Robotaxis have reportedly become very successful in the Chinese city of Wuhan, and the country is clearly moving towards allowing the phenomenon to become widespread in many of its cities. China’s two largest cities — Beijing and Shanghai — are paving the way for robotaxis to operate legally within their borders.
These developments have lit a fire recently under the stocks of several China- and U.S.-based companies that could benefit from the proliferation of robotaxis. And over the longer term, the successful, widespread deployment of robotaxis in Chinese cities could very well convince U.S. officials to allow a similar scenario to play out in America.
Here are three robotaxi stocks that can soar as the phenomenon proliferates tremendously.
Baidu (BIDU)
Baidu’s (NASDAQ:BIDU) Apollo robotaxi service is providing 6,000 driverless rides per day in Wuhan and is rapidly surging. Baidu expects the service to start breaking even within the city by December. The company’s ability to provide a robotaxi service that consumers embrace while moving the business rapidly towards profitability suggests that it can develop a huge, highly profitable, multinational robotaxi network.
Also noteworthy is that, according to Chinese securities firm Guotai Junan International, the operating costs of Baidu’s robotaxi business are expected to drop meaningfully going forward.
From July 1 to July 11, the company’s shares climbed 14%, indicating that the Street may be starting to realize the huge potential of Baidu’s robotaxi business.
Despite these recent gains, the shares still have a tiny forward price-to-earnings ratio of 9.9 times and a very low enterprise value/EBITDA ratio of 5.7 times.
The company’s low valuation and huge potential make it one of the best robotaxi stocks to buy.
Aurora Innovation (AUR)
Aurora Innovation (NASDAQ:AUR) develops hardware and software to drive trucks autonomously. On June 25, the company announced a huge breakthrough. Specifically, it reported that Uber Technologies (NYSE:UBER) agreed to provide its freight-hauling customers early access to Aurora’s offering. Under the deal, Uber will become one of Aurora’s initial customers when the latter company starts autonomously hauling cargoes between Dallas and Houston. That program is expected to kick off by the end of this year.
Further, the deal gives Aurora an important first-mover advantage. That’s because Aurora will become the first company to provide autonomous transportation to the customers of Uber’s freight business.
“Autonomous trucks will make moving goods more efficient, and this industry-first program will help facilitate and accelerate the adoption of autonomous trucks with our carriers,” Uber Freight CEO Lior Ron said in a statement.
Aurora is not a traditional robotaxi company, but it looks poised to become a big winner in the autonomous trucking space, and I believe that it will eventually use its technology to transport passengers autonomously as well. Indeed, the company has indicated in the past that it eventually wants to enter the ride-hailing business. Consequently, I view it as one of the top robotaxi stocks to buy.
Mobileye (MBLY)
Mobileye (NASDAQ:MBLY) is already providing systems that enable vehicles to steer and break on their own. Consequently, demand for the company’s products will likely soar as robotaxis proliferate.
Indeed, the company’s SuperVision system, which features 11 cameras, already allows drivers to keep their hands off of steering wheels. As of February, the firm was developing another system called Chauffeur, which allows drivers to take their eyes off the road as well.
What’s more, Mobileye expects to enable Volkswagen (OTCMKTS:VWAGY) to deploy thousands of fully autonomous vans in 2026. So in just a couple of years, Mobileye should be selling systems that enable vehicles to be transformed into robotaxis. Consequently, I expect the company to be one of the major beneficiaries of the Robotaxi Era.
What’s more, as I pointed out in a previous column, Volkswagen, one of Mobileye’s key customers, has invested in two of the world’s most promising EV makers: Rivian (NASDAQ:RIVN) and Xpeng (NASDAQ:XPEV). As a result, I expect Mobileye to get a big lift from providing its offerings to Rivian and Xpeng.
On the date of publication, Larry Ramer held long positions in AUR, RIVN, and XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
