Cash in on the driverless car revolution: Experts say market could be worth more than £900bn by 2025

  • Start-ups from Silicon Valley have leapfrogged the traditional motoring giants
  • Firms such as Google and Tesla have invested millions testing self-driving cars
  • Experts say the most interesting developments come from smaller companies

Imagine hopping in your car to go to the supermarket and not having to move a muscle for the entire journey.

Picture your car turning corners by itself, braking when a cat shoots across the road and then reversing into that tricky parking space for you.

ADVERTISEMENT

It might sound like something from a science fiction novel, but the technology to do all of that already exists.

Companies such as Google and Tesla Motors have clocked up millions of miles testing their self-driving cars.

By 2025, the autonomous car market worldwide could be worth more than £900 billion, according to government agency Transport Systems Catapult.

So the question for investors is: how can you make money from this potentially enormous market?

In the past, savers who wanted to invest in the automotive industry might have looked to household names such as General Motors, Ford, BMW or Toyota.

But start-ups from Silicon Valley in California, America's tech capital, have leapfrogged the traditional motoring giants in the driverless technology race.

Richard Lightbound, chief executive of ROBO Global, which has an index that measures the performance of the automated technology market, says: 'From an investor's perspective, the most interesting developments are coming from smaller companies, such as Nvidia and Mobileye.

'Some of these firms are leading the way and you want to look at them if you wish to invest in this areas.'

Tom Slater, who manages the £5 billion Scottish Mortgage Investment Trust, invests £6.50 of every £100 of savers' money in electric car pioneer Tesla Motors, which last year started testing its driverless cars on public roads in California.

A year ago, it suffered a setback when one of its Model S cars was involved in the world's first fatal car crash involving a driverless vehicle.

Since then, however, an official report from the National Highway Traffic Safety Administration has cleared it of any wrongdoing.

The company remains a leader in the field.

Mr Slater, whose fund has turned £10,000 into £14,200 in the past five years, says: 'The technology is there now. Yes, there are big hurdles to overcome, especially persuading people that these cars are safe on the roads, but the opportunities are huge.'

Another of his stock picks is Chinese technology giant Baidu, which has gone public with its desire to mass- produce driverless cars by 2021.

Roughly £4.80 in every £100 of the fund's cash is invested in the firm.

Already here: The luxury electric car company Tesla already fit a semi-autonomous Auto Pilot system to many of its vehicles

Alastair Unwin, manager of the Neptune Global Technology fund, has invested heavily in the drive towards automation, turning £10,000 into £14,000 since his fund was launched in December 2015

One of the firms he is most excited about is the German firm Infineon, which accounts for about 1 per cent of his investments.

Driverless cars use a number of sensory systems to avoid accidents and stay on the road — radar, ultrasonic detectors and cameras.

Another is lidar (light detection and ranging), which works a little like radar, but instead uses laser beams to measure the distance between objects.

Infineon, which reported nearly £5.5 billion in revenue last year, is already well-known for radar and camera technology. Last October, it bought Dutch firm Innoluce BV to corner the lidar market.

'It is incredibly difficult to pick out who will be the winner in the driverless vehicle race,' says Mr Unwin.

'There are so many competing technologies from various different companies, but Infineon has had a good run the past two years or so.'

ADVERTISEMENT

While small start-ups are making huge strides, Silicon Valley giants Apple and Google have the deepest pockets to research driverless technology — and buy firms that make breakthroughs.

Mr Unwin invests £18 in every £100 of his Neptune Global Technology fund in Apple and Alphabet, Google's parent firm.

Google has been developing this technology within its Waymo division since 2009.

It is taking Uber and the self-driving truck creator Otto to court over accusations that they copied the ideas.

Apple's interest in the sector came to light in December last year in a secret letter to the U.S. highways regulator in which it said it was 'excited' about automated cars.

The iPhone creator is rumoured to have a 1,000-strong team working on automated car technology in a secret lab in California.

The Polar Capital Technology Trust — which has turned £10,000 into £16,900 over the past five years — also invests heavily in the two firms, which account for nearly £15 in every £100 of its savers' cash.

Jeremy Gleeson, who runs the AXA WF Framlington Robotech, which was launched last month, has money in car parts manufacturer Delphi.

Its Roadrunner driverless vehicle completed a 3,400-mile journey from San Francisco to New York in just nine days in 2015.

The car used collision-warning technology provided by Israeli technology firm Mobileye, another firm in which the fund has money.

'Car manufacturers around the world will need more of this technology, so we're targeting companies which will benefit from this,' says Mr Gleeson.

ADVERTISEMENT

p.thomas@dailymail.co.uk

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.