Investors have been buzzing about the tremendous potential of self-driving vehicles for several years now. There are good reasons for the buzz: In theory, at least, vehicles that can safely move people and goods from place to place without human drivers could lower costs, increase flexibility, and dramatically reduce the risk of passenger injuries — all at once.
Looking a bit deeper, we start to see how self-driving technology could be transformative beyond lowering costs and improving safety. If self-driving vehicles become ubiquitous, will people still own cars? Will cities still need parking spaces?
Simply put, the potential for change — and disruption — is huge…
As with any potentially transformative technology, the advent of self-driving cars could be immensely profitable for investors who have the knowledge to position themselves in advance. That’s what this article is about. We’ll start by defining terms and answering some basic questions. Then we’ll take a closer look at the size of the potential market, the types of companies that could profit, and the possible risks and pitfalls that these companies (and their investors) might face over time.
What is self-driving technology?
Self-driving technology is a combination of hardware and software that can fully automate the task of safely driving a vehicle from destination to destination. Take note of that word “automate”: If a human has to be paying attention, ready to take over, then it’s not “full self-driving,” no matter what some people might claim.
Is self-driving different from autonomous driving?
No. The terms “self-driving vehicle,” “driverless vehicle,” and “autonomous vehicle” all mean the same thing: a vehicle that drives itself with no human intervention required.
What are the components of self-driving cars?
At the simplest level, self-driving systems have three types of components: sensors, software, and computing hardware.
- Sensors. Sensor systems include the cameras and radar units that help the system understand its surroundings. Most self-driving systems under development also incorporate lidar, a technology that uses invisible lasers to make precise images of the vehicle’s surroundings as it moves. Those images are then compared with a highly detailed 3D map in order to determine the car’s exact location.
- Software. Most of the self-driving software under development is based on artificial-intelligence programming, incorporating machine learning algorithms that can adjust themselves and improve the system’s effectiveness as more data is acquired.
- Hardware. Self-driving systems typically require a lot of computing power. (Former Intel CEO Brian Krzanich once said he thinks of self-driving vehicles as “data centers on wheels,” which gives a good idea of the amount of power required.) Most systems are based on graphical processing units (GPUs) similar to those developed for personal computers. Often, specialized processors, such as the image-processing system-on-a-chip developed by Intel subsidiary Mobileye, are incorporated as well.
All of these categories will offer opportunities for investors as the technology matures.
How many self-driving cars exist now?
Almost none.
This is a critically important point for investors considering this space to understand: The technology has a lot of promise, but it has yet to be perfected. Aside from a small number of vehicles operating within strictly limited areas that have been carefully mapped, fully self-driving cars don’t yet exist…
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