In April, a normal-looking Audi SQ5 drove into New York City. Aside from a few decals, it didn’t look all that different from a stock Audi.
But under the hood was a slew of technology that set it apart. And holding on to the steering wheel was, well … nothing. Nothing at all.
The car drove itself 3,400 miles from San Francisco to New York in nine days. It weaved its way through traffic, mountains and road construction. In the “driver’s seat” was enough technology to make a Ferrari blush.
Dubbed “Roadrunner,” the specially-equipped car featured three vision-based cameras, four short-range radars, six long-range radars, six lidars (ranging devices and light detection), intelligent software algorithms, a localization system and a trunkload of advanced driver assistance systems (ADAS).
Delphi Automotive (NYSE: DLPH), the British auto parts maker, customized the Audi SUV. And it did a heck of a job, both on the execution and the marketing front. Roadrunner pulled into Manhattan without incident, just in time for the New York International Auto Show.
The trip was a fantastic publicity stunt illustrating how new technologies could transform the auto industry. It put a stake in the ground marking a destination that visionaries have looked forward to for decades – a future in which self-driving cars are actually a possibility.
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Self-Driving Cars Are Inevitable
I think that for a lot of people a world of self-driving cars seems unlikely. It’s hard to imagine vehicles escorting themselves around busy roads while passengers read or just stare out the window. To be perfectly honest, I’m not sure I like that vision myself.
But I do think that there are great benefits that can come with more co-pilot-like features. These tech innovations mitigate concerns that a drunk driver, texting teenager or otherwise distracted driver is behind the wheel of an oncoming car.
The reality is that there is a spectrum of automobile technology. At one end you have the fully-autonomous car. And at the other end is the Ford (NYSE: F) Model T.
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I think most of us would agree that we’re moving toward a future in which cars have the ability to, at the very least, assist drivers in making maneuvers and avoiding accidents.
It’s virtually guaranteed that cars will become rolling smartphones, complete with Wi-Fi and all the latest apps. Many 2015 and 2016 model year cars already have some sort of driver-assisted technology as a standard feature.
The Turning Point
Anybody who has any doubts about an accelerating shift toward more driver-assisted technology needs to just consider one development. Because I think one small, simple device really opened the world’s eyes to the potential benefits of super-high-tech cars.
That device is the back-up camera.
Hardly noticeable on the outside of a vehicle, the back-up camera has quickly become one of consumers’ favorite pieces of auto technology. Not only does it reduce accidents (the vast majority of car insurance claims result from drivers backing into things) it saves lives.
And the cameras are cheap, costing manufacturers just $40 to $145, depending on what other equipment the vehicle already has.
The back-up camera isn’t an overly complicated piece of technology. But it has shown the world that there are real and tangible benefits to auto technologies that humans just can’t compete with.
I was initially just happy to have a back-up camera when I bought my last car. Now, I won’t buy a car without one. Soon, I don’t think I’ll be able to buy one without it, even if I wanted to.
A full 46% of 2014 model year vehicles sold in the U.S. had a back-up camera as a standard feature. Manufacturers are now including cameras (and radar) in front grilles, side mirrors and license-plate holders. The data is clear: back-up cameras help prevent accidents and enable drivers to maneuver better. They’re also desired by consumers.
The back-up camera has done so much, so fast, to accelerate the pace of driver-assisted technology that many industry groups believe autonomous driving will be available by 2020 (click here for the details).
IHS Automotive (NYSE: IHS) thinks driverless cars will be common within a decade. And Tesla Motors (NASDAQ: TSLA) says that a simple software update will allow Model S sedans that are already on the road to feature a hands-free mode this summer.
Within the next 12 months, many auto brands – including Audi, Mercedes, Cadillac and Infiniti – will offer various forms of hands-free driving modes.
With the absence of any specific laws prohibiting hands-free driving modes, auto manufacturers are free to develop technologies at will. And this very real and fast-moving trend is fueling growth for a number of companies that supply the auto industry with the latest and greatest tech.
Within 12 months, self-driving cars will be in showrooms around the world. Automakers may see a small bump up in sales. But one company in particularly will make huge profits.
That’s because it’s supplying a crucial component to nearly all self-driving cars. As self-driving cars hit the road in 2016, one stock could see its shares soar 630%.
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