It's becoming clear that the auto industry is at the beginning of a period of dramatic, transformative change. New technologies like electric drivetrains and autonomous-driving systems, and the new shared-mobility business models enabled by technology, seem set to bring sweeping changes to our cars, the way we own them, and the ways in which we get around, particularly in cities. 

Of course, there are opportunities for investors whenever an established industry undergoes a period of sweeping changes. That's true in autos right now. It's likely that some new entrants will become huge (and hugely profitable) companies in time. And it's also likely that not all of the legacy auto-industry players will survive, much less thrive amid the changes.

So who will be the winners and losers in this period of transformative change? Many investors will make cases for technology companies such as Tesla (TSLA -0.71%), NVIDIA (NVDA 5.71%), and possibly Intel (INTC 1.40%) and its recently acquired Mobileye subsidiary. 

There's merit to the idea of looking to Silicon Valley for opportunities to profit on all of these coming changes. But plenty of investors have already caught on to that. What if we could identify the likely winners within the group of legacy auto companies? We might find equally compelling opportunities -- at better prices.

That's what I've done here. I think Aptiv PLC (NYSE: APTV), a new company formed from part of an old one, and Detroit stalwart General Motors (GM -1.70%) are worth close consideration by investors looking to profit from the auto industry's transformation. 

One note: For both companies, I think there are good fundamental reasons to buy, but there are also some timing-related reasons to consider waiting a bit. I've summed those up at the end of each following section. 

A white BMW sedan with Aptiv logos.

Aptiv has partnered with BMW and Intel to develop a modular self-driving vehicle system. Image source: Aptiv PLC.

Aptiv: An emerging self-driving player

Never heard of Aptiv? That's no surprise: It's a brand-new name for part of the company that used to be giant auto-industry supplier Delphi Automotive. As of Dec. 5, the former Delphi is now two companies -- and that's where it gets interesting for investors. 

Delphi has long been known as a major supplier of what the auto industry calls "powertrain components," parts and systems for internal-combustion engines. In recent years, Delphi had also built a major business around parts and services that help automakers integrate advanced technology into their vehicles, including everything from complex wiring harnesses to software. 

That's highly relevant to the trends I mentioned: In fact, the former Delphi recently acquired self-driving software start-up nuTonomy, giving it a center of artificial-intelligence expertise that will be leveraged to expand its product portfolio further in the future.

As the amount of computing power in autos steadily increases, that line of business -- and the related businesses that Delphi had recently built up around it -- has become more and more important. Delphi's management also thought the company was becoming more valuable, but the company's overall valuation was held back by its legacy business, and its legacy image.

Hence the split. Delphi spun off its internal-combustion powertrain unit and gave it a version of its legacy name: Delphi Technologies (DLPH). The technology portions of the business, and most of old-Delphi's senior management, stayed behind, and that company has been renamed Aptiv. 

So, what is Aptiv, post-split? It's a major global supplier of the pieces that help integrate computer controls into vehicles. That starts with what the company often describes as a car's "nervous system," the network of wires and switches that conduct data and electricity throughout a vehicle, and includes other pieces like touchscreens and sensors, all designed to integrate seamlessly into mass-produced vehicles. 

Aptiv is already a major player in self-driving. Among other initiatives, it has joined Intel and Mobileye in a series of partnerships working to develop self-driving vehicle systems, including an important one led by German luxury-car giant BMW AG

Reasons to buy now: If self-driving turns out to be big business (very likely), and if at least some of the traditional automakers do well in this new world (also likely), then Aptiv probably stands to grow significantly. 

Reasons to hesitate: As I write this, Aptiv is a brand-new stock. It's not yet clear how the market will value the new company. There might be benefit to waiting a few months to see -- but there might turn out to be more benefit to getting in early. Look before you leap. 

Barra is shown standing next to a white Chevrolet Bolt EV with visible self-driving hardware while speaking at GM's factory in Orion Township, Michigan.

CEO Mary Barra, shown here with a self-driving Chevrolet Bolt EV, is leading GM into the future while making the most of the present. Image source: General Motors.

General Motors: An emerging future-tech powerhouse

If you haven't been paying close attention over the last few years, the idea of buying General Motors might seem laughable. After all, GM was the automaker that Americans loved to hate for years, the poster child for everything that had gone wrong with arrogant old Detroit.

But here's my message to you now: Things have changed in a very big way at GM. Under CEO Mary Barra, GM has emerged as a leader -- yes, a leader -- in electric vehicles and autonomous-driving technology. On top of that, Barra has GM positioned to become a major -- possibly dominant -- player in car-sharing and ride-hailing. Consider:

  • GM's Chevrolet Bolt EV was the first affordable long-range electric car to come to market, beating Tesla's Model 3 by months. Right now, while Tesla struggles to get the Model 3 into production, the Bolt is setting sales record after sales record. And the Bolt is just the beginning: GM will introduce at least 20 additional new all-electric vehicles by 2023, with the first two arriving no later than early 2019. And to top it off, Barra promises that these electric vehicles will deliver something that has so far eluded Tesla: profit.
  • Self-driving? If GM isn't at the absolute forefront, it's very close. GM subsidiary Cruise Automation is running a test fleet of over 100 self-driving Chevy Bolts as I write this, and it's expected to add many more cars in coming months. It's testing in one of America's toughest driving environments: downtown San Francisco. The goal: to deploy fleets of self-driving Chevy Bolts in ride-hailing service in cities as soon as the system is ready, probably in 2019. It'll happen fast: GM already has the car (a modified version of the Bolt) and the factory (the self-driving Bolt can be built on the Bolt's regular assembly line in Michigan), and some key sensor technology, and it's building out the necessary 3-D maps and infrastructure right now. 
  • GM is also well-positioned in ride-hailing and car-sharing. Not only does it own a big stake in Lyft and a seat on Lyft's board, but it also has a wholly owned subsidiary called Maven that offers an app-based car-sharing service in many U.S. cities. GM may choose to deploy its self-driving ride-hailing Bolts via Lyft -- or it may use Maven's infrastructure to launch a rival service that it owns outright. 

The takeaway here is that when it comes to all of this future tech, GM has more pieces than any of the other major players:

  • Like Tesla, GM has proven long-range electric-vehicle technology and the supply chain to ramp up production over the next few years. 
  • Like Alphabet's self-driving subsidiary, Waymo, GM has a self-driving system in an advanced state of development -- almost certainly ahead of most or all other players.
  • Like Uber, GM is building the infrastructure for an autonomous ride-hailing service in major U.S. cities.
  • And unlike all of the above, GM is one of the world's largest automakers, with deep supplier relationships, factories around the world, and a century of car-making experience. 

From an investment perspective, GM's stock looks pretty good too. It has had a good run in 2017, but it's still fairly cheap at about 7.4 times expected 2017 earnings. Its dividend yield is an attractive 3.5%, and that dividend should be sustainable through a recession. 

Reasons to buy now: GM is exceptionally well positioned for the future, and healthy and quite profitable in the present. Its management team is very strong, and it pays a solid and sustainable dividend. As it will probably be able to sell its highly profitable trucks and SUVs for many years to come, its future-mobility businesses will add to -- not replace -- its profits. Long story short: GM's leading position on future tech means substantial profit growth is likely over the next several years. 

Reasons to hesitate: The majority of GM's profits still come from selling trucks and SUVs in the United States. That's a very profitable business at the moment, but there are growing signs that the U.S. new-car market has passed its cyclical peak. When the U.S. slides into a recession, GM's sales, profits, and in all likelihood its stock price will fall. History suggests that's likely to happen before GM's future-tech efforts really start to pay off. If so, that could be a better opportunity to buy than we see today.