Significant progress in additive manufacturing (AM) technology — popularly known as 3D printing — has transformed the ways in which products are designed and manufactured. Over the past decade, 3D printing has seen a phenomenal rise in popularity and adoption, especially among capital-intensive industries.

The AM technology is being increasingly explored in the automotive industry. For a very long time, 3D printers were traditionally used in the auto industry for creating automotive prototypes. However, the range of 3D printing applications in the auto industry has been expanding over the past few years, thereby transforming the automotive market in fundamental ways. The usage of 3D printing technology in the auto industry has been resulting in newer designs, lighter products, shorter lead times and lower costs.

Automotive 3D Printing a Game Changer

3D printing technology is getting a stronger foothold in the auto industry, thanks to increasing demand for better-performing vehicles and the need for optimizing the production process and streamlining logistics. Automakers are fast accelerating the adoption of AM technology amid changing dynamics of the industry in order to stay innovative.

While the industry had been primarily using AM for rapid prototyping for decades, the technical trajectory of AM makes a strong case for deployment in end parts, product innovation and direct manufacturing. Auto biggies including General Motors GM, Ford F, Tesla TSLA and BMW AG BAMXF have begun to realize the commercial benefits of 3D printers in automotive manufacturing.

3D printing provides an economical solution to automakers and looks to provide an array of options to consumers. AM technology helps in manufacturing components with fewer design restrictions, offering flexibility while designing products with custom features. It aids in getting rid of the supply chain complexity by directly manufacturing the final parts and eliminating the need for new tooling, thereby  reducing the overall lead time and enhancing market responsiveness.

Increasing electrification efforts by automakers are likely to lead to widespread adoption of the AM technology in the auto industry. The electric vehicle (EV) industry is successfully leveraging 3D printing as it speeds up the development of vehicles. Also, generative design and the AM technology result in lighter parts for green vehicles. As we know, light-weight EVs are critical as they lead to lower energy consumption and superior driving range. Several EV projects are currently using the AM technology in production and development.

In this era of connected vehicles, the number of electronic devices like sensors and antennae within vehicles is rising. 3D printing for electronics is leading to efficient ways of creating smart components to network vehicles, gathering automotive data and resulting in cost efficiency.

With electric and driverless cars being the future of mobility, automakers are now on the cusp of revolutionary changes, which have been boosting the AM technology in the industry. As 3D printing is helping automakers gain flexibility in production and attain cost reduction and better car components, auto companies are increasingly undertaking collaborative projects as well as signing partnerships with 3D printing firms to industrialize the AM technology. Future applications of 3D printing in the auto industry depend on how largely the technology evolves over the coming years.

With automobile manufacturers using the AM technology to gain leverage in a cut-throat competitive market, investors should watch out for the 3D printing space, which is likely to witness massive growth in the coming years. Notably, most of the 3D printing stocks rallied yesterday after Tesla posted a job offer for its “rapidly growing Additive Manufacturing operations.” Prominent 3D printing players including 3D Systems DDD, ExOne Company, Stratasys, Materialise NV MTLS and Proto Labs PRLB gained 18.4%, 13.4%, 5.6%, 5.2% and 5.1%, respectively.

Below we have highlighted three stocks from the 3D printing space that you should retain in your portfolio for long-term growth. All the three stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 Stocks to Watch Out For

Proto Labs, Inc.: Minnesota-based Proto Labs is a technology-enabled, manufacturing service provider. The company uses traditional manufacturing techniques and 3D printing to develop plastic as well as metal prototypes. Its technology-enabled approach gives it the fastest turnaround speed in the industry. Such speedy services lend it a competitive advantage, and help customers manufacture at a brisk pace and introduce those in the markets more quickly. The Zacks Consensus Estimate for its fiscal 2021 earnings indicates year-over-year growth of more than 8%.

Materialise NV:  Belgian-based Materialise offers 3D printing software and on-demand 3D printing services. Wilfried Vancraen, who holds quite a few patents related to the technical and medical applications of 3D printing, is the owner and founder of the company. This is encouraging as various studies show that stocks tend to do well, especially if the company is being managed by the owner. The Zacks Consensus Estimate for its fiscal 2021 earnings suggests year-over-year growth of more than 188%.

3D Systems Corporation: Headquartered in South Carolina, this company is focusing on strategic initiatives like improvement of the existing 3D printers, strengthening partnerships and enhancing productivity to drive growth. 3D Systems has been making acquisitions to diversify offerings, add synergistic technology and expand its domain expertise in operating markets. The Zacks Consensus Estimate for its fiscal 2021 earnings implies year-over-year growth of 154.8%. It has a long-term expected EPS growth of 26%.

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