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AXA IM's five stocks to play the auto tech revolution

Five unexpected companies that are in the driving seat of tomorrow’s automotive industry

The automotive industry is increasingly adopting new technology.

This is happening through automation making manufacturing more efficient, alongside technological complexity of systems in the car.

As a consequence, traditional manufacturers and suppliers are being disrupted. 

AXA Framlington's Robotech fund manager Tom Riley, its Global Technology fund manager Jeremy Gleeson and Global Thematics fund manager Amanda O’Toole share their views on five unexpected companies in the driving seat of tomorrow’s automotive industry.

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The automotive industry is increasingly adopting new technology.

This is happening through automation making manufacturing more efficient, alongside technological complexity of systems in the car.

As a consequence, traditional manufacturers and suppliers are being disrupted. 

AXA Framlington's Robotech fund manager Tom Riley, its Global Technology fund manager Jeremy Gleeson and Global Thematics fund manager Amanda O’Toole share their views on five unexpected companies in the driving seat of tomorrow’s automotive industry.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Twilio

Lower levels of ownership are challenging conventional models of private vehicle use, particularly among the young and urban for whom costs may be prohibitive expensive, says Gleeson. 

Twilio is one of the companies which enables other digital firms to do business, offering cloud communications systems helping ride-hailing apps such as Uber connect fleets of drivers to customers.

'There are many ways that investors can be exposed to the changing model of how companies reach their customers,' he said.

 

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Alphabet

Since 2009 the self-driving car business owned by Alphabet's self-driving subsidiary Waymo has overseen more than five million miles of driving mostly on complex city streets in the US.

With each mile the firm collects more data enabling it to continue to learn and improve the driving process, according to Riley.

'While we’re unlikely to see driverless cars become an everyday feature of our roads in the coming years, the information which Alphabet is gathering is immensely useful to better understand not only how these technologies work in the real world, but also how consumers engage with them,' he said.

He also notes that Waymo collaborates with car manufacturers such as Fiat Chrysler, and announced in March 2018 that it would partner with Jaguar Land Rover to introduce a fleet of 20,000 electric cars as part of a trial ride-hailing service in the US.

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Panasonic

Panasonic has gradually refocused its business in recent years, moving from purely consumer electronics to become one of the world’s largest suppliers of high-end batteries for plug-in hybrid and electric vehicle manufacturers, says O'Toole. 

The company partnered with Tesla to create its $5 billion (£3.8 billion) Gigafactory and supplies batteries for Tesla’s S, 3 and X models, and has also recently announced a collaboration between with Toyota to develop new prismatic batteries, which are smaller and lighter than traditional batteries, for electric vehicles.

'Panasonic’s long history in consumer electronics, combined with its more recent collaborations with electric vehicles manufacturers, means it is uniquely placed to benefit from the opportunities presented by the development of advanced driver assistance systems and the in-vehicle infotainment market,' explained O’Toole.

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Aptiv

Aptiv is a principal partner for a number of major manufacturers, making electronics and intelligence systems for vehicles, particularly advanced driver-assistance systems (ADAS) which are designed to help people drive more safely, said Riley.

The company was in December 2017 spun out of Detroit's Delphi Automotive as a standalone enterprise specialising in high tech components, leaving the parent business to focus on legacy products.

Riley said: 'Aptiv and their customers are seeing increasing regulatory demand for driver assistance functions in the name of safety.'

O’Toole added: 'As traditional manufacturers lose market share to hybrid and fully electric vehicles (EVs), Aptiv has a good product suite to offer manufacturers alternative systems to those historically used in petrol and diesel vehicles.'

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Infineon

Moving further out along the supply chain, Infineon is a semiconductor company which makes 'power' semiconductors – chips which can switch or control power within complex systems.

Riley said: 'Infineon has a market-leading position in self-driving and factory automation systems, and has a relatively high "purity" of exposure to the automation theme – it generates the majority of its revenues from automotive and industrial applications.'

 

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Jeremy Gleeson
Jeremy Gleeson
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Tom Riley
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10/48 in Equity - Global Themes (Performance over 1 year) Average Total Return: 15.07%
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