AI. Robotaxis. Electric Vehicles. And the Magnificent 7.

Source: Waymo.

AI. Robotaxis. Electric Vehicles. And the Magnificent 7.
GM crashes. Waymo expands. Tesla launches.
 
More than a few Magnificent 7 companies have their fingers in the pie of autonomous vehicles and robotaxis. You might have seen Waymo’s robotaxis around town in San Francisco, Phoenix or Los Angeles, or Tesla’s online. Are you aware that GM scrapped their Cruise robotaxi project on Dec. 10, 2024? According to GM’s press release, this will save the company $1 billion annually – beginning in the first half of 2025. Microsoft, GM’s partner on the project, is expecting to take an $800 million impairment charge in the next quarter as a result. Apple also reportedly canceled Project Titan in late February 2024 – a decades-long project for their own autonomous EV.
 
So, which companies are leading the pack in terms of AI, robotaxis and electric vehicles, and why are some pulling out? Here are the topics we’ll cover in this blog.
 
Robotaxis and the Algorithms that Drive Them
GM Puts Cruise on Pause
Magnificent 7: Google, Microsoft, Nvidia and Tesla
Autonomous Vehicles Don’t Drive Drunk
Magnificent 7 Buybacks
 
And here is more information on each point.
 
Robotaxis and the Algorithms that Drive Them
Microsoft was the AI behind the GM Cruise robotaxi. Waymo is a Google project. I’ve ridden in a Waymo. You can check out my Waymo ride on my Instagram channel. (Click to access.) Tesla wants to put its cybercabs on roads before 2027. However, Elon Musk also promised they would be available in 2020 back in 2019. As mentioned above, Apple pulled their project. Nvidia is adding staff in China to focus on autonomous driving technology.
 
Whether we like it or not, cars now run on AI and autonomous technology. Whether it assists us in parking in a tight space or stops us cold before we have an accident, robots are gaining control of the steering wheel, gas and brakes. For many Magnificent 7 companies, autonomous driving is another robust revenue stream. However, that only happens if the auto industry itself remains strong. So, why is the #1 carmaker in the world, GM, cutting back?
 
GM Puts Cruise on Pause
GM had a high-profile robotaxi accident involving a pedestrian in San Francisco that went viral. The settlement reportedly cost GM $8-12 million. The public and political appetite for having Cruise cars on the road dissolved. However, GM also cited increased competition in autonomous and electric vehicles as factors in the decision to focus away from robocabs and back on autonomous driving technology. Meanwhile, Waymo is expanding and has the first mover advantage in the U.S., while Baidu’s Apollo Go robocab is expanding in China.
 
China is moving rapidly to EVs, and represents the biggest EV car market in the world. Of the 17 million EVs that are expected to be sold in 2024, China could purchase 10 million, or almost 60%. More and more, Chinese consumers are purchasing from Chinese EV makers, pushing the year-over-year revenue growth of many Chinese automakers to the top of the Auto Stock Report Card. With hundreds of EV makers in the market, including new EVs from Chinese smartphone makers, the price wars have been intense. Few companies are profitable.
 
General Motors and Ford Motor Company still sell the most cars by far (in terms of revenue), at $172 billion and $176 billion, respectively. However, increasing protectionism (tariffs) is likely to make a challenging auto environment even more daunting in 2025. GM, Stellantis, Ford and Volkswagen have all announced furloughs and layoffs. Tesla reduced its workforce by 14% in 2024 – laying off around 19,000 employees. The automakers are definitely hunkering down for a challenging 2025. The questions are, “How will this affect the autonomous driving AI companies?” and “Is Tesla a carmaker or an AI and technology investment?”
 
Magnificent 7: Google, Microsoft, Nvidia and Tesla
Google, Microsoft and Nvidia all benefit from being technology and AI companies that are expanding into the autonomous vehicle space. Meanwhile, automakers, like Tesla, are seeing their main revenue stream impacted by price wars and Chinese competition. Tesla’s year-over-year revenue growth was just 8%, compared to 11% (Alphabet) 16% (Microsoft) and 94% (Nvidia). While robotaxis and EVs are exciting and are the fastest growing vertical in transportation, as developed world economies slow down, car sales are the first industry to be impacted. (We saw GM and Chrysler go belly-up in the Great Recession.) Economists are predicting lower GDP growth for the U.S. and China in 2025.
 
The differences between automakers and AI leaders are very important distinctions to make. While Tesla talks up its AI and technology, car sales (and credits) make up 80% of the company revenue – 90% if you include vehicle maintenance and the supercharger network. As Tesla soars to all-time highs, the company boasts a very expensive price tag – a P/E of 130 – the highest on the Magnificent 7 Stock Report Card (which includes the very popular Nvidia). Email [email protected] with AI SRC or Auto SRC in the subject line to receive an updated report card.
 
Autonomous Vehicles Don’t Drive Drunk
The move for autonomous vehicle technology and robocabs is based upon the premise that robots don’t drive impaired. Any poor decision (like the one that resulted in the Cruise pedestrian accident) can be reprogrammed for better results. Elon Musk envisions a world where your personal vehicle can moonlight as a robocab while you sleep – earning some extra income.
 
There is another important consideration that doesn’t get enough conversation: that single-occupancy vehicles create gridlock and are not the most sustainable transportation option. Transportation is the largest emitter of CO2 in the U.S. (source: EPA.gov). European countries that focus on public transportation have a CO2 per capita that is 1/3 that of the U.S., Canada, Australia and the Middle East, where SOVs are rampant. While EVs have a lower CO2 footprint than ICE* vehicles, having one car per adult in the developed world comes with a high demand for lithium, copper and nickel. Companies like Redwood Materials are working hard to recycle these elements.
*internal combustion engine
 

Magnificent 7 Buybacks
2023 and 2024 were all about the Magnificent 7. As I’ve mentioned repeatedly, without the spectacular performance of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, the S&P500 would have performed at less than half the speed, which is what the Dow Jones Industrial Average did. According to Howard Silverblatt, the senior index analyst of S&P Dow Jones Indices, “[Year to date], the Magnificent 7 has accounted for 53.5% of the total return, as the 28.35% return would have been 13.17% without them.”

 
One of the reasons why the Magnificent 7 has been on fire is that these companies are also the biggest buyback purchasers. The top 4 Buyback rankings go to Apple, Alphabet (Google), Nvidia and Meta. Microsoft is in the Top 10.
 ​

These companies all have a war chest of cash and have aggressive buyback authorizations, so it’s easy to assume that the repurchases will continue. However, that doesn’t guarantee continued share price gains. 2022 was the top performer for buybacks, with $922.68 billion in shares bought back by companies. Yet, the NASDAQ and the Magnificent 7 companies were some of the worst performers in a year that saw losses of -19.44% in the S&P500.
 

Sources: Morningstar, S&P Dow Jones Indices, Coinbase, MSN.com.

Bottom Line
Robotaxis and autonomous driving are all part of the artificial intelligence craze. They are embedded in the cars of the future and will continue to push technology’s growth dominance. The potential is factored into the elevated share prices, however. While I would definitely want to own a technology-heavy large cap growth fund, and extra hot slices of Breakthrough Technology and Artificial Intelligence ETFs, now would be a great time to capture gains and make sure that my plan is age appropriate and properly diversified. Many “conservative” portfolios have missed out on these gains (and might have suffered losses on their long-term bonds). There is a way to fix this, with a carefully crafted plan. Email [email protected] or call 310-430-2397 to learn more about our easy-as-a-pie-chart nest egg strategies, Financial Freedom Retreat and unbiased 2nd opinion.  
 
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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

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