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Self-Driving Car Industry on Back Gear as Uber Crash Kills

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Only a couple of days ago, the general perception on driverless cars was that these are incredibly safe and hence boring. However, a tragic incident which took away the life of a woman, completely changed the view on the industry, which is currently standing at a critical junction in its evolution.

A self-driving test vehicle from the leading ridesharing company Uber Technologies Inc. struck and killed a 49-year-old woman in Tempe, AZ. The incident prompted investigation by regulators and criticism from advocates. Uber has said that it will fully co-operate in the investigation and suspended tests of all its self-driving vehicles on public roads in San Francisco, Pittsburgh, Toronto and the greater Phoenix area.
Safety issues apart, this sad incident has given a big jolt to the nascent self-driving car industry, which is witnessing billions of dollars of investment and has the potential of a game changer in the transportation industry.

The Speed-Breakers

Of late, the self-driving industry has been growing by leaps and bounds. Several automobile and technology companies such as General Motors Company GM, Tesla, Inc. TSLA, Alphabet Inc. GOOGL, Toyota Motor Corporation TM, Baidu, Inc. BIDU and Uber have poured in huge investments to develop the niche technology. Huge prospects of self-deriving vehicles to transform the auto industry and the transportation landscape have mainly resulted into this lofty investment. However, the high-impact fatality in Tempe is likely to slow down testing activities, hamper commercialization and dampen enthusiasm associated with the industry.

The incidence is of huge impact as it came at a time when companies have been urging for regulatory clearance for offering self-driving car ride services. In fact, late last week Alphabet’s Waymo car unit and Uber had written to U.S. senators for the approval of the self-driving car legislation. The immediate effect of the incidence may be further delay in the landmark bill pending in Congress that seeks to expedite the testing of self-driving vehicles.

Reality Checks

The first pedestrian death brings to the fore the pertinent question whether the industry is moving at break-neck speed to deploy the technology. Innovation is always welcome but the industry also needs to be honest with itself about the inherent risks associated in self-driving cars. This is no Luddite view.

Among the above-mentioned stocks, while Toyota sports a Zacks Rank #1 (Strong Buy), General Motors carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Both Alphabet and Baidu have a Zacks Rank #3 (Hold) but Tesla carries a Zacks Rank #4 (Sell).

General Motors, Tesla, Alphabet, Baidu and Toyota  have expected long-term growth rates of 8.4%, 25%, 22.7%, 20.8% and 6.1%, respectively.

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