Mobileye Is Ending Its Relationship With Tesla on Future Self-Driving Car Tech

Tesla Introduces Self-Driving Features With Software Upgrade
A member of the media test drives a Tesla Motors Inc. Model S car equipped with Autopilot in Palo Alto, California, U.S., on Wednesday, Oct. 14, 2015.
Photograph by Paul Morris—Bloomberg via Getty Images

4:30 p.m. ET Updated with statement from Tesla CEO Elon Musk

Seven months ago, Tesla CEO Elon Musk insisted that the all-electric automaker would continue to use Mobileye’s driver-assistance technology in its cars. The declaration was an effort to quash industry speculation and rumors that Tesla intended to ditch the software company for a product developed by hacker George Hotz.

Now that relationship is ending, although it’s not entirely clear who did the breaking up.

Mobileye has dominated its small, yet burgeoning, corner of the automotive industry. Its technology—vision chips and software that interprets data from a camera to anticipate possible collisions with cars, people, animals, and other objects—is used by nearly two dozen automakers, including Audi, BMW, General Motors (GM), Ford (F), and Tesla Motors (TSLA). The Israel-based company, which went public in August 2014, has a market cap of more than $10 billion.

Amnon Shashua, the co-founder, CTO, and chairman of Mobileye said on Tuesday that the company’s work with Tesla will not extend beyond EyeQ3, the third-generation processing platform used in Tesla’s Model S sedan and Model X SUV. The vision-on-a-chip system processes and analyzes images to enable vehicle and lane detection. It’s a critical component of Tesla’s semi-autonomous driving technology known as Autopilot, which uses radar, ultrasonics, GPS navigation, and cameras. Tesla’s Autopilot service is constantly learning thanks to machine learning algorithms, detailed mapping and sensor data, and the car’s wireless connection.

Moblieye will continue to work with Tesla to improve the performance of the EyeQ3, Amnon said, noting that this will include a significant upgrade of several functions that affect both the ability to respond to crash avoidance and optimize auto steering in the near term without any hardware updates.

A Tesla spokeswoman declined to comment on the partnership or discuss what tech the automaker planned to use in future cars. However, an unnamed source within Tesla told Fortune that the company plans to transition away from Mobileye and use its own internally developed software for the camera portion of Autopilot.

Musk has since sent a statement that gives some insight into why the agreement between the two companies is ending, a decision that he said was expected and will not have any material effect on its plans.

“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 said. “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.”

Hotz, who challenged Mobileye’s technology in a profile last year and has since launched his own self-driving car tech company called, said Tesla is making a “good move” by moving away from the company’s tech. He later added during an email exchange with Fortune, “If the internal stuff doesn’t work out so well, we are happy to license tech to Elon Musk for double. I like double.”

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Meanwhile, Mobileye appears more interested in working on next-generation products that will lead to fully autonomous vehicles.

“In our view, moving forward more advanced autonomy is a paradigm shift both in terms of function complexity and the need to ensure an extremely high level of safety,” Amnon said. “There is much at stake to Mobileye’s reputation and the industry at large.”

Amnon never mentions the May 7 crash that killed Joshua Brown, who was driving a Tesla equipped with Autopilot. But his comments about reputation were likely tied to that event or concerns of future incidents.

The National Highway Traffic Safety Administration opened an investigation into Autopilot to determine what role the advanced driver assistance technology may have played in the crash. Musk has said the company will not disable the semi-autonomous driving system, and will instead focus on educating customers how to use it.

People say Tesla is sending mixed messages about its Autopilot system. For more, watch:

Amnon went even further to distance his company from Tesla, noting that achieving this high level of safety requires deeper partnerships that go beyond the typical automaker-supplier relationship. His comments suggest that its relationship with Tesla did not. Amnon also said its business with Tesla was not material to Mobileye in terms of percentage of total revenue.

Instead, Amnon pointed to Mobileye’s recent collaboration with BMW and Intel. He said the company will continue to pursue similar relationships. Earlier in the call, Mobileye announced that its fifth generation processor, known as EYEQ5, would be used by Volvo in its DriveMe autonomous vehicle pilot program. Beginning next year, the automaker will make 100 XC90 self-driving model Volvos available to consumers around Gothenburg, Sweden for use in everyday driving conditions.

Last month, BMW, Intel, and Mobileye announced plans to produce self-driving cars for city streets by 2021 and develop the technology as an open platform that can be used other automakers or ride-sharing companies.

BMW’s iNEXT model, a next-generation flagship brand that the company plans to launch in five years, is at the heart of the partnership. Intel (INTC), the world’s largest chipmaker, will contribute its computing power with artificial intelligence and computer vision company. Mobileye will bring its advanced sensor tech into the car.

A BMW spokesman said its still committed to its partnership with Mobileye.

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