Justin’s note: Over the last few months, I’ve shown you why traditional cars are on the path to becoming obsolete. It’s a major theme that’s opening up huge investment opportunities. My colleague Nick Rokke, analyst for The Palm Beach Daily, is also on top of this trend.
His latest essay on self-driving cars was so good, I had to share it with you today. Read on to learn more about this technology…and the specific company to put on your radar today.
By Nick Rokke, analyst, The Palm Beach Daily
A couple of weeks ago, I attended a food and wine festival in midtown Miami. During the event, automaker Tesla previewed a couple of its new cars.
That’s how I got a chance to see the new Model X.
The Falcon Wing doors reminded me of the old DeLorean. The seats adjusted to my body for perfect comfort.
And the navigation system looked like something from the U.S.S. Enterprise.
Sensing my excitement, the rep went in for the sale…
“All new Teslas have full self-driving capability. We’re just waiting for the regulators to allow us to turn it on,” he told me.
What he didn’t realize was that I wasn’t in the market to spend over $90,000 on a car… I was there to check out the technology inside the car.
And this technology will allow the car to drive itself better than any human ever could. It includes…
Eight surround-view cameras that provide 360 degrees of visibility around the car with a range of up to 250 meters.
Twelve ultrasonic sensors that complement this vision. This allows the car to detect objects at nearly twice the distance as the cameras.
A forward-facing radar with enhanced processing that provides additional data. It uses sensors that can see through rain, fog, dust, and even the car ahead.
There’s one company that makes the electronic “brains” that power self-driving cars like the Tesla Model X.
I’ll get to it in a minute, but first check out the video below (by clicking on the image) to see this technology in action.
The Road to the Future
As you can see in the above video, self-driving cars (also called “autonomous vehicles”) are a reality today.
The only thing we’re waiting on is for lawmakers to make them legal to operate on the road.
Some states and cities already allow self-driving cars on their roads. But what automakers need is national legislation.
In September, the U.S. House unanimously passed a bill that would bring self-driving cars to the market much faster. A similar bill is now in the Senate.
Now, we don’t know whether the Tesla Model X will take over streets of the future when Congress passes this law.
(Justin’s note: Regular Dispatch readers know we’re not fans of Tesla’s stock. It’s based on hopes and dreams.)
We do know autonomous cars will be a major part of our future… And that’s good news for one company I’ll tell you about in a moment.
To capitalize off this trend, most investors will be tempted to buy self-driving carmakers. But the safer way to play this trend is to buy the companies that make the technology that goes into self-driving cars.
Before I get to that, let me show you why the autonomous vehicle trend is taking off…
The Self-Driving Trend Is About to Take Off
Bob Lutz is a 46-year veteran of the automotive industry. He’s worked with several car companies, including General Motors, where he was vice chairman.
Not many people know more about cars than Lutz. This is what he wrote in the November 5 issue of Automotive News:
We are approaching the end of the automotive era… In 15 to 20 years, at the latest, human-driven vehicles will be legislated off the highways.
And studies back him up.
The Boston Consulting Group is a premier consulting firm. It projects autonomous vehicles will make up 25% of the global car market by 2035.
Like we said, we’re not going to try to guess which carmaker will make the best self-driving car 10 or 20 years down the road.
Instead, we want to find the companies that provide the cameras, sensors, and radars for self-driving cars… no matter who makes them.
The Maker of “Robot Brains”
One of the biggest players in this space is Nvidia (NVDA).
It makes the Drive PX 2 computing platform. The computer uses the car’s cameras as “eyes” and processes the data for the car’s “brain” to make decisions.
And according to road tests, the computer is already a better driver than humans.
The Drive PX 2 can process data from multiple sensors in real time. And that provides 360-degree detection of lanes, vehicles, pedestrians, signs, and more.
Basically, it’s like driving on autopilot.
According to Nvidia, 145 companies already use its Drive PX platform. Some names you may recognize are Toyota, Audi, Tesla, Mercedes-Benz, Volvo, Honda, and BMW.
And with over 5,000 patents protecting its intellectual property, it’s unlikely anyone will overtake Nvidia in this space.
It will be the “brains” inside millions, if not billions, of autonomous cars.
Nvidia’s Sales Are About to Explode
Last year, Nvidia’s automotive segment pulled in $320 million in sales. While that’s only 5% of its sales, there’s plenty of room to grow.
Investment bank Goldman Sachs predicts car companies will sell 112 million vehicles in 2025. Nvidia’s automotive partners control about 35% of this market.
By my calculations, if just 13% of those new cars are autonomous, Nvidia will supply 5.1 million cars with its chips.
This year, Nvidia sold its system to original equipment manufacturers for $15,000 per unit. To be conservative, let’s say Nvidia gets just $2,500 per unit. (The cost of technology decreases over time.)
If Nvidia equips 5.1 million cars with its $2,500 unit, that’s $12.7 billion in sales. That’s almost double Nvidia’s total revenues last year.
We could see Nvidia’s auto segment multiply 40 times over the next eight years.
This is a company you should definitely put on your radar.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
Today, readers respond to Doug’s recent interview on Russia:
Doug, I got a huge chuckle over your comment: "most of this is hysteria fomented by denizens of cesspool known as the Democratic Party." On a more serious side, if you and your readers want to know America's future you may wish to read three best-seller books by Jonathan Cahn: The Harbinger, The Mystery of the Shemitah, and then The Paradigm.
The Shemitah reveals the origin of the seven year cycles of the world markets ups and downs. The Harbinger reveals that the 9/11 attack on the World Trade Center took place on the exact ground where George Washington made his first speech as the first president of the USA. Coincidence? A warning to America! The Paradigm reveals future world events, world leaders, and a blueprint to future events with exact dates.
To learn more about "updated" future events you may wish to listen to Jonathan Cahn on YouTube. Suggestion: start with his most recently published YouTube teachings and work your way back to older publications. Hope this helps you and your readers make great decisions! Hold on to you britches, guys. Things are about to get REAL interesting.
Doug asked: ". . . how are they supposed to stop foreigners from having opinions, and dispensing them to Americans? Have a news blackout from abroad in the months before every election?"
It's already happening. Eric Schmidt of Google says they're downgrading news from Russia in order to hide it from searches. YouTube is "de-monetizing" videos from Ukraine in order to drive publishers into silence.
Did you get a chance to read our latest interview with Doug? It reveals a startling fact: more and more millennials are favoring communism today. If you read it, feel free to write in with your thoughts right here. We love hearing from Dispatch readers.