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UBS: These 8 stocks are going to dominate in the self-driving car revolution
UBS: These 8 stocks are going to dominate in the self-driving car revolution
Graham RapierMay 23, 2018, 17:46 IST
Uber
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Self-driving cars will change which parts and suppliers automakers purchase from.
UBS' has identified eight parts suppliers set to reap the rewards of a self-driving future.
Cars as we know them are about to undergo a radical transformation.
As our four-wheeled transporters become more eco-friendly, connected, and autonomous, the way automakers assemble vehicles will also need to radically change.
UBS analysts led by Colin Langan set out to identify the hardware makers, software developers, and other suppliers most primed to get a boost from this sea change, identifying eight stocks that will win from these indirect opportunities.
"Once drivers are eliminated, car interiors can be redesigned to emphasize comfort & flexibility. This implies opportunities for seating, electronics & suspension," UBS said. "AV (autonomous vehicle) seats may need to pivot & reconfigure. Increased emphasis on in-car entertainment should drive demand for electronic displays. In addition, AVs tend to offer a less smooth driving experience than human drivers, so automakers will likely rely on more advanced suspension products."
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Here are the banks eight picks for stocks set to benefit from the self-driving car revolution:
UBS' take: "ADNT should benefit from increased seating content as adoption of autonomous vehicles alters the interior of the car. Seats in AVs will likely be more configurable (swivel, full-recline, etc.), and could end up looking a lot like premium seating on today’s airplanes."
Industry: Vehicle electrical systems and software platforms
Year-to-date performance: +14.3%
UBS' take: "APTV is amongst the leaders in developing an AV operating system, which should drive growth as both L3 and L4 systems gain mass adoption. We also see an indirect benefit from added entertainment electronics content. In addition, increasing electrification is a net positive for APTV. "
Industry: Powertrain supplies (transmissions, clutches) and electronics
Year-to-date performance: +2.05%
UBS' take: "We see limited direct or indirect impact from AVs for BWA. On the EV impact, we see BWA as relatively powertrain agnostic. We estimate BWA has about $900 - $1,700 of potential ICE (in-car entertainment) content vs. ~$2,200-$2,400 of potential EV content. Though the EV opportunity is higher, it may be challenging for BWA to gain as strong a share position on EVs."
UBS' take: "We see limited direct or indirect impact from AVs for DLPH. On the EV impact, DLPH has a strong EV opportunity with about $1,500 in possible EV content vs. only $200-$600 in ICE content today."
UBS Rating: Neutral
Source: UBS
Lear
Ticker: LEA
Industry: Supplier, seating and electrical systems
Year-to-date performance: +13.4%
UBS' take: "Lear benefits from every theme as it has added wiring content in the AV system, indirect content from advanced seating, and EV content opportunities."
Industry: Vehicle bodies, electronics, seating, and vision/LiDAR systems
Year-to-date performance: +16.35%
UBS' take: "MGA has capabilities around sensors, vision in particular, and the company has developed an AV domain controller. MGA is also working with a partner to supply LiDAR to BMW and has announced a partnership with Lyft to supply AV technology on Lyft cars. However, MGA's AV software is still under development which is likely why MGA was not typically included as a key AV supplier by experts we interviewed."
Industry: Part supplier and aftermarket product manufacturer
Year-to-date performance: -18.56%
UBS' take: "We see no direct AV opportunity for TEN; however we see indirect opportunities from advanced suspension. Also the increase in miles travelled should help TEN's aftermarket business. However, TEN remains at risk in an EV world."
UBS' take: "VC has recently developed DriveCore which is focused on the AV domain controller and AV middleware that performs sensor fusion. VC is later to AVs than other suppliers, like APTV; however, the company has a focused strategy that could prove successful over time. In addition, VC’s display electronics should benefit from the shift to AV’s."
