Driverless Cars: Unsafe at Any Speed?

The implications of this thesis are broadly negative for firms participating in the development of driverless cars. They're very slightly negative for the big tech giants: For Google (GOOG) and Apple (AAPL), driverless cars are basically a fun hobby. The impact is a bit more negative for the big auto firms, which need something new now that low interest rates and low energy prices have basically sucked consumption of their current product out of several future years. The five auto firms with the biggest stakes are Tesla (TSLA), Audi (FWB:NSU), Mercedes (FWB:DAI), BMW (FWB:BMW), and Honda (HMC). Not coincidentally, most of the action here is in foreign luxury cars, trying their hardest to push semi-autonomous to all-the-way autonomous. Very recently, Ford (F) and General Motors (GM) have also got on board: Even if just for PR purposes, they cannot afford not to be left behind.

A purer play on driverless cars would focus on sensor, software, and AI firms. Foremost here, in the public space, is Mobileye (MBLY), which totally rides the driverless wave: It careens up and down on rumors and now trades at a P/E of 139. Mobileye's chips are mostly supplied by Semiconductor Manufacturer International Corp. (SMI). Some other listed firms include Nokia (NOK), which (post cell phones) specializes in onboard mapping; NXP Semiconductors, NV (NXPI); Flextronics International, Ldt. (FLEX); Nvidia (NVDA); Autoliv (ALV); and of course Delphi Corporation (DLPH), which is…