Mobileye ends partnership with Tesla as it turns to fully autonomous driving

Thinking Highways
By Thinking Highways July 27, 2016 18:04

Mobileye ends partnership with Tesla as it turns to fully autonomous driving


Shares of Mobileye, a self-driving car technology company, tanked Tuesday morning, after the company said it would no longer be working with Tesla Motors Inc.

Mobileye MBLY, +4.72% was the provider of EyeQ3 technology used in the autopilot feature in Tesla cars, which was recently under scrutiny after a fatal crash. But the company said it would not provide any further products. Instead, Mobileye will focus on technology for fully autonomous vehicles, which it called the “turning point” in the auto industry.

Mobileye announced a partnership earlier this month with Intel Corp. INTC, -1.03%and BMW to get fully autonomous cars on the road by 2021. The company said it is also in the final stages of signing a definitive contract with Volkswagen AGVOW, +2.26% VLKAY, +2.42% to provide its road experience management technology, which provides real-time data to help anticipate collisions and obstacles.

A Tesla TSLA, -0.33% driver, using the autopilot feature, suffered a fatal crash recently On the earnings call, Amnon Shashua, chief technology officer of Mobileye, alluded to the crash and said statements Mobileye made at the time, about how collision avoidance technology was not designed to handle a lateral crash, provide some “color” for the termination of the relationship.

“I think in a partnership, we need to be there on all aspects of how the technology is being used, and not simply providing technology,” Shashua said, according to a transcript provided by FactSet.

Elon Musk, chief executive of Tesla, said in an emailed statement to MarketWatch that the dissolution of the partnership was “expected” and will not affect Tesla’s plans to build a fully self-driving car.

“MobilEye’s ability to evolve its technology is unfortunately negatively affected by having to support hundreds of models from legacy auto companies, resulting in a very high engineering drag coefficient,” Musk wrote in a statement. “Tesla is laser-focused on achieving full self-driving capability on one integrated platform with an order of magnitude greater safety than the average manually driven car.”

Executives declined to comment on whether Tesla would replace Mobileye’s product with another or on which company ended the relationship.

“With respect to Tesla, we made a statement. I don’t want to put too much color into it. I don’t want to open the floor to it,” Shashua said.

Executives also declined to comment on how much of Mobileye’s revenue came from the Tesla relationship, but said it was “not material to the financial results.” Mobileye expects EyeQ3 shipments to continue in the “near future” and possibly “the longer future.”

The company will provide support for the EyeQ3 product and make “significant” updates to it, but won’t develop future technology. In addition to the BMW-Intel partnership, executives are expecting two more partnerships for fully autonomous vehicles will be announced near the end of the year.

Shares of Mobileye bounced off their worst premarket levels but were still down 8% later Tuesday. Tesla shares were down less than 1%. Mobileye saw a brief boost in shares earlier Tuesday, when the company reported second-quarter earnings and beat expectations.

As for other partnerships, Shashua dismissed the aspirations of ride-hailing companies to develop an autonomous network, suggesting that it will be developed instead by the car manufacturers.

“We’re not involved in discussions with shared mobility companies because we believe that most of the car manufacturers would become mobility compan[ies]. So, there will be nothing special about Lyft and Uber and Gett in the longer term,” Shashua said.

Read also: The complicated web of companies that will determine the future of cars

But when asked if Mobileye and Tesla could collaborate again, Shashua said he is not ruling anything out.

“I think it was Henry Kissinger that said, we have no friends, no enemies, only interests. Nothing is fixed. If in the future, things will change, we’ll change our decision,” he said.

Thinking Highways
By Thinking Highways July 27, 2016 18:04