It's Possible to Own a Self-Driving Vehicle Now!

A year ago, investors were very optimistic about the potential of automotive technologies such as automated driving. However, they now run the risk of becoming too pessimistic.

The news from this year's CES in Las Vegas was more muted than usual for anyone looking for an idea of the cars that might be on sale in five years' time. Stellantis showed off new concept electric vehicles on Thursday, including a highly anticipated Ram pickup truck, but in reality it is playing catch-up with peers such as Ford and General Motors. Sony unveiled a brand for its new automotive joint venture with Honda, Afeela, but didn't give many details of the much-hyped EV they expect to start selling in North America in 2026.

As Stellantis Chief Executive Officer Carlos Tavares pointed out in his keynote speech, more than $1 trillion of market value was wiped off automotive technology stocks last year. This isn’t just about Tesla: Shares in early-stage companies that don’t make profits have been even worse hit. That makes car makers understandably reticent about putting too much weight on—or money behind—the gizmos CES is best known for. Autonomous vehicles, the focus of much futurism in the industry, have taken a public beating, particularly since Ford and Volkswagen in October pulled the plug on their driverless-taxi joint venture.

Although investors may be seeing a more cautious approach to communication and funding, this does not mean that there has been a lack of technological progress. Driverless taxis from companies such as Alphabet’s Waymo and GM’s Cruise continue to operate in cities like San Francisco and Phoenix, though with more caution and stricter limitations. The challenge with these projects is that they are very costly, with no proven business model or clear path to commercial success. If this does not change, they may struggle in a tighter financial environment.

Two companies that are making significant profits from the automation of driving today are Tesla and Israeli supplier Mobileye. Tesla is a leading innovator in the electric vehicle space, while Mobileye is a leading supplier of advanced driver assistance systems (ADAS) and autonomous driving technology. Both companies are well positioned to continue benefiting from the growing trend of automation in the automotive industry.

Tesla has increased the price of its "full self-driving" software package to $15,000. The package automates most mundane driving tasks but requires drivers to keep their eyes on the road as a backup. Tesla said late last month that 285,000 Tesla owners in North America had bought the package, though far from all of them will have paid the latest price.

Mobileye, which was spun out of chip giant Intel last year through an initial public offering, offers a "eyes-on, hands-off" technology called SuperVision, in addition to the more basic assisted-driving technology. In an update at CES on Thursday, co-founder and CEO Amnon Shashua said SuperVision had a cumulative revenue pipeline of $3.5 billion through 2030, based on the production estimates of car makers that have included the technology in coming models.

Mr. Shashua gave a clear explanation of how Mobileye would move into the more adventurous realm of extended “eyes-off” autonomy, at least on and between highways. By adding a second sensor suite and then testing the finished product in an eyes-on “shadow” mode, Mobileye expects to deliver in 2026 the kind of provably safe automated driving that would actually give consumers time back. It said it already had “line of sight” toward $1.5 billion in revenue from one vehicle program that will likely include the product.

It is frustrating that Mobileye can't yet reveal which brands are backing its latest products, but the supplier's technological path to a more useful self-driving future seems much clearer than Tesla's. Tesla has no plan to include backup sensors and doesn't publish data on how often its system requires the human driver's intervention, which is unlikely to win over regulators or the public.

The real appeal of Mobileye for investors is that it doesn’t require a full investment in autonomous technology. SuperVision and basic driver-assistance packages should provide profitable growth for years. Mobileye is trading at a forward earnings multiple of 44 times, which is ahead of Nvidia’s 33 times. However, Mobileye is expected to grow faster. Plus, a small premium doesn’t seem like a big deal for a company that could potentially let you read a book on your future commute.