Japan is aggressively working toward the launch of self-driving vehicle service on public roads by 2020, when the country will host summer Olympics and Paralympics.
Japan’s government reportedly plans to build the required infrastructure for vehicles such as buses and trucks by fiscal 2019.
Per the current plan, the self-driving service will be available from Tokyo’s Haneda airport to serve both domestic and international flights as well as nearby seafront areas.
Moreover, the government is contemplating to increase the number of locations for autonomous vehicle service to more than 100 across the country by 2030.
Self-Driving Vehicles to Boost Japan’s Economy
The goal to bring self-driving cars public by 2020 is expected to provide a significant boost to Japan’s economy. Prime Minister Shinzo Abe believes that the Olympics in Tokyo provide an opportunity to increase investments from Japan’s entrepreneurs, which will strengthen the economy.
Moreover, self-driving vehicles are expected to become immensely important for Japan’s aging demography due to their ability to minimize the chances of accidents. Traffic accidents involving the elderly are on the rise in the country, challenging the industry a target of fewer than 2,500 road fatalities a year by 2018, set by the National Security Agency.
Per The Business Times, almost 30% of vehicles sold in Japan now are equipped with driver-assistance features such as collision avoidance.
Japan has already created designated zones to test self-driving vehicles. Reportedly, the government is also working to digitize the entire country’s road network, which is likely to be completed prior to the games. This will ultimately help self-driving vehicles to navigate smoothly.
However, many entrepreneurs of Japan believe that government should allow self-driving vehicle makers to test new technologies in more public places at faster speeds (more than 25-31 mph).
Legalization of Level-3 Can Attract Technology Providers
Post Tesla (TSLA - Free Report) and Uber accidents, testing of self-driving cars have become a risky affair for companies in the United States, primarily due to lack of regulations. The accidents have also compelled Uber and NVIDIA to suspend tests, while Intel (INTC - Free Report) has chosen Israel’s Jerusalem for test driving purpose.
Japan is expected to legalize Level-3 self-driving vehicles by 2020, which will provide the country’s automakers an edge, particularly over the United States, in the race to build autonomous cars. Moreover, proper regulations will attract worldwide technology providers, as they will be able to tests new technologies without any inhibitions.
Moreover, Japan’s intense emphasis on safety is expected to gain far greater consumer acceptance.
Hence, proper regulation and infrastructure expansion make Japan a perfect choice for automakers like Toyota Motors (TM - Free Report) , Renault–Nissan, Subaru and Honda.
However, not all automakers have the required expertise in the self-driving technology software or in chips, cameras and sensor technologies. This should compel them to partner technology providers, which bodes well for the likes of NVIDIA (NVDA - Free Report) and Intel.
3 Stocks to Benefit Immensely
Here we take a brief look at three stocks that are expected to benefit from Japan’s aggressive move to bring self-driving vehicles mainstream by 2020.
Toyota Motors is expected to be a frontrunner in this regard due to its immense research capabilities. The automaker holds the most patents on self-driving vehicle technology and its deep resources provide significant leverage.
Moreover, the Toyota Research Institute-Advanced Development plans to invest ¥300 billion ($2.8 billion), with the main goal of developing “production-quality software” for automated driving.
For the Olympics, the company wants to have prototype vehicles with its “Urban Teammate” system on the road. Toyota is one of the main global sponsors of the 2020 Olympics.
Toyota currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is expected to benefit from its collaboration with Toyota. The Japanese automaker is using NVIDIA DRIVE PX AI car computer platform to power advanced autonomous driving systems.
Artificial Intelligence (AI) and deep learning, in which NVIDIA is a dominant name, are important tools for the development of self-driving vehicles. This is because AI and deep learning are capable of recognizing and handling almost infinite number of scenarios encountered on the road.
The DRIVE PX platform delivers 30 trillion deep learning operations per second. The platform fuses data from cameras, lidar, radar and other sensors. The system can then use AI to understand the 360-degree environment surrounding the car, localize itself on an HD map and anticipate potential hazards while driving.
This Zacks Rank #1 stock has also unveiled Constellation driving simulator that allows companies to test self-driving systems in a virtual environment. We believe this product has immense growth prospects due to aggressive testing targets of Japan-based auto manufacturers. Although the company doesn’t expect the new simulator to fully replace real-world testing of self-driving cars, it is expected to lower the number of trials, significantly.
Intel has initiated testing of around 100 self-driving cars in Jerusalem. Notably, the company had announced its plans to test this fleet of 100 vehicles at the time of acquiring Mobileye, which it bought for $15 billion in 2017.
The buyout provided Intel access to Mobileye’s technologies related to cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management.
Moreover, the company plans to make Level 4 and 5 vehicles hit the road with assistance from its vehicle partners by 2021. This Zacks Rank #3 (Hold) stock has also been a long-time supplier to Alphabet’s Waymo division.
Japan-based automakers Honda and Nissan are collaborating with Intel to launch self-driving vehicles.
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