Autonomous Driving Offers No Easy Path for Investors

Chris Mack and Lakshman Venkitaraman discuss potential impacts of autonomous driving on the auto sector.

Key Takeaways


  • The development of autonomous driving technologies has the potential to significantly impact the auto market, weakening long-standing barriers to entry and creating new industry winners and losers in the process.
  • Software providers could gain the most from this shift: immensely complicated algorithms will probably contribute the most to getting consumers safely from point A to point B, while auto hardware may, in a similar fashion to smartphones, be reduced to commoditized platforms on which to run highly differentiated software that consumers will ultimately care much more about.
  • Debates are ongoing as to whether autonomous driving technology may increase overall vehicle demand by creating a more attractive product, whether buyers will be willing and able to shoulder additional costs associated with the technology, and even whether a smaller fleet of autonomous cars could replace widespread personal car ownership, hurting future car sales.
  • While many predict the widespread adoption of autonomous vehicles by 2030, we are more cautious in our forecasting as we see a number of risks that could stall the incremental shift from driver assistance (Level 1) to fully automated driving (Level 5).
  • We are watching this market very closely to determine the best companies to invest in—and the best times to do so—recognizing that the risk of not entering this market may be commensurate with the risks entailed within it.



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