AUR - The Autonomous Age: 3 Stocks to Buy for the Age of AV

2024-01-25 10:43:00 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Many pundits and investors are skeptical about the idea of autonomous vehicle stocks. And their doubts have some validity. After General Motors’ (NYSE: GM ) mistakes with autonomous vehicles in San Francisco, individual consumers probably won’t be able to purchase self-driving automobiles for many years. It will take several more years for robotaxis to start spreading rapidly around the U.S.

Still, in America, autonomous delivery vehicles are going to start rapidly proliferating soon, while robotaxis are already becoming quite ubiquitous in China. Also noteworthy is that many consumers in both countries are obtaining vehicles with semi-autonomous capabilities. Here are three autonomous vehicle stocks to buy for investors who want to exploit these trends.

Aurora Innovation (AUR)

For years, Aurora Innovation (NASDAQ: AUR ), working with major partners including FedEx (NYSE: FDX ) and Uber’s (NYSE: UBER ) Uber Freight, has successfully tested its autonomous Aurora Driver system on trucks in Texas. With “human safety drivers” behind the wheel, trucks utilizing Aurora’s software successfully made dozens of trips per week last year on multiple routes in Texas. Later this year, driverless, Aurora Driver-powered trucks should start traveling on the Dallas-Houston route, and AUR will begin charging for its software.

Given the tremendous shortage of truckers in the U.S., Aurora should be able to generate immense revenue and profits over the longer term, making it one of the best autonomous vehicle stocks.

Also noteworthy is that AUR recently “finalized the architecture and requirements of its Aurora Driver hardware.” Moreover, it is partnering with another firm, Continental , to develop and sell driverless trucks. These vehicles may be ready to hit highways in 2027, providing Aurora with a huge, new revenue stream.

Xpeng (XPEV)

On Dec. 29, China-based electric vehicle maker Xpeng (NYSE: XPEV ) disclosed that it had deployed its XNGP Advanced Driver Assistance System in 27 additional Asian cities. By “early this year,” the high-tech ADAS will be deployed and “will be available in 200 cities across China,” Xpeng stated.

According to CNBC , XNGP “enables the car to carry out some driving functions automatically but requires a driver behind the wheel.” According to the automaker, the system includes autonomous lane changing expected to incorporate “overtaking and parking” and gains the equivalent of a year of human driving knowledge every quarter.

By 2026, in partnership with Volkswagen (OTC: VWAGY ), XPEV is slated to launch EVs that feature its ADAS systems and Volkswagen’s designs.

Mercedes-Benz ( MBGYY )

Mercedes (OTC: MBGYY ) tests vehicles with Level 3 autonomous-driving capabilities in Beijing, China. The company says that these vehicles utilize “highly autonomous driving technologies.”

Moreover, the system is already approved for use in California, as “the first Level 3 technology to be state-certified in the United States.”

With Level 3 ADAS, drivers can take their hands off the wheels and stop watching the road. According to The Wall Street Journal, Tesla’s (NASDAQ: TSLA ) “Enhanced Autopilot” is “more capable” than the Mercedes system. However, Tesla’s offering is only Level 2 on the ADAS scale.

Mercedes’ offering should be available for $2,500 in 2024. I believe the product will generate significant revenue for the automaker while enabling it to sell many more vehicles.

On the date of publication, Larry Ramer held long positions in AUR and XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

More From InvestorPlace

• ChatGPT IPO Could Shock the World, Make This Move Before the Announcement
• Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.

The post The Autonomous Age: 3 Stocks to Buy for the Age of AV appeared first on InvestorPlace .