Mobileye breaks ties with Tesla to focus on other autonomous initiatives

Shares in machine learning company Mobileye have fallen by 8% following the announcement it will be breaking ties with automotive innovator Tesla.

Tesla is widely recognized as one of the world’s most innovative organizations, leading the charge towards electric cars, and more recently autonomous driving. To date, Mobileye has been supplying cameras and technology for Tesla’s Model S sedans, including machine learning functionality for its autopilot product plans, a critical aspect of the project.

“We are continuing to support existing product including even significant software upgrades but moving forward to full autonomy level 3, level 4 autonomy, we think that that’s not in the interest of Mobileye to continue with Tesla in that area,” said Amnon Shashua, CTO at Mobileye.

The progress towards autonomous vehicles is graded by levels, with most vehicles currently on the road fitting into either level’s one or two. The concept of autonomous vehicles starts to creep into the equation during level three, where the amount of attention required by a driver is minimized. According to the National Highway Traffic Safety Administration (NHTSA), once a vehicle reaches level four, a driver would have to enter the destination, but the vehicle performs all safety-critical functions for the entire trip. As this vehicle would control all functions from start to stop, including all parking functions, it could include unoccupied cars.

Although Mobileye shares fell following the announcement, the team are confident it will rebound. One analyst speculated during the quarterly earnings call Tesla accounted for 1% of the company’s annual sales, though CFO Ofer Maharshak could not be tempted into confirming the figure, simply stating it had not been officially released, though the sales do not have a material impact on the annual sales of Mobileye.

Although not specifically confirmed on the call, it would appear Mobileye is not satisfied with the supplier-relationship which it currently has with Tesla, instead preferring initiatives where the team has ownership (or at least part ownership) of the project. Working with OEMs such as Tesla is a good start for the team, though it now wants to bring in a more diverse of technology players to accelerate the advancement of the autonomous vehicle. Earlier this month, Mobileye confirmed it had entered into a new partnership with BMW and Intel, seemingly an example of blending machine learning, OEM and other technology partners.

“Mobileye’s work with Tesla will not extend beyond EyeQ3,” said Shashua. “We continue to support and maintain the current Tesla Autopilot product plans. This includes the significant upgrade of several functions that affect both our ability to respond to crash avoidance and to optimize auto-steering in the near-term without any hardware updates.

“Mobileye believes that achieving this objective requires partnerships that go beyond the typical OEM supplier relationship, such as our recently announced collaboration with BMW and Intel. Mobileye will continue to pursue similar such relationships.”

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Mobileye has stated it is working with 13 OEMs, a number of which are using Mobileye REM’s technology, which provides real-time data for localization and high-definition lane data that forms an important layer of information to support fully autonomous driving. The technology is based on software running on Mobileye’s EyeQ processing platforms that extracts landmarks and roadway information at low bandwidths, approximately 10kb per kilometre of driving.

While Tesla is recognized as one of the world’s most innovative brands, it has been under pressure recently following the death of a test-driver earlier this month. The incident was the first reported death involved with a self-driving car.

Although partnerships within the technology world are numerous and replaceable, it would appear investors are not pleased with the news. Dumping one of the world’s most innovative companies resulted in a slide of 8% on Mobileye share price, though playing a more assertive role in the development of autonomous vehicles, such as the relationship with BMW and Intel, could see the machine learning company move out of the supplier bracket, which may have limited the potential of the team in the long-run.