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The Right Way to Invest in Autonomous Vehicles

How to make huge returns from autonomous vehicles … even if you don’t invest in a single car manufacturer

Right now, Tesla’s market cap is about $42 billion. But if CEO Elon Musk, is right, the company is on its way to be worth $500 billion …

… and it has nothing to do with selling more of its existing line of electric vehicles.

Last Thursday, the eccentric CEO told investors that Tesla’s autonomous-driving strategies will be the catalyst that sends the company’s valuation skyrocketing.

On the investor call,  Tesla’s current electric vehicle business unit as little more than a backstop of value to Tesla’s overall business as we enter a new autonomous driving era.

Meanwhile, the enormous ride-sharing company, Uber, goes public this Friday. Despite losing more than $3 billion in 2018, the company is expected to launch with a valuation between $80 – $90 billion (for context, that’s roughly twice the market cap of Ford).

And what is Uber pointing toward as the growth engine for its company going forward?

You guessed it, autonomous driving.

Last month, Uber’s self-driving car project received a $1 billion financial jolt from Toyota, auto-parts giant Denso, and the SoftBank Vision Fund. According to Uber’s press release, the partnership “builds upon the progress made to date, deepening the companies’ collaboration in designing and developing next-generation autonomous vehicle hardware. It will also prepare the companies and industry for mass production and commercialization of automated ridesharing vehicles and services.”

The autonomous-driving news doesn’t stop there …

Yesterday,  that the ride-sharing company, Lyft, will soon offer rides from self-driving cars operated by Waymo around Phoenix (Waymo is the self-driving car unit of Google). Then, last Tuesday came word that GM’s self-driving unit had raised another $1.2 billion.

In fact, looking across the entire automotive sector, it’s now impossible to find a major auto company not touting autonomous-driving — and the time until a self-driving vehicle is actually in your driveway may be much sooner than you realize. For example, look at Ford.

The company is now boasting it will have a fully-autonomous vehicle in operation in just two years.

From its :

No driver required. Thanks to Ford, that statement will be possible in 2021, the year that we will have a fully autonomous vehicle in commercial operation …

The vehicle will operate without a steering wheel, gas pedal or brake pedal within geo-fenced areas as part of a ride sharing or ride hailing experience. By doing this, the vehicle will be classified as a SAE Level 4 capable-vehicle, or one of High Automation that can complete all aspects of driving without a human driver to intervene.

 

***But if you think all the autonomous-vehicle leaders are all here in the United States, you’re way off

Last Friday,  wrote about the Chinese electric car company, DearCC, and its premium brand, Enovate.

From Matt:

Just two model years from now, Enovate claims it will produce a new car with just about every futuristic feature carmakers are striving for — from 5G connectivity, to 0 to 60 acceleration in under three seconds … a direct shot at Tesla.

But the car has two other features that really make me sit up and take notice.

First is its self-driving technology. While this Enovate ME-S does have a small, digital steering control, it’s intended to be tucked away into the dash during normal use. Instead, according to Enovate’s specs, the car will start and stop, drive itself, park, and complete a trip — known in the industry as Level 4 automation.

Putting highly automated cars on the streets by 2021 is ambitious. But, ultimately, this is the future.

***With autonomous vehicles as the future of transportation, what’s the best way to invest?

When looking at the major car manufacturers, it gets murky. Which brand will be first to market with its line of autonomous vehicles? Will it be Enovate? Or Ford? Maybe something from a European car company? Or will it actually be Tesla?

Regardless, how will the public embrace it? Just being the first to market doesn’t mean a company will be most profitable — which is ultimately what will drive stock prices. So, how does an investor identify the autonomous vehicle companies that will see the most bottom-line growth?

Well, what if you didn’t have to answer all those questions?

What if there was a way to invest in this massive autonomous vehicle trend that didn’t require you to know ahead of time which auto manufacturer would be the market leader?

There is.

It involves a “picks and shovels” style of investing.

If you’re unfamiliar with the term, it dates back to the 1849 Gold Rush. Though thousands of would-be millionaires set out to find gold, most never saw a single penny from their sweat and toil. But who did generate a fortune — the easy way? The entrepreneurs who supplied all the picks and shovels to the dreamers looking for riches.

You see, picks and shovels were the price of admission, so to speak, when searching for gold. So, the savvy entrepreneur selling those picks and shovels made a fortune — and it didn’t matter one bit whether a specific miner found gold or not.

When it comes to the autonomous vehicle industry, a savvy investor might say “I don’t care which auto manufacturer is going to be the market leader — I want to put my money behind something that all auto manufacturers are going to need, just to compete … the price of admission, so to speak.”

***What we’re talking about are next-generation batteries

To deliver an electric, autonomous vehicle that’s cheap, safe, and capable of traveling hundreds of miles on a single charge, we need a breakthrough battery. Currently, our lithium-ion batteries aren’t capable of supporting next-generation technologies.

So, now, the race is on. And frankly, the stakes have never been higher.

From :

Adoption of EVs is already expected to fuel an exponential increase in lithium ion batteries, the reigning replacement for the internal combustion engine. The latest report from BloombergNEF found that electric buses and passenger cars accounted for 44 gigawatt hours of lithium ion battery demand in 2017 — and by 2030 that demand is forecast to surge to over 1,500 gigawatt hours per year. Anyone with a viable solid-state battery that can outperform lithium ion technology could gain the upper hand in a market for all EV batteries that will be worth about $84 billion by 2025, compared with about $23 billion now, according to UBS Group AG.

With these stakes on the table, all the major auto manufacturers are scrambling to secure next-generation battery technologies. At this point, let me turn back to Matt McCall:

General Motors (GM), Ford, Toyota Motor (TM), Honda Motor (HMC), Mitsubishi Motors (MMTOF), Nissan Motor(NSANY), and Hyundai Motor (HYMTF) all want these next-generation batteries in their fleets as soon as possible.

Audi, Porsche, Mercedes, and BMW (BMWYY), too. In fact, Germany is so eager to help its automakers outdo the Chinese, Japanese, and Americans that it’s spending $1 billion on these batteries.

I could go on …

But as an investor, I’d rather own a pure play on the battery revolution …

Therefore, at , I’m recommending companies that supply this new technology — nicknamed the “Jesus Battery.”

If you ever wanted to invest in the coming electric car revolution, but weren’t sure how, THIS is your chance.

I know I do.

So, I found a company that holds key patents.

Automakers like Toyota are relying on this tiny company for its electric cars. Yet the company is totally off the radar.

That makes now the right time to get in before everyone else. I’ve got a full presentation on the investment opportunity in this “Jesus Battery,” which you can view for free by .

Tomorrow’s transportation will come through electric, autonomous vehicles. And powering them will be next-generation batteries. If you want to be a part of this “picks and shovels” way of investing, .

In the meantime, we’ll continue to keep you up to speed on developments with autonomous driving here in the Digest.

Have a good evening,

Jeff Remsburg

The post appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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