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Autonomous cars: a smarter investment?

With advanced trials of driver-less cars set to take place in the UK later this year, the technology could soon be a reality. While some media ‘investment experts’ might suggest you invest in car manufacturing companies to benefit from this technological shift – what about the bigger picture? What knock-on effect are self-drive cars likely to have on the car industry? How about our economy? And what of the technology powering these cars? 

A race to the finish…

There seems to be a bit of a race going on between major car manufacturers and tech companies to see who can get their automated vehicle to market first. Some, such as VW and Ford, have formed alliances to concentrate on self-driven cars. While there have been some setbacks during the trials, including a tragic accident in the US, technology is constantly improving, while both auto and tech companies continue to invest huge sums in trials and simulations.

What about car manufacturers?

For investors interested in pooling their money into smart investments, like future technologies, you can see how backing major car manufacturers, like Tesla, GM and Ford, could be appealing. However, some of the companies creating their own autonomous cars aren’t traditional car manufacturers, for example, Apple, Google and Uber.

First isn’t always best…

Car manufacturers who aren’t quick to get in on the act may find themselves lagging behind, but this doesn’t necessarily mean the company which gets its car to market first will win out. As with Henry Ford in 1909, the company who makes the car affordable to the masses first, rather than the one who invents it, could go on to dominate.

While investment experts might point towards investing in one of the ‘Top 10’ companies operating in the race to market, there may also be smarter investment decisions to be made – particularly when considering what might happen to the auto industry and the technology firms behind it.

What about the transport industry?

Once these self-driving vehicles really start to take off (flying cars – now there’s an idea!), there is likely to be a massive change for the transport industries.

Imagine the effect on taxi companies if all vehicles can self-drive? We can hear the sobs of a billion taxi drivers around the world! In the States, there are already driverless taxi services being trialled by companies like Uber.

What will an autonomous world look like for car insurance companies? Though the goal is to make these cars as safe as possible, can we ever eliminate the probability of accidents? If there’s an accident involving two self-driving cars, who do we sue?

What about the economy?

While it might seem that the majority of car manufacturers and tech firms investing in autonomous cars are predominantly based in the US or Europe, in the last few years, the UK government has made great strides towards significantly investing in research and technology that could drive the autonomous car market forwards. In fact, there is a mission to get driverless cars on the road here by 2021.

The Driven Group is a UK-based alliance of technology companies, with the mission of bringing driverless cars to our roads ASAP. The consortium, which includes both British and European institutions like Oxbotica (an award-winning Artificial Intelligence company), Telefonica, Nominet and Oxford University, is said to be leading research into self-drive cars. They are set to begin advanced trials of the vehicles on UK roads later this year.

There are great gains to be had in getting ahead with this technology. It is estimated that the UK market for connected and automated vehicles will be worth an estimated £62 billion by 2030, that’s without considering the figure on a global scale!

What about the technology driving these cars?

If you’re thinking of investing in some of the companies who are manufacturing these cars, your mind is probably boggling.  Who’ll win out? Will it be Google, Apple, Tesla, GM or someone else?

Another angle to consider is – ‘who’ is actually driving these cars. Who will supply the technology and components to make them work? There’s a lot of powerful technology going into driving these cars and keeping us safe – someone’s got to produce and continue to update it. You could find that a relatively unknown tech company, who makes a small microchip, or thingy-my-watsit that goes into the majority of the self-drive cars, suddenly becomes a big success story overnight!

Currently, tech firms hitting the headlines around investment in self-drive are relatively well-known, like Blackberry and Intel, both of whom have made significant investments in developing their own advanced driver-assistance systems (ADAS) which are being used to power many self-drive models now.

There are also relatively unknown technology firms who are focusing completely on this market. Aptiv, an auto-tech firm based in Dublin, have been quietly producing both hardware and software for autonomous driving systems for several years now and the Driven Group have £8.6 million worth of funding from Innovate UK  to invest in technologies and solutions that will remove barriers to real-world use of these vehicles. According to the Driven website, this includes resolving insurance, cyber security and data issues.

What about security?

There are concerns that there could be a problem if the cars don’t use technology that protects them from being cyber hacked. There could be some smart investments to be made in backing the company that goes on to create the advanced hacking and anti-virus software used by car manufacturers.

I’m interested in making smarter investments – where do I start?

Is investing in self-drive cars something you’re interested in? Perhaps you can’t decide whether to invest in the big brand names that are focused on manufacturing the cars, or the technology companies building the software that powers them?

If you’re considering investing in this, or any other technology, it’s best to seek financial advice from an expert, like your independent financial adviser.

To find out more about this, and how you can make smarter investments with your money, give Carrick Financial Management a call on 0191 217 0007 or email enquiries@carrickfinancialmanagement.net.