, stating that the vehicles would be able to replace human drivers in three years.

Although there have been several delays since then, it looks like Tesla will soon launch its eagerly awaited robotaxi later this year.

Ironically, if that happens, it will also be the time of another selloff of Tesla stock led by Musk. Tesla vehicles and, consequently, Tesla stock are currently experiencing a worldwide fire sale due to negative sentiment surrounding Musk's close ties to the Trump administration.

Tesla shares are still trading at more than 115 times trailing earnings as of March 14th, despite the recent decline. There may be less expensive ways to invest in self-driving cars, regardless of your opinions about Musk.

For instance, in China, BYD is rapidly gaining market share and outselling Tesla's electric vehicles. In February, the company introduced sophisticated autonomous driving capabilities on the majority of its models. 30 times trailing earnings is a much more reasonable price for BYD shares.

Numerous well-known corporations have divisions devoted to autonomous vehicles. These include Amazon (NASDAQ:AMZN) with Zoox and Alphabet (NASDAQ:GOOGL) with Waymo.

As mentioned above, Nvidia (NASDAQ:NVDA) also creates chips designed especially for self-driving car technology, so its stock provides some exposure to the market.

However, private companies are among the most exciting businesses in the field. As an illustration, Wayve, a British start-up that creates a machine learning platform that enables autonomous vehicles to learn on their own, raised £1 billion in funding in May of last year.

You would need to purchase an investment trust or venture capital trust that owns the shares of these businesses in order to invest in them.

In contrast, Wayve is owned by Baillie Gifford UK Growth Trust (LON:BGUK) and Schiehallion (LON:MNTN), two Baillie Gifford funds. Scottish Mortgage (LON:SMT), for instance, owns the private autonomous delivery vehicle company Nuro in addition to some of the previously discussed companies.

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