3 Reasons Intel Can Win the Self-Driving Car Race

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Intel (NASDAQ: INTC) has definitely come a long way since the March announcement of its acquisition of vision specialist Mobileye for a princely sum of $15.3 billion. This move is now acting as a catalyst for Intel in the self-driving car race, where it was lagging graphics specialist NVIDIA (NASDAQ: NVDA).

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NVIDIA looked like the go-to investment to tap the autonomous car opportunity, given its impressive product-development moves and partnerships with leading automakers. But the status quo has changed as Intel has moved to cut NVIDIA's lead in this space, giving investors more clarity as to how it plans to monetize this opportunity.

A closer look at Intel's moves in self-driving cars clearly indicates that the company has built its presence in a rapid and strategic manner.

Buying strength

Intel might have paid through the nose for Mobileye, but its outlay looks reasonable in the face of the estimated $77 billion value that the autonomous vehicle market could reach by 2035. Mobileye already has relationships with more than 25 global automakers, 13 of which are engaged in developing autonomous cars.

What's more, Mobileye claims that its technology is used in over 15 million vehicles across the globe, which further underscores its deep ties with automakers. Mobileye was already working with BMW (NASDAQOTH: BAMXF) when Intel announced its acquisition. The three companies are now engaged in the development of a fully autonomous self-driving car, with the intention of bringing it to market by 2021.

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NVIDIA plans to be involved in a fully autonomous car hitting the market by 2021. So Intel has gained remarkable ground in this space despite a two-year disadvantage to NVIDIA, which released its first vehicle platform in early 2015.

As it stands, Intel and its partners plan to start testing 40 autonomous vehicles by the end of 2017. This excludes the fleet of 100 fully autonomous cars, based on Mobileye's technology, that the chip giant plans to start testing on its own this year. All this means that Intel is now well-placed to learn more about autonomous-driving technology as it gathers more data from the test cars, which will help it take the fight to NVIDIA.

A formidable alliance

Intel's sudden acceleration in autonomous cars has a lot to do with its willingness to partner with a variety of specialized players. Earlier this year, the chip giant brought in Delphi Automotive (NYSE: DLPH) as a systems integration specialist, which was a smart move, as Delphi had already displayed its self-driving prowess by helping an Audi car drive itself through heavy traffic in Silicon Valley.

Delphi has worked with BMW to develop a prototype of an autonomous-driving platform. More importantly, the addition of Delphi will serve Intel's broader dreams of selling its self-driving technology to other automakers, given the former's expertise in integrating different technologies into a single platform.

Intel, not relying just on BMW to further its self-driving ambitions, has been receptive to bringing in more automakers into its fold. In August, the chip giant welcomed Fiat Chrysler Automobiles (NYSE: FCAU) to the alliance, to accelerate technology development and also mitigate some of the high costs of self-driving car development.

The Waymo win

The biggest gains from the Fiat partnership were revealed in late September when Intel announced that Waymo, the self-driving-car subsidiary of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), is using Intel chips to power self-driving minivans.

For the past few months, Waymo has been using Fiat Chrysler's Pacifica Hybrid minivans to hone its technology on public roads in Phoenix, as a part of its early rider program. But it recently came to light that these new minivans are powered by "Intel-based technologies for sensor processing, general compute and connectivity, enabling real-time decisions for full autonomy in city conditions." This is a big deal for Intel because Alphabet leads the self-driving space by a wide margin.

What's more, the Fiat-Waymo combine is reportedly planning to offer ride-sharing services, a market that could hit $70 billion in 2021. So the alliance will need a lot more cars to tap the full potential of this market, opening up an opportunity for Intel to move more chips and technology solutions.

All in all, the Waymo development indicates that Intel's transformation from a laggard to a leading contender in the self-driving race is now complete. The chip giant was quick to turn itself around when it seemed that NVIDIA would run away with the autonomous-driving opportunity.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Nvidia. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.