NVIDIA (NASDAQ:NVDA) moved into the self-driving car market years ago and racked up an impressive list of partners and clients, making it a top tech stock for the future. But even after all these years, the graphics specialist has failed to make the most of the opportunity in autonomous cars, as the broader market has failed to take off as anticipated. Not surprisingly, NVIDIA's automotive business has huffed and puffed as the company has been forced into a change of strategy to attack the autonomous car market.

And now, it seems that NVIDIA is taking things a step further. The chipmaker made a couple of big announcements at CES 2020 that reaffirm its commitment toward autonomous vehicles and have the potential to supercharge its automotive business in the long run. Let's see why.

Person reading a book inside a self-driving car.

Image Source: Getty Images.

NVIDIA wants to be the enabler of autonomous cars

NVIDIA has altered its strategy since it first entered the self-driving car space. From selling just chips to the likes of Tesla, the graphics specialist is now focused on providing end-to-end solutions to automakers and component suppliers.

This is why the company's announcement this week at CES that it is opening up its end-to-end autonomous driving platform, DRIVE AV, to developers to accelerate the development of self-driving cars is a big deal. Transport industry participants will be able to access pre-trained deep neural networks (DNNs) on DRIVE AV as well as artificial intelligence (AI) training processes available on the NVIDIA GPU Cloud (NGC) container registry.

So, how is this going to help NVIDIA make a mark in the self-driving car market? The answer seems quite simple at first: NVIDIA could become the go-to company for anyone looking to develop autonomous cars. That's because NVIDIA's DRIVE AV platform will give developers access to all the technology they need to step up autonomous car development.

For instance, anyone looking to accelerate the development of self-driving cars can utilize NVIDIA's data center infrastructure and pre-trained artificial intelligence models. NVIDIA is also providing an onboard computer that can be fitted into the vehicle to carry out the complex calculations that are necessary for the operation of autonomous cars.

NVIDIA claims that OEMs (original equipment manufacturers) can modify the AI models according to their needs. This is a smart move as automakers now have a ready reckoner in the form of NVIDIA's platform if they are looking to speed up autonomous car development.

After all, the graphics specialist now has years of experience in this field and even allows automakers to virtually test their autonomous vehicles in real world-like environments for billions of miles. So, NVIDIA is now offering what seems like a truly end-to-end system. It should help OEMs extensively test autonomous cars before they hit the roads while making them smarter in tackling real-world situations thanks to a huge repository of AI models shared by various customers in NVIDIA's cloud.

Don't expect quick returns, however

NVIDIA has made a bold move to attract more automotive partners and increase its chances of capitalizing on the trend of autonomous cars. But investors shouldn't expect any quick returns out of such a move as NVIDIA has been boasting of a large lineup of partners for a long time now.

In fact, NVIDIA had earlier claimed that it has more than 370 partners using its platform to develop self-driving cars. That hasn't led to outsized growth in the company's automotive business despite its small base. In the third quarter of fiscal 2020, NVIDIA's auto business generated $162 million in revenue and accounted for just over 5% of the overall revenue.

Growth has been slow and erratic, and automotive revenue saw a sharp drop last quarter.

Chart showing NVIDIA automotive business growth.

Data Source: NVIDIA quarterly reports. Chart by Author.

At the same time, experts warn that it would be a long time before we get to see autonomous cars hit prime time, even though investments in the field have gone up rapidly. A third-party report estimates that investments in autonomous vehicles shot up to $60 billion in 2018 from $6 billion in 2015. But as developers ran into challenges that autonomous cars could face in real-world scenarios, deployment timelines were pushed back.

Edwin Olson, the CEO of May Mobility -- an autonomous driving start-up that recently raised an investment from Toyota -- estimates that it could take 16 years before self-driving cars become as good as humans.

So, assuming that NVIDIA's announcements at CES can drastically improve its automotive revenue won't be prudent. Instead, opening up its platform could help NVIDIA speed up the development of self-driving cars and encourage their mainstream adoption -- which is when investors can expect the company's automotive business to hit the jackpot.