How to Invest in the Future of SAV Technology Through Baskets and Blue Chips
Shared autonomous vehicles might be on the horizon. Here's how retail investors can get their slice of SAV technology as it develops.
Feb. 11 2021, Published 10:27 a.m. ET
AI tech in the automotive realm is innovating rapidly—more rapidly than the legislation that governs U.S. roadway standards. Meanwhile, SAV (shared autonomous vehicle) technology is eyeing the limelight and investors are getting curious.
Right now, SAVs don't meet some key FMVSS (Federal Motor Vehicle Safety Standards), which require the use of vehicle parts that become a moot point in fully autonomous rides. For example, a steering wheel and side mirrors are required in all road-legal vehicles. Despite that, the stock market is getting creative.
Does Elon Musk support SAV technology?
Obviously, Elon Musk is a staunch supporter of autonomous technology. The fact that 14 Tesla accidents were under NHTSA investigation as of September 2020 (accounting for 60.8 percent of autonomous-related accidents under investigation) hasn't stopped his drive.
In terms of SAV technology, Musk hasn't said much. However, with companies like Rivian preparing for release of their electric passenger vehicles in the U.S., Musk isn't the only one with a potential interest in SAV development.
Companies and stocks that cover the shared autonomous vehicle niche
The SAV subsector is a narrow one, but it could very well expand in the future. You might see them go by the names robo-taxi or shuttle in some instances. Shared mobility is already a huge industry (think Uber and Lyft), but add autonomous to that name and we're in uncharted territory on the regulated side of things.
If the legislation follows, research suggests that Los Angeles alone could bring in robo-taxi revenue anywhere from $4 billion to 20 billion by 2030 (depending on how optimistic the outcome).
First Transit has eight SAV projects across the country. Unfortunately for investors, the company is in the private sector (despite the fact that it has public transport on its mind).
Recently, Waymo launched a robo-taxi project within a 50-mile radius of Phoenix. Its parent company, Alphabet, is on the stock market (NASDAQ: GOOGL).
Voyage is another company with eyes on SAV technology. Currently, the company is privately held, but investors should watch in case that changes. Other companies are in the same boat, including Embark Trucks, Zoox, and EasyMile (the latter of which has just announced that it's partnering with newly merged automaker Stellantis).
How to invest in SAVs
Consider one of the ARK ETFs for your SAV investment. ARKQ is geared specifically toward autonomous technology. With a 131.41 percent return in the 12 months ending February 11, 2021, it's a lucrative (and growing) fund. You can expect SAV to land here as it progresses.
The Global X Robotics & Artificial Intelligence ETF is another good buy. As a global basket of securities, investments within the fund could reflect swifter legislation changes beyond the U.S. border. Ultimately, that could prove profitable for a diversified portfolio.
You can also throw a hand (or more) into Google stock. This is a blue-chip stock that currently reflects Waymo's moves. If Waymo ever spins off from its parent company, you could split (or multiply) your investment across the two.