Alphabet Inc: Driverless Cars Are a Game Changer for Google Stock

Alphabet IncDriverless Cars a Big Deal for Google Stock

The driverless car by Alphabet Inc (NASDAQ:GOOG) has been in testing for a few years already, and it could be a big deal for Google stock.

Few can miss its rather unattractive—rather obnoxious-looking, actually—body. Still, styling aside, the Google driverless car offers a number of socially responsible advantages.

Here are just three of these benefits from the top of my head:

  1. It could enable older and disabled people to keep driving and remain mobile, allowing further freedom and independence;
  2. Once the technology is perfected, it could reduce accidents and increase safety on the roads;
  3. And it could reduce traffic congestion and perhaps even reduce the need for big parking tickets.

Indeed, a driverless car could be programmed to leave one parking spot and seek a new one while you’re still in the restaurant or at the movies. No need to worry about rushing out to move it before “Officer Yougots A. Tikket” shows up.

Driverless Cars Are a Game Changer

In fact, the Google driverless car could be one of the major innovations of the coming decades. It could surely be a huge boost, if any were needed, for Google stock.

Of course, Google isn’t the only company attempting to create a fully driverless car. Prototypes from Google and other companies are being tested now. However, the fatal accident on Thursday, June 30 on a fast track in Florida involving one of Tesla’s models was a reminder that despite the progress, driverless cars still raise many questions, including those regarding safety.

Still, rather than take all manner of wanton liability risks with safety and its shareholders’ equity like one Tesla Motors Inc (NASDAQ:TSLA), and rather than use customers as lab rats, Google is not doing any beta testing with its driverless car. Those who own Google stock can rest because the company is only testing the software and hardware that make driverless technology possible itself.

When Google does introduce its driverless car to the world, it seems the company will not be selling a driverless car itself. Instead, it will work in partnership with existing carmakers, which will use Google’s systems in regular production cars. So far, Fiat Chrysler Automobiles NV (NYSE:FCAU) has signed an agreement with Google to use its driverless car technology in a future version of its new Chrysler “Pacifica” minivan. (Source: “Fiat Chrysler, Alphabet in Partnership Talks,” The Wall Street Journal, April 28, 2016.)

The contest for driving automation started decades ago in one form or another, but the computing capacity needed to power such systems was too weak then. Over the past five years, however, a number of manufacturers have developed and started to sell partial driverless systems. They include start-stop engine controls in traffic jams, autonomous parking features, automatic adaptation to speed limits, and support while maneuvering tight turns. However, Google was the first company (in June 2015) to actually create a bona fide driverless car and put it in circulation within a specially authorized area. Google stock has gone up thanks to a number of bullish factors, there’s no word on whether the driverless car technology has had an impact yet.

How does it work? Simply put, the Google driverless car relies on a sophisticated system of radars and cameras that map the car’s environment and detect cars, pedestrians, traffic lights, white lines, or other obstacles. (Source: “The Artificial Intelligence in Google’s Self-Driving Cars Now Qualifies as Legal Driver,” Fortune, February 10, 2016.) It then uses this information to determine the car’s next move. In fact, the technology is so advanced that you face more risk of injury to your eyes than being run over by one, as your eyes are trying to understand just how repulsive the Google driverless car’s looks.

But the Google driverless car is based on a much different principle than what Tesla has used. Tesla, the car company/new religion of smug millionaires, launched its interpretation of driverless technology, marketed with the crackpot term of “Autopilot,” at the end of 2015 as a software update. Overnight, and with little oversight, Tesla “Model S” owners suddenly had access to driverless capabilities. Autopilot is still being tested, ostensibly by Tesla customers, and as mentioned, there has already been one deadly accident. (Source: “As U.S. Investigates Fatal Tesla Crash, Company Defends Autopilot System,” The New York Times, July 12, 2016.) In that sense, those who feel driverless car technology is a key factor for the future, might prefer Google stock over Tesla for the time being.

For the record, Tesla has defended its technology. Still, it’s more of a driver assistance system that can be activated under certain conditions, rather than a truly autonomous function. Technically, with Tesla’s Autopilot engaged, a driver must always be present, keep his or her hands on the wheel, and be ready to take back control at any time. Unfortunately, many Tesla owners have a faith in their cars that borders on the religious, so you may want to pray that the driver of that Tesla behind you is an agnostic.

The Bottom Line on Google Stock

There’s no need for such fatalism when confronted by a Google driverless car testing in Mountain View, California or Austin, Texas. Google has tested 70 cars, which have covered nearly 1.6 million combined miles in total autonomy. The firm has extended experience in two other cities: Kirkland, Washington and Phoenix, Arizona.

Google could very well be the leader in self-driving/driverless car technology and its approach could yield holders of Google stock the biggest profits—especially since it can be adapted to fit most cars already in production.