Kwan-Chen Ma

About the Author Kwan-Chen Ma

K C Ma is the Director and Chair of Roland George Investments Program at Stetson University. He is a principal of KCM Asset Management.

Pull Over Tesla Inc (TSLA)

The fascination people have for manually driving their cars is engrained in our culture, ever since Ford Motor Company (NYSE:F) assembly line, through the Golden Age of Muscle Cars, to Tesla Inc’s (NASDAQ:TSLA) electric cars today.

Similar to the electric car for the last 50 years, the idea of a car driving itself still seems like a pipe dream. Time is the main factor for changing the general population’s mind. Yet, a less known and already delivered reality is the self-driving transportation service. Forms of transportation with pre-programmable routes that do not require much human judgement, such as postal offices, agriculture, and even the army are already adopting the self-driving technology to deliver service at a fraction of the cost. Specifically, self-driving trucks are already on a path to “run over” the conventional transportation system.

More importantly, self-driving trucks have been 100% deliverable.

By 2035, the number of self-drive trucks will reach close to 100 million. The passenger carriers, such as cabs and Uber alike, will adopt the self-driving technology on their vehicles. This segment will easily replace the more than 5 million commercial drivers that are now active in the United States.

That being said, the upcoming self-driving technology is set to shake up over a hundred years of human driving tradition. Innovations are inevitable. Manual driving will be part of the history. Currently, semiconductor chips and safety sensors are “main drivers” to the self -driving industry, taking over the human’s task to operate a vehicle. Although it is not yet a complete reality, self-driving vehicles will get more share of the road by 2020, achieving close to 10% of all vehicles in 2035. The whole industry is expected to be worth $1.5 trillion by 2040.

Almost on every possible level, the biggest disruptive technologies of our time are teaming up to tackle the issues with the self-driving technology.

Today, the word “Autonomous” is synonymous with “Virtual Reality.”

GPS has historically been a two-dimensional platform. Are cars two-dimensional? No. While you are only worried about your final destination, autonomous vehicles have to take into account everything in between. Therefore, autonomous GPS’s have to build a 3-dimensional virtual representation of their surroundings. It is not simply choosing between turning right or left anymore. Mobileye (NYSE: MBLY) provides the technology needed for such actions. Their sensors detect obstacles such as vehicles, pedestrians, traffic lights, and road debris.

Today, the word “Autonomous” is synonymous with “Artificial Intelligence.”

MIT has developed a virtual reality landscape to test how autonomous vehicles react to different obstacles. Reaction is not enough as every situation is different. Artificial intelligence platforms will not only analyze their experiences, but learn from them. Enhancing the self-driving ability of vehicle has been one of NVIDIA’s (NASDAQ: NVDA) latest projects. Therefore, analytics firm HIS predicts AI platform shipments will increase from 7 million in 2015 to over 110 million by 2025. Despite the recent Google self-driving car crash, we have come a long way since the days of “Johnny Cab.”

Today, the word “Autonomous” is synonymous with “Cloud.”

Self-driving vehicles require a rigorous parallel computation cycle to analyze sensor’s data about the environment. The cloud is necessary to store “Exabyte” of data needed for processing videos, images, and map generation.

The typical inaccuracy in GPS systems can be tolerated and managed by human judgement. After all, you will notturn your car “right” into the ocean, even when the SIRI-like voice from your GPS system tells you to.

But your self-drive car will drive off a cliff, if it follows a faulty mapping system.

This is why NVIDIA just announced a partnership with a mapping company to develop a cloud-to-car mapping system for self-driving vehicles. While Artificial Intelligence allows autonomous cars to learn from their own experiences, the cloud permits cars to share their experiences with one another.

Instead of investing in autonomous taxis that won’t speed you away from hostile gunmen, we have a better idea. This proprietary autonomous vehicle four-stock index will be the first of its kind:

Among other products, Mobileye makes hardware and software to prevent self-driving vehicle collisions. Mobileye’s Series 5 sensors first detect obstacles on the road. Their EyeQ chips, considered the “brain” of the vehicle, receives information from the sensors, analyzing it, and reacting according to the situation. The chips will automatically stop the vehicle in case of any danger, preventing crashes. Until recently, Mobileye was the main partner with Tesla for their collision prevention system.

Pull over Tesla!

Delphi Automotive (NYSE:DLPH) produces a variety of products solely for the self-driving industry, ranging from safety technology, sensors, to chassis wiring for electric-powered autonomous vehicles. Delphi manufactures low-cost light detection sensors (LIDAR), a technology required for autonomous vehicles to detect their environment. Among other products, they also produce a light weight “on board” universal car battery charger is compatible with all power grids, autonomous or not, and is designed to charge a vehicle battery quickly and independently.

Delphi has just started producing their own self-driving cars.

Other than making the best gaming chips, NVIDIA Corporation (NASDAQ:NVDA) manufactures semiconductor chips for autonomous and semi-autonomous vehicles. They also produce the compatibility software necessary for security sensors. The system combines data from multiple cameras, as well as light detection (LIDAR), and ultrasonic sensors. From touch screen navigation to digital instrument clusters, NVIDIA’s GPUs power the visuals in these cars. DriveWorks, NVIDIA’s latest project, allows cars to monitor and enhance the vehicle’s autonomous driving ability.

NVIDIA has already made over 50 key partnerships including Audi, Porsche and Bentley.

Oshkosh Corporation (NYSE:OSK) was the first to manufacture self-driving trucks for the military. Oshkosh’s unmanned ground vehicle technology, TerraMax, allows military trucks to operate autonomously under any weather and terrain conditions on the field. This segment of “severe-duty, four-wheel drive” trucks, representing 18% of their total revenue, is expected to provide the largest room for future growth.

Today, “Autonomous, Artificial Intelligence, Virtual Reality, Cloud,” are the same words!

 

Disclaimers: I have yet to convince the Roland George Investments Program (RGIP) at Stetson University to purchase MBLY, DLPH, OSK, nor to recommend GOOGL or TSLA. RGIP Growth Portfolio has enjoyed the +120% return of our NVDA holding.