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  • Updates
  • autonomous vehicles
  • electric vehicles

Honeywell shares overtake Intel and Tesla in self-driving race

There is still a long way until fully autonomous vehicles hit the road, but Honeywell, Tesla and Intel are continuing to develop technology to facilitate the shift. Honeywell has shown the strongest performance with a diversified offering and a focus on navigation services for self-driving vehicles.

- Fully driverless technology remains a relatively distant challenge for companies in the space

- Tesla shares have performed poorly over the last few months as Elon Musk dumps a large number of shares

- Intel spins off its autonomous driving business Mobileye in an attempt to create shareholders value and raise cash

Honeywell [HON], Tesla [TSLA] and Intel [INTC] maintain their autonomous driving ambitions even as the industry reassesses how long it will take for full driverless vehicles to hit the road.

The image of driverless vehicles roaming the streets has long been a fantasy. While in recent years advances in technology made the possibility seem increasingly plausible, the challenges involved are only becoming more clear. In October, Tesla CEO Elon Musk, admitted that full self-driving software was not currently advanced enough to be used without someone behind the wheel.

Argo AI, a self-driving vehicle group that was backed by Ford and Volkswagen and was once valued at $7bn, shut down operations in October after six years in development. The company admitted that building profitable fully driverless technology would cost billions of dollars and is at least half a decade away.

Developing the technology still remains a focus for Honeywell, Tesla and Intel. Honeywell, which operates in aerospace and building technologies alongside its autonomous vehicle ambitions, has seen the best share price performance with an increase of 4.8% since the beginning of the year. Tesla and Intel shares, however, have had a different story with declines of 46.9% and 40.4% respectively.

Tesla overshadowed by Twitter fiasco

While the Tesla share price has struggled considerably this year, the turmoil has not all been down to challenges from its autonomous driving ambitions. Tesla CEO Elon Musk has been forced to sell nearly $20bn worth of Tesla shares to complete his $44bn takeover of Twitter [TWTR]. While this has weighed down Tesla shares in recent weeks, prior to that, the company failed to meet delivery targets in the third quarter due to logistics challenges.

Honeywell has shown strong growth in its core operations in the third quarter. Total sales increased by 6% year-on-year while its aerospace operations grew 10% and building technologies revenue bounced up 19%. While the company has no dedicated autonomous driving arm, it provides inertial navigation systems that are required in autonomous vehicles. The company is in a strong position to benefit from future autonomous driving growth by providing such technology.

Intel spins off Mobileye

At the end of October, Intel spun out Mobileye, its autonomous vehicle technology business in an effort to raise cash. Intel aimed to unlock value for shareholders and shore up its battered share price while retaining majority control of the business. It initially hoped that the business would be valued at $50bn, however, the eventual listing gave the autonomous driving company a valuation of $23bn.

While the IPO was valued lower than initially hoped by Intel, the shares hit almost $29 on its opening day – over 38% above its initial public offering price of $21 per share. This was amongst a very challenging IPO market with only $7.4bn being raised in traditional US IPOs so far this year – down 94% from 2021.

There have been more deals within the autonomous driving space in recent months. Ouster [OUST] and Velodyne Lidar [VLDR] have agreed on a merger that will form a leading player in the field. The two companies develop light detection and ranging (lidar) sensor technology, which is used in autonomous vehicle technology.

Funds in Focus: Global X Autonomous & Electric ETF

The Global X Autonomous & Electric Vehicles ETF [DRIV] has Honeywell, Intel and Tesla shares within the top 10 holdings at seventh, eighth and ninth respectively. As of 16 November, The Honeywell shares make up 2.37% of the total fund while Intel and Tesla have weightings of 2.26% and 2.25% respectively.

The fund has declined 25.5% since the beginning of the year with considerable holdings in declining shares such as NVIDIA, Tesla and Intel weighing down the fund performance in the last few months. In the past month, however, the fund has gained 16.7%.

The iShares Self-Driving EV and Tech ETF [IDRV] also offers exposure to Tesla and Intel shares as the 12th and 14th largest holdings, with respective weightings of 3.5% and 2.99%. While the fund has declined 29.1% since the turn of the year, it has climbed 16.4% in the past month.

Disclaimer Past performance is not a reliable indicator of future results.

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