2026 will be the year autonomous vehicles make it into the limelight. So far, the race has been between Tesla Inc. (TSLA) and Alphabet Inc.’s (GOOGL) Waymo. But technology provider Kodiak AI Inc. (KDK) may be the best way to play the trend, counsels Eoin Treacy, editor of Fuller Treacy Money.
Tesla’s approach is to use cameras to “see” where the car is going and react accordingly. Waymo uses cameras, LiDar, and detailed mapping to navigate.
In the early days of the race, Tesla’s on-highway autonomous driving was much more impressive. Today, Waymo is driving around cities and beginning to drive on highways. It is also operating a true autonomous taxi service while Tesla is playing catchup. There are also reports that Waymo’s cars are beginning to operate more like regular drivers. They are taking more risks, which suggests the AI is learning to react to real-world scenarios.
So, why 2026? The Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) are set to propose new rules in the spring of 2026. These will update decades-old Federal Motor Vehicle Safety Standards (FMVSS). The aim of these changes is to create uniform rules so autonomous vehicles can roam between cities and states without needing to adjust to local differences.
These changes could also relax mandates designed for human-driven cars, such as requirements for windshield wipers, gear shift sticks, and defrosting buttons in vehicles that lack manual controls. A company could be able to put 2,500 such vehicles on the road a year without needing to get additional permissions. There is potential for future legislation to significantly increase that number.
The AI trend of the last three years has focused almost exclusively on large language models. Autonomous driving is also part of the wider AI theme, but is running on totally different models. All of the computing power is carried inside the vehicles. There is no need for large data centers and that means there is a clear business case for companies supplying components to the automotive sector.
Kodiak AI has nothing to do with the Kodiak selling waffle mix. This is a Silicon Valley-based company selling modular sensor pods that attach to conventional trucks. The SensorPads that attach to big rig trucks, military vehicles, and pickups contain LiDar, radar, and cameras. They turn any vehicle into an autonomous rig. The design is meant to be easy to install and customizable.
Kodiak AI’s technology tied for first place in the Visually Enhanced Risk Assessment score (VERA Score®) at 98. That was competing with human-driven trucks. The haulage sector is ripe for disruption and Kodiak AI is leading the field. It is one to watch in 2026.
Recommended Action: Buy KDK.
