Helsinki-Bengaluru, 05 Oct 2020 – Autonomous vehicle technology since its inception was always on the radar of investors. Foreseeing the potential in the technology, start-ups have received heavy funding from venture capitalists and traditional automakers. Amidst the breakdown of COVID-19, around $7.2 billion investment was made in the autonomous vehicle tech companies during the first half of 2020. Even the stocks of public listed companies are reviving up, as the retail investors are gaining trust in the technology and hoping for fresh opportunities. In the second quarter of 2020, the automotive sector is showing the signs of fast recovery from the impact of pandemic as the technology company stocks witnessed an impressive market rally.
Autonomous vehicle technology is growing at a slower pace due to plenty of aspects such as no firm government policies and regulations, lack of infrastructure, not enough training and simulation, less precise perception algorithms, and need for improvement in machine learning and artificial intelligence. The companies trying to drive this technology to commercialization need fresh investments to thrive their businesses. There has been a series of IPOs from the autonomous and electric vehicle companies hitting the market. Two core LiDAR suppliers have announced their IPOs and few are on the verge. Even the merger and acquisition strategy has been seen dominating the industry, may it be the acquisition of Zoox by Amazon, or the takeover of Vayavision by LeddarTech, or Intel acquiring majority stakes in Moovit. The industry is certainly going to boom in next 5 years and the investors positioning to hold the shares in these companies would enjoy the strong capital gain.
Amongst the traditional automakers, the companies aggressively spending on research and development of autonomous vehicles includes Toyota (NYSE:TM), FCA (NYSE: FCAU), Ford (NYSE: F), GM (NYSE:GM), BMW (OTCMKTS: BMWYY), Volkswagen (ETR: VOW3), and Daimler (ETR: DAI). Tesla (NASDAQ: TSLA) is leading in EVs with same intensity of aggression for self-driving technology. Big technology giants such as Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL), Intel (NASDAQ: INTC), Baidu (NASDAQ: BIDU), and NVIDIA (NASDAQ: NVDA) are in the race to provide the complete autonomous driving stack to the carmakers.
Alphabet’s Waymo is considered as a leading tech company in the industry due to its highly safe self-driving system for robotaxis. The company has also built a LiDAR, which the company is planning to offer to other players in the industry. Waymo is known for its aggressive testing and simulation of self-driving vehicles with lowest disengagement rate. Intel made its noticeable entry in the autonomous vehicle industry by acquiring the well-known Israeli computer vision and SoC supplier Mobileye. Since then Intel is consistently progressing with its strategies in the autonomous vehicle space aiming at developing a complete autonomous driving solution stack for the automakers. This can be justified with the recent acquisition of HD mapping company Moovit and partnering with Chinese EV player NIO (NYSE: NIO). Baidu, the Chinese tech giant has more than 50 partners for its autonomous driving development project. It has received the approval to operate autonomous ride-hailing services in Beijing. NVIDIA’s software architecture and computing platform is being used by majority of carmakers and technology players in the industry.
Among the Tier-1 suppliers and the sensor providers Aptiv (NYSE: APTV), Magna (NYSE: MGA), ZF, Foresight Autonomous Holdings (NASDAQ: FRSX), are the leading stocks with high growth opportunities in long term. Velodyne LiDAR (Nasdaq: VLDR, VLDRW) is the latest AV sensor company to go public through a merger with special purpose acquisition company (SPAC) Graf Industrial Corp. Also, Luminar Technologies, another LiDAR company has made an announcement in August 2020 to go public by merging with SPAC Gores Metropoulos Inc., with a post-deal market valuation of $3.4 billion. All the major autonomous vehicle manufacturers and the tech giants have extended their timelines for autonomous vehicles deployment. The technology and sensor players are developing their respective systems for testing purpose and the actual mass production will start no sooner than 2022. The companies need immense investment for the R&D of this technology and to continue the business operations. These are supposed to be the major reason behind these companies to go public.
China is proceeding at a faster pace in the autonomous and electric vehicle sectors as compared to other countries which can be reflected from the government’s plan to deploy conditional automation in large scale production and highly autonomous driving vehicles in some parts of the cities in restrictive environment by 2025. Also, the country is aggressively promoting the use of EV by mandating the vehicle manufacturer to make or import at least 10% to 12% electric vehicles. China is certainly going to lead the race in near future. NIO (NYSE: NIO), the Chinese electric vehicle company went public in September 2018 on NYSE and has recently announced to offer 75 million new American depositary shares to raise around $1.5 billion at current stock price. In August 2020, electric vehicle start-up Xpeng Motors has filed IPO on NYSE just after the $1.1 billion IPO of China’s electric SUV manufacturer Li Auto. Xpeng Motors has also unveiled the highly autonomous cars model P7 to be deployed soon in China. Nikola Motors Company, an American electric truck maker was listed on NASDAQ with symbol NKLA in June 2020 via a merger with VectoIQ. WM Motors has also announced to go public in early 2021.
Canoo, Hozon New Energy, Fisker, and Hyliion are some of the upcoming electric vehicle IPOs that investors should keep an eye on.