Mobileye Is Poised to Seal More Self-Driving Car Deals, Chairman Says

September 14, 2016, 6:39 PM UTC
Chairman of Israeli driving assistant software maker Mobileye NV, Amnon Shashua, poses for a photograph at his office in Jerusalem
Chairman of Israeli driving assistant software maker Mobileye NV, Amnon Shashua, poses for a photograph at his office in Jerusalem September 14, 2016. REUTERS/Ronen Zvulun - RTSNR61
Ronen Zvulun — Reuters

Mobileye, a leading supplier of collision-avoidance car sensor systems, expects to seal its second alliance with a leading carmaker for self-driving vehicles in the next few months, the company’s chairman said on Wednesday.

The Israel-based company clinched its first such deal with Germany’s BMW in July and expects to forge one or two similar alliances, Amnon Shashua, Mobileye’s chairman and chief technology officer, told Reuters.

Mobileye’s move into autonomous driving is aimed at ensuring that its lead in automated driver assistance systems — where it commands 70 percent of the market — will not be eclipsed as the race to introduce driverless cars unfolds.

The allure of the sector has drawn in Silicon Valley leviathans Google and Apple as well as carmakers, with Goldman Sachs having estimated that the market for advanced driver assistance systems and autonomous vehicles could grow to $96 billion in 2025 from only $3 billion last year.

Mobileye is also in the process of finalizing terms with Volkswagen on its first major map-making supply deal, setting the stage for follow-on agreements with other automakers and suppliers of high-resolution maps, such as HERE, TomTom and Zenrin, Shashua said.

The company had promised three big deals this year, with BMW the first to be unveiled in July, followed by August’s announcement of a technology partnership with top-tier automotive supplier Delphi Automotive.

Shashua said the third deal would also be a partnership with a leading carmaker.

‘Defining Moment’

“We can do another one or two to mitigate risk,” he said, referring to the company’s marquee partnerships to build autonomous driving systems.

Mobileye has leaped into the ranks of highly valued tech companies with a price to earnings ratio of 131. While comparable with other high-flying tech stocks, the p/e ratio is 10 times those of auto suppliers such as Delphi Automotive.

These Two Companies Are Teaming Up to Create a Self-Driving Car:

The company commands high net profit margins of around 50 percent and predictable revenue that it says should more than triple to $1.1 billion in 2019.

“This will be a defining moment, you will have here a significant partner in terms of size, buying into this process of crowd-sourced generation of maps,” Shashua said of its deal with VW.

Mobileye is also in talks with about 10 other carmakers over joining its Road Experience Management (REM) mapping product, Shashua said, seeking to turn REM into an industry standard in which data from millions of cars can be used to update road maps.

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It is already working with General Motors on technical aspects of using REM but will only begin to negotiate business terms of the relationship once it has nailed down the VW contract, which Shashua said would serve as a “boilerplate” for further deals.

“A lot is happening. The first strike is going to be announced with Volkswagen and from then, things will progress very, very quickly,” he said.

“Once that is signed, it won’t take long until we have many car manufacturers.”