Cars are getting smarter, as anyone who has watched a Tesla drive itself down the road on YouTube already knows. More advanced driving features help any automaker -- such as $Tesla(TSLA.US)$ -- sell more vehicles. But smarter cars are also a boon for other companies in several supporting industries, which leaves a number of ways to play the smart car trend.
Citigroup looked at the smartcar -- cars that are electrified, connected to a network, and can drive themselves -- and identified a handful of stocks that can benefit from the theme for years to come. Four stocks, in particular, look like they have the right mix of factors to attract several different kinds of investors.
Autonomous cars represent the pinnacle of smartness. "Our cars are like semi-sentient robots on wheels," said $Tesla(TSLA.US)$ CEO Elon Musk at his company's artificial intelligence event in August. Tesla was showing off how intelligent its cars are becoming, and the company is spending millions to develop autonomous driving features faster than its competition.
Every automaker is in the race to develop smart, self-driving cars.$Ford Motor(F.US)$ calls its autonomous driving system Blue Cruise. Chinese EV maker $NIO Inc(NIO.US)$ calls its system NAD, short for NIO autonomous driving. And NIO's supercomputer, which it calls the brain of NAD, is dubbed ADAM.
Those systems and computers use components from countless suppliers.
"Smartcars are set to turbocharge demand in the technology space. By 2030, we expect technology content to be 50% by value of a typical smartcar."
-wrote Citigroup analyst Arthur Lai in a Wednesday report.
He envisions tech sales into the car industry exceeding sales to the smartphone industry by the middle of this decade. It's becoming a $1 trillion annual opportunity for smartcar suppliers.
The smart car trend will provide investors with many options to evaluate for years to come.
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