Forget About Tesla: Here's Where the Better Autopilot Profits Will Be

May's tragic autopilot crash highlights the dangers in Tesla technology. Look elsewhere for safe investment opportunities.
By Kat McKerrow ,

It's been a trying week for the autonomous vehicle industry. Thursday night, the media took a break from worrying about the fallout from the U.K.'s Brexit vote and started panicking over Tesla (TSLA) - Get Report .

Back in May, an Ohio Tesla driver and outspoken aficionado of the car brand died in a highway accident when his vehicle struck a left-turning tractor-trailer. That would be tragic enough on its own, but yesterday the company revealed that the Model S vehicle had been engaged in autopilot mode when the accident occurred. Tesla's sensor system had not detected the turning truck. And, according to witness reports, the driver was watching a DVD at the time and hadn't noticed the truck in time to make an emergency stop.

This highlights a big problem with current self-driving technology. Simply put, it's not "there" yet. And Tesla is demonstrating its irresponsible edge in allowing the technology to hit the streets and in promoting a false sense of security that was apparently strong enough to allow the car's driver to watch a movie instead of the road.

Surprisingly, despite the drubbing Tesla is receiving in the press, the stock is up today. Shares closed down by more than 2% after the markets closed Thursday, but since open Tesla is rebounding.

However, the longer-term implications could be tremendous, affecting not only Tesla but the entire American self-driving car industry and the investors who hope to profit from it. The National Highway Traffic Safety Administration (NHTSA) has announced that it will open a preliminary evaluation of Tesla's autopilot feature.

The NHTSA has stayed relatively hands-off when it comes to self-driving cars, allowing individual states to set their own rules. This has led to a disparity among laws. In Florida, for example, where the fatal Tesla crash occurred, anyone with a valid driver's license may operate a self-autonomous vehicle. Meanwhile, New Jersey is considering requiring a special class of license to operate a vehicle on autopilot.

The NHTSA is scheduled to release guidelines for national-level regulations on self-driving vehicles later this month. In June, the agency said that it would not interfere with state legislation beyond the national guidelines. This was a blow to the American self-driving industry, which had hoped that federal regulators would streamline what now is a bumpy and irregular patchwork of laws across the country.

There's now a chance that this could change...for better or for worse for self-driving carmakers.

In the meantime, safer profits may be there for the taking in carmakers with more international exposure than Tesla. Japan in particular is welcoming to self-driving technology. With a disproportionately growing population of seniors, autonomous vehicles are a boon to Japan's highways. Toyota (TM) - Get Report is already courting this market, recently debuting a commercial targeting the elderly. And Toyota has also partnered up with Microsoft (MSFT) - Get Report to analyze the technology's data, as well as hiring a former Alphabet robotics exec. Toyota shares are down today following a flat earnings release. This is a good time to grab shares for long-term profits.

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In addition, the European Union has thus been more open to autonomous vehicle technology. German carmaker BMW announced today that it intends to bring a mass-produced self-driving car to the market in 2021. The company is teaming up with Mobileye and Intel for the project.

Tesla has always been -- and will remain -- a risky bet. The company has perhaps bitten off more than it can chew too quickly. In the meantime, other carmakers and technology companies are playing it safe, perfecting autopilot before rolling it out onto public roads. This is where the safer profits will be made.

Autonomous cars are the wave of the future. Let's leave them in the future for just a while longer. The moneymaking opportunities for investors will be even greater.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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