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From Teeka Tiwari, editor, Mega Trends Investing: Visionary billionaire entrepreneur Elon Musk is making his boldest prediction yet:
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…Within two years you’ll be able to summon your car from across the country. |
He’s betting self-driving cars will be the next disruptive technology. And he has an eye for big trends…
Musk made billions by investing in PayPal as the e-commerce trend was taking off in the late 1990s. He was also an early innovator in the electric car market, founding Tesla Motors. And his SpaceX firm is pioneering interplanetary travel.
I’ve been skeptical of the self-driving car trend. I thought Musk was overhyping the technology to promote his $100K-plus Tesla automobiles. And while Musk is a great salesman… I’ve come to recognize self-driving cars are a real, investable mega trend.
Earlier this month, I spent a week at the Consumer Electronics Show (CES). It’s the largest annual gathering of technology companies in the world.
One theme dominated all others: the self-driving car.
At CES, I spoke with dozens of executives, researchers, and engineers from major car companies—including Toyota, BMW, GM, and Ford—to get the inside scoop.
I even managed to snag a pass to listen to Gary Smyth—General Motor’s head of global research and development. His entire talk focused on making self-driving cars a reality.
Smyth is looking for limited self-driving capabilities for cars (think highways, not local streets) by 2017. He expects full-blown autonomous vehicles to start emerging around late 2020.
(And GM is putting its money where its mouth is. The company just signed a $500 million deal to fund ride-sharing company LYFT. The deal calls for GM to create a fleet of cars for LYFT that require zero drivers.)
I also met a senior executive (who asked to remain anonymous) from a company called NXP (Nasdaq: NXPI). NXP makes the chips that enable cars to “talk” to one another so they can locate each other on the road. These chips are critical to the success of self-driving cars.
I asked him what’s motivating all of these companies to spend billions researching and developing this technology now. His answer: They have no choice…
Research suggests self-driving cars can eliminate about 80% of all traffic fatalities. That’s 24,000 American lives saved each year.
Federal government data also shows traffic accidents cost the country $871 billion per year.
The government won’t be able to resist these numbers… so new government regulations—coming later this year—will require auto manufacturers to have self-driving functions in all new cars by 2020.
This was my lightbulb moment: Whichever car manufacturer could tout the safest and smartest self-driving car would be positioned to steal massive market share from its rivals.
But the profit opportunity wouldn’t be in the automakers (car manufacturing is a low-margin business, just like PC manufacturing is a low-margin business).
The money lies in owning the company that provides the “brains” operating all of these self-driving vehicles.
NXP will be an important player here. It will have a far greater upside than the automakers. The problem is NXP just makes sensors and chips, not full-blown operating systems.
I want the company that makes the central processing unit (CPU) that makes sense of all the data required to operate a self-driving vehicle.
I found it.
I shared the well-capitalized, profitable American firm with my Mega Trends subscribers in December’s issue.
The market’s recent weakness has created an opportunity to scoop this company up on the cheap. This stock could trade 80% higher over the next year… as the first limited self-driving cars start appearing in early 2017.