These Companies are Disrupting the $2 Trillion Auto Industry
LONDON, February 9, 2018 /PRNewswire/ --
FN Media Group Presents Safehaven.com News Commentary
The world's biggest consumer market is in the middle of a major disruption. The auto industry is about to change in ways few investors fully recognize. You've all heard of autonomous vehicles and electric cars, ride-sharing and ride-hailing. But beyond the headlines, there are hundreds of start-ups preparing products and services that will change the auto industry forever. Included in today's commentary: Tesla, Inc. (NASDAQ: TSLA), Aptiv PLC (NYSE: APTV), General Motors Company (NYSE: GM), Fiat Chrysler Automobiles N.V. (NYSE: FCAU), Magna International Inc. (NYSE:MGA).
New technologies will transform the driving experience. That's big news for an industry worth approximately $2 trillion. And even the big auto-makers are getting in on the action.
Here are five companies that are making big changes to the automotive industry:
#1 Tesla (NASDAQ: TSLA)
The top name in electric cars had a big year last year.
For the first half of 2017, Tesla stock surged to nearly $400. It has since fallen to $340, though that still gives Tesla a market cap of more than $50 billion. That makes it bigger than the Ford Motor Company.
Tesla's success is linked to the roll-out of its new Model 3, an electric car designed to be affordable and available for mass production. Tesla CEO Elon Musk has faced some problems in getting the new car off the ground: sales have been slow, with only 1,500 units shipped in the last quarter of 2017. Tesla had estimated 5,000 would be sold, while Wall Street had hoped for at least 2,900.
Musk had tweeted in July 2017 that Tesla would be manufacturing 20,000 Model 3's per month by December. Instead, Tesla production was only 2,425 units in the last quarter.
Still, 2017 was a banner year for the company, which shipped more than 100,000 units for the first time in its history. While that's a small figure compared to some (Volkswagen sold 10 million cars in 2016 alone), it's a sign that a company some have called over-hyped has the potential to become a major producer.
That means it's earned its high valuation and could go even higher.
#2 PowerBand Solutions (PBX.V) (Powerband will start trading on Friday 9th Feb on the TSX Venture)
A little company with big ambitions, PowerBand Solutions is planning to bring blockchain technology to the auto market and its innovative technology could transform how cars are bought and sold.
The company is using its software and data-management to cut out industry middle men and simplify the automotive auction process, reducing costs and freeing up billions of dollars currently wasted on middlemen in the U.S. every year.
Both the consumer and the dealers stand to win big, thanks to PowerBand's innovative technology.
With the Livenet auction, the consumer can get more value for their trade, saving the consumer anywhere from $400 to $1000 on the purchase of a new vehicle.
Even more, the company has developed unique software to allow for faster and more streamlined auto purchases, with a plan to integrate blockchain technology to certify vehicle history, financing, mileage, servicing, accidents etc.
It has already lined up partnerships with some of the biggest names in the space, with a total of 125 unique customers having signed on to use PowerBand, giving it a direct sales growth of 15 percent per month since mid-2017.
At that rate, Powerband can project sales to increase from $2.2 million in 2018 to $61 million in 2021.
These revenue gains come from the profit generated for its customers through Powerband's transaction model, but it is also built to provide a gross profit margin for Powerband of up to 69.7 percent. Powerband hopes to expand its revenues by accessing more than 1000 dealers across North America. It's already finished $8 million in financing to date and doesn't expect to need much more investment before yielding a positive cash flow.
That means this little company, with a market cap of only $14 million, is projected to earn revenue of $61M by 2021, if Powerband can capture approximately 2 percent of the vehicle auction market. .
The auto sales market could be transformed by this technology, marking the end of a slow and expensive process that has been dominated by middle men.
This could be a fantastic opportunity for investors if Powerband can accomplish what certainly looks possible for them to achieve.
#3 Aptiv (NYSE: APTV)
This brand-new company is disrupting the auto industry through its innovative self-driving technology.
Aptiv is the result of a split in Delphi Automotive Plc. Delphi divided itself into two companies, one focused on manufacturing and the other, Aptiv, on software. The move was designed to capitalize on the intense interest in self-driving technologies: suppliers like the new Aptiv have become hot commodities.
Aptiv has partnered with the ride-hailing company Lyft to design self-driving software that could revolutionize ride-hailing.
Aptiv and Lyft unveiled a self-driving car at the Consumer Electronics Show in Las Vegas this January, and reviewers were impressed with its performance.
If widely distributed, self-driving cars could completely change automotive transportation. Revenue from self-driving car companies is expected to grow by 39.6 percent by 2027, rising to $126.8 billion.
That makes a brand-new company like Aptiv, with a bevy of solid software and strong partnership deals, a tempting opportunity for investors.
#4 General Motors (NYSE: GM)
One of the largest American automakers, General Motors (GM) has seen a remarkable bounce back since the dark days of the 2009 financial crisis, when it required a federal bail-out to stave off bankruptcy.
GM has made a full recovery and along with other auto-makers enjoyed strong sales several years in a row, bolstering the stock price.
The company is getting ready to enter the auto industry's most disruptive field. It's promised 20 all-electric vehicles by 2023, and it has also promised an autonomous taxi for 2019.
The company's AV subsidiary, Cruise Automation, is working hard to complete its independent AV software, and in November it was announced that the first GM AV will be ready for production by 2019.
And GM has set itself a high bar: rather than just operational, it wants to prove that it's AV is safer than a human driver.
That means the company is planning on putting a big bet on AV technology becoming more widespread in the future. GM could end up as a major disruptor, and some have even predicted the company could be a better bet than Tesla in the long-term. Savvy investors should take notice.
#5 Fiat Chrysler (NYSE: FCAU)
A major competitor of GM, Fiat Chrysler enjoyed a solid 2017.
Like other auto-makers, the company was struck by declining sales, but the company's stock enjoyed massive gains of 96.4 percent.
It's translating those gains into further results, investing $1 billion and creating 2500 jobs for an auto plant near Detroit.
Despite its major gains, the company remains under-valued. It has out-performed three quarters in a row, presenting a tempting target for investors.
But the company is looking to the future. CEO Sergio Marchionne has warned the auto industry that in less than a decade widespread transformations will transform how cars are made, sold and driven.
In the short-term, that means that Fiat will be a safe, profitable bet for investors looking to avoid the pitfalls of wagering on a gamble.
More top companies disrupting their industries:
Magna International (NYSE:MGA) is based in Aurora, Ontario. The global automotive supplier is gutsy and innovative--and definitely tuned to the obvious future--clean transportation. A great catalyst is its development of a combo electric/hydrogen vehicle--a fuel cell range-extended EV (FCREEV). It's not going to produce them (for now, at least) but plans to use the model to show off its engineering and design prowess and produce elements of the electric drivetrain and contract manufacturing.
The company's auto parts are distributed to heavyweights such as General Motors, Ford, Tesla, BMW, Toyota, Volkswagen and Chrysler. These huge deals provide a safe and steady profit stream for the company. It's insightful, forward-thinking and smart value/low cost for shareholders.
By. Meredith Taylor
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Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Forward-looking statements in this news release include expected continued success in software development, access to qualified sales force, continued involvement of current management, automotive industry activity levels remaining constant, receipt of required regulatory approvals, statements that Powerband's cost savings technology will save new car sellers $400 to $1000 per vehicle, that Powerband could realize as much as a 69 percent profit margin on certain vehicle sales on its revenues, that the enterprise value of Powerband can rise substantially, that Powerband can increase revenues by 3000 percent to $61M by 2021, that Powerband's technology can be employed by over 1000 dealers by 2021, that Powerband will be able to develop a blockchain system for providing accurate information about a vehicle, that recent revenue growth trends can continue, and that Powerband will continue to sign new partners.
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