More than a century ago, in 1913, Henry Ford introduced the assembly line in his automobile factory – and forever changed the way that mass industry works. Today, with the advent of new technologies such as AI, machine learning, and LiDAR, the automotive world is on the cusp of another industry-wide shake-up, and one that holds the promise of a true automobile – a ‘self-mover.’ In short, the new technology is making true self-driving cars possible.
New technologies and fast-growing industries typically provide a fertile ground for risk-friendly investors, and autonomous vehicles are no exception. While Tesla soaks up the headlines, it’s hardly the only game for potential AV investors.
The key will be to find companies that have already developed records of successfully putting vehicles on the road – and even though the AV industry is new, self-driving cars are already a reality. The stock analysts at Morgan Stanley know this, and they are recommending two self-driving car stocks – and their names are not Tesla. We’ve used the TipRanks platform to get a look at the broader Wall Street view of both – here are the details, and the Morgan Stanley comments.
Aurora Innovation (AUR)
The first stock we’ll look at is Aurora Innovation, a company working on self-driving tech from the AI end. It has created the Aurora Driver, a self-driving system based on AI that is designed from the start to work with multiple types of vehicles—everything from ride-hailing cabs to long-haul freight trucks. The company boasts that it can deliver the benefits of autonomous driving technology safely and quickly across a broad range of the transportation sector. Aurora’s goal is to make autonomous vehicles more accessible, more reliable, and more efficient.
In addition to its AI, Aurora’s Driver uses a modular sensor suite and a powerful, proprietary computer, making the platform a mix of software and hardware specifically designed to match autonomous driving to a car. The platform package is compact, and the AI software uses machine learning tech to ensure that it is always ‘training,’ growing smarter with every drive. The system can be integrated into any type of vehicle and can operate in any weather or environmental conditions, making it suitable for the mountains and winter snows of Aurora’s Pennsylvania home to the hot, flat deserts of Texas, where the company is preparing for its commercial launch.
The company plans to introduce its autonomous driving platform on a commercial truck route in Texas, running between Dallas and Houston, in April of this year. While this initial launch will have some aspects of a test run, it is planned as a true commercial venture, with driverless trucks hauling customer loads between two of Texas’ major cities. Aurora plans to follow this launch later this year by adding night and heavy weather capabilities to the system and expanding the route to include Fort Worth and El Paso, and out to Phoenix, Arizona.
On the financial side, Aurora is still pre-revenue—after all, the company has not yet launched its commercial service—and operates at a net loss.
But for Ravi Shanker, who covers Aurora for Morgan Stanley, the key point here is that this company is on the brink of starting a ‘revolution’ in the AV sector. He notes the quality of the Driver platform and the recent share price gains, writing of the company, “We believe AUR is leading the charge with arguably the most sophisticated on-highway, Class 8 autonomous solution amongst peers. The April rollout of commercial driverless operation will be a key milestone for AUR and the industry (as well as being a binary outcome catalyst), which we believe can unlock a long runway of earnings growth ahead. It has been 4 years since AUR went public but the market is finally noticing their autonomous leadership and the stock is up over 3x in the last 9 months (over 5x at its peak 2 weeks ago) – however, this is just the beginning if our view of the opportunity runway ahead, materializes.”
Following these comments, Shanker puts an Overweight (i.e., Buy) rating on the stock with a $12 price target that suggests a 69% upside in the next 12 months. (To watch Shanker’s track record, click here)
Overall, Aurora gets a Moderate Buy consensus rating from the Street, based on five recent analyst reviews that include three to Buy and two to Hold. The shares are currently priced at $7.10, and the $9 average price target points toward a gain of 27% on the one-year horizon. (See AUR stock forecast)
WeRide, Inc. (WRD)
Next up is a Chinese company, WeRide, a full-service autonomous driving company based in Guangzhou – but with offices in such major international tech hubs as San Jose and Singapore. The company holds driverless permits in China, the US, Singapore, and the UAE, and is conducting a wide range of tests on autonomous driving technologies at Level 2, Level 3, and Level 4. The company currently has R&D tests underway in 30 cities across 9 countries.
That’s a serious footprint for an autonomous vehicle maker – but more importantly, WeRide has nearly 2,000 days of real-world driverless taxi operations behind it. The company operates a self-driving robotaxi fleet in China. Its first robotaxis were launched in 2018, and WeRide followed up in Guangzhou with a robotaxi fleet that covered an area of more than 144 square kilometers.
Today, WeRide products include its driverless robotaxi vans, in operation in several Chinese cities and accessible by apps from WeRide and Uber; a fully driverless Level 4 robobus, with a capacity for 8 to 10 passengers; a robovan for urban delivery services, built in partnership with JMC-Ford Motors; and even two models of robosweepers, designed to automate urban street sweeping services. The company even offers a Level 4 autonomous driving platform, designed for retrofitting to existing vehicles.
WeRide went public on Wall Street at the end of October 2024 and like many early-stage cutting-edge tech companies, operates at a net loss, and its revenues are modest – but that was less important for Morgan Stanley’s Tim Hsiao than the company’s sheer potential. WeRide is a global leader in putting autonomous tech on the road – and Hsiao notes this and more in his write-up of the stock: “We are positive on the company’s exposure to L4+ (self-driving) autonomous driving (AD) in China and overseas through its robo-fleet offerings (i.e. robotaxis, robovans, robobuses, robosweepers). We see growing synergies across its four key products, and believe that its centralized ‘WeRide One’ platform can deliver greater cost savings longer term, with scale. Meanwhile, we are constructive on WeRide’s solid order pipeline in robovans and robotaxis, as well as its recent partnership with Uber to launch robotaxis in the UAE over the next few months. We think WeRide can leverage its existing projects to win contracts in new cities/countries.”
Getting into the predictions game, Hsiao goes on to outline a sound path forward for WeRide, and says, “As penetration of L4+ AD continues to rise globally, we believe WeRide is well positioned to capture any regulatory tailwinds in autonomous vehicle development. Overall, we see WeRide as an attractive pure play in the global L4+ AD space, given the limited number of listed players currently.”
Quantifying his stance, Hsiao gives WRD shares a rating of Overweight (i.e., Buy), along with a $23 price target that implies a potential one-year upside of 40%. (To watch Hsiao’s track record, click here)
This stock only has 2 recent analyst reviews on record, but both are positive, making the consensus rating a Moderate Buy. The shares have a trading price of $16.39 and an average target price of $22, suggesting that a 34% upside lies ahead for this stock. (See WRD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.