If you Google search ‘self-driving cars’ you’ll quickly find that the technology is no longer a far-off, futuristic pipe dream, but a reality in the here and now.
It is a field that most of the big tech companies have at least half an eye on. Tesla is an obvious player, while Nvidia is developing chips specifically for use in the self-driving car space.
Waymo, Google’s self-driving car unit, completes an estimated 150,000+ rides every week, generating around $50-75 million in annual revenue.
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“We see three seismic automotive shifts gathering speed,” says Hamish Maxwell, investment specialist at Baillie Gifford’s Scottish Mortgage Investment Trust. “The shift from traditional engines to electric. A shift from owning your car to ridesharing. And the shift from human-operated vehicles to autonomous ones.
“The opportunity for self-driving cars is enormous,” he adds. The trend is set to revolutionise travel, with potentially lucrative rewards on offer for investors.
Automobile sales are already worth more than $2 trillion annually, likely to reach $4 trillion by the 2030s, according to Maxwell. There is also the $5 trillion ground transportation industry and the $4 trillion freight industry to factor in.
"We estimate the market for robotaxis is ~$10 trillion globally," Tasha Keeney, director of investment analysis and institutional strategies at ARK Investment Management, tells MoneyWeek.
"This is because autonomous technology can unlock higher utilization rates, driving down the price per mile far below that of human driven ride-hail today. This could expand the ride-hailing market far past what players like Uber and Didi have carved it out to be, and ultimately robotaxis could dominate urban transport."
Self-driving car (also known as autonomous vehicle, or AV) technology is set to disrupt all of these, and the revolution could be nearer than you might think.
How far away are self-driving cars?
Depending on where you live, self-driving cars are already a reality.
Waymo and other firms operate robotaxi fleets in certain US cities already, including San Francisco and Los Angeles in California and Phoenix, Arizona.
They’re unavailable in the UK as things stand, but are not far away. The Automated Vehicles Act, passed under the previous government in 2024, sets the stage for self-driving cars to hit the UK’s roads by 2026.
Maxwell thinks we are approaching an inflection point at which societies – not just regulators – will find self-driving cars are significantly safer than human-driven alternatives.
From there, he envisages rapid adoption.
“I don't expect this to be a gradual progress towards 2034/2035,” he says. “There'll be a moment, and I think it's coming quite soon, where society suddenly says ‘I get it.’”
The key variable is data. The more miles that the artificial intelligence systems powering autonomous vehicles have to learn from, the faster they can improve on their present ability.
That has already reached the point where they cause fewer accidents per mile than human-driven cars. There are, however, ethical questions surrounding the safety of an autonomous car that mean the bar is effectively higher.
“It creates weird philosophical questions about robot decision-making versus human decision-making,” says Maxwell. “So it has to be much safer – and I think we’re already getting to a point where it is much safer.”
How to invest in self-driving cars
There are various businesses and sectors that potentially stand to benefit as AV technology advances.
"In addition to robotaxis, we see autonomous technology taking many forms - from drones to robots that roll on the street or sidewalk, to semi trucks," says Keeney.
"Similar to robotaxis, we expect autonomous logistics to drive down delivery costs by ~60-90% across form factors. This year, many autonomous trucking companies have plans to begin fully driverless routes, and we see drone delivery beginning to scale with large retail/ e-commerce partners."
Some of the major players in self-driving cars are listed companies, and as such are easily accessible to DIY investors. You can buy their shares using most investment platforms, and hold the stock in a stocks and shares ISA.
Company | AV involvement | Market cap |
|---|---|---|
Tesla | Developing self-driving car technology | $804.1 billion |
BYD | Developing self-driving car technology | $155.0 billion |
Rivian | Will bring in autonomous car technology in coming years | $12.16 billion |
Aurora | Developing self-driving truck technology | $12.11 billion |
Tesla (NASDAQ:TSLA) is perhaps the best-known of these. However, it is something of a controversial stock, thanks to the actions of its CEO, Elon Musk.
Musk is arguably one of the prime culprits for over-promising and under-delivering on self-driving advances. The first time he set out a timeline for Tesla’s full self-driving technology was in 2013, when he told the FT that Tesla cars would be able to take over from human drivers within three years.
There have been successive delays since, but Tesla finally appears to be on the verge of launching its much-anticipated robotaxi later this year.
If that transpires, it will ironically coincide with another Musk-driven selloff for Tesla’s shares. Negative sentiment around Musk’s proximity to the Trump administration is currently driving a global firesale of Tesla cars and, by extension, Tesla stock.
Despite the recent slump, Tesla shares still trade at over 115 times trailing earnings (as of 14 March). Whatever your views on Musk, there might be cheaper ways to invest in self-driving cars.
For example, BYD is outselling Tesla’s electric cars in China, gaining share fast, and the firm rolled out advanced autonomous driving features on most of its models in February. BYD shares trade at a far more reasonable 30 times trailing earnings.
There are also large listed companies that have subdivisions dedicated to self-driving cars. These include Alphabet (NASDAQ:GOOGL) with Waymo and Amazon (NASDAQ:AMZN) with Zoox.
As above, Nvidia (NASDAQ:NVDA) also develops chips specifically geared towards self-driving car technology, so its shares offer some exposure to the trend.
Some of the most exciting businesses in the field, though, are private companies. For example, Wayve, a British start-up that develops a machine learning platform for self-driving cars to learn organically, raised $1 billion in funding last May.
In order to invest in companies like these, you’d need to buy an investment trust or venture capital trust that holds their shares.
Scottish Mortgage (LON:SMT), for example, holds private autonomous delivery vehicle company Nuro as well as some of the listed companies above, while other Baillie Gifford funds like Schiehallion (LON:MNTN) and Baillie Gifford UK Growth Trust (LON:BGUK) hold Wayve.
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