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Tesla (TSLA) Buys DeepScale to Develop Fully Autonomous Cars

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Autonomous vehicles are set to revolutionize the concept of transport while contributing significantly to the global economy. To capitalize on the changing dynamics of the auto industry, Tesla (TSLA - Free Report) recently acquired DeepScale, a California-based computer vision startup, in order to develop fully driverless cars. The startup focuses on “deep neural networks” that use data and provide information to help a vehicle’s in-car driverless technology “see” what's around it more effectively.

DeepScale’s Artificial Intelligence software for vehicles is named as Craver21. DeepScale engineering will optimize Tesla hardware to allow its vehicles to perform autonomous driving seamlessly. The buyout adds the much-needed talent to Tesla Autopilot team, which has seen the departure of a number of Autopilot executives and engineers in the past year. The financial details of the transaction have been kept under wraps.

Tesla’s vehicles are not considered fully autonomous, i.e. Level 4, a designation by the Society of Automobile Engineers which means that the vehicle can operate in certain conditions without human intervention. Instead, vehicles from Tesla are Level 2.

While Tesla is making attempts to perfect its self-driving technologies, the company is at the top of its game when it comes to electric vehicles. Although electric cars occupy a small portion of the global automobile market, Tesla has acquired a substantial market share within this niche segment. With Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the EV segment. Notably, the company delivered a record 97,000 vehicles globally in the third quarter.

While Tesla has been bearing the brunt of increasing R&D and SG&A costs, which have been denting profits; rising Model 3 delivery, which accounts for the bulk of its overall deliveries, is likely to aid its prospects.

Tesla, Inc. Price and Consensus

Zacks Rank & Stocks to Consider

Tesla currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Auto-Tires-Trucks sector are Douglas Dynamics, Inc (PLOW - Free Report) and SPX Corp. (SPXC - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and Lithia Motors (LAD - Free Report) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Douglas Dynamics has an expected earnings growth rate of 11.7% for 2019. The company’s shares have gained 24.7% year to date.

SPX has an estimated earnings growth rate of 22.7% for 2019. Its shares have rallied 38.8% year to date.

Lithia Motors has an expected earnings growth rate of 12.8% for 2019. The company’s shares have gained 65.4% year to date.

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