Delphi: self-driving costs to fall 90% by 2025
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Delphi: self-driving costs to fall 90% by 2025

Delphi Automotive, the car parts manufacturer at the center of the trends towards self-driving and electrification, has some good news for people waiting to drive the cars of the future: by 2025, self-driving costs could have fallen by 90%. Delphi, which changed its name to Aptiv on Tuesday in a move to deepen exposure to these areas, wants to help automakers “rethink the way vehicles are engineered and built”. It’s traditional engine components business will continue to exist, spun off as Delphi Technologies, while Aptiv “will concentrate of self-driving and other technologies.”

Prior to Tuesday’s name change and spin off, Delphi’s share price was up 55% in 2017 so far

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SOURCE: Yahoo Finance

Delphi is having a fantastic year, its share price rising throughout, and investors should realize that the dramatic drop shown on the graph above doesn’t reflect a change in value, but rather, a change in where that valuation lies (the aforementioned Delphi Technologies spin off). More important to long term growth than the company’s strong performance on the market this year is the in-roads its been making towards becoming a central figure in self-driving technology. A number of acquisitions, combined with the company’s considerable financial heft and the recent redesign of its business, has put it in prime position to dominate the evolution of the auto industry.

The company’s CEO, Kevin Clark, thinks that self-driving technology will take off in a big way and, as a result, that prices will drop by as much as 90% (to around $5,000) in 2025. Noting that the current combination of self-driving hardware and software costs between $70,000 and $150,000, Clark sees a definite trajectory to much lower prices in the near future: “the cost of that autonomous driving stack by 2025 will come down to about $5,000 because of technology developments and higher volume.”

Clark explained that Aptic is “working now with our customers to optimise” existing autonomous driving platforms, and that five to 10 years out, given the amount of software going into the car, the complexity of (self-driving) systems and infotainment systems, the basic architecture of the vehicle needs to be rethought.”

Ultimately, he said, “you’re going to see more acceptance and more deployment in the commercial market,” thanks to economic incentives and the buying power of fleet operators.

Disclosure

Dominion holds Aptiv and Delphi Technologies in its Global Trends Managed Fund.


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