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Mobileye’s Revenge

Mobileye’s Revenge
by Roger C. Lanctot on 03-25-2017 at 7:00 am

 Tesla Motors CEO Elon Musk has famously dismissed hydrogen fuel (“fool”) cells and LiDAR and even parted company with Mobileye over automated driving strategy. Now it appears that Mobileye has gotten a measure of revenge with broad implications for the automotive industry, Tesla Motors and automated driving.

Mobileye’s revenge has come in Tesla’s delivery of a new version of its Autopilot software – referred to as Autopilot 2.0 or AP2 – that appears to be inferior to the original autopilot which created a sensation upon its release more than a year ago. The original autopilot software – though released with warnings that it was a beta and that drivers had to remain attentive and that it should only be used for highway driving – led to the creation of multiple Youtube videos of owner drivers sleeping at the wheel, climbing into the back seat or using the system on surburban or even city streets.

Even though at least one driver was killed while using the system, there was broad recognition and acceptance that autopilot 1.0 was truly an exceptional system capable of performing beyond its promised capabilities. Around the time of the fatal crash in Florida, Mobileye and Musk parted company – which some attributed to the crash and Musk’s apparent reckless marketing choices.

Whether Musk was motivated by animus to Mobileye’s own architectural and algorithmic decisions or whether Mobileye preferred to disassociate itself from Musk’s reckless ways was never made clear at the time or since. Nevertheless, Musk forged forward with an update to the original autopilot – the aforementioned AP2 – which appears to have diminished the cleverness of the original feature.

A video shared online by the New York Daily News captures the apparently addled autopilot 2.0 in action – repeatedly veering to the left across a double yellow line and into the path of oncoming traffic. All indications are that Mobileye is no longer a part of Tesla’s autopilot plans with what might be catastrophic results.

http://tinyurl.com/zjq3vmo – Video: Tesla Model S on Autopilot 2.0 Struggles to Stay on Course

My colleague, Industry Analyst Angelos Lakrintis, notes that there were rumors that Tesla was using a Mobileye chip in combination with an Nvidia Drive PX platform for its original autopilot system. The expectation is that the Nvidia platform remains in place but that the Mobileye content is gone replaced by a mystery processor and algorithm.

Savvy Tesla owners have avoided updating their autopilot systems in order to preserve their access to the superior performance of the original system. Tesla finds itself in the position of Microsoft and Apple which have both, at various times, introduced operating system updates that consumers have refused to download and install.

This creates a scenario whereby Tesla, the global market leader in implementing over-the-air software updates to its vehicles must now find a way to either pay its customers to download and install the software updates, coax them with attractive value propositions to be delivered by those updates, or scare them that their vehicles, their warranties or their lives are in danger if they do not allow the updates. Tesla’s software management strategy, a key competitive advantage, has suddenly been undermined by a dispute with a supplier.

To add insult to injury, Intel has now offered to purchase Mobileye for about $15B. The acquisition guarantees that Tesla will be confronting Mobileye’s outsized presence in the market for the foreseeable future as the two companies vie for automated driving leadership.

The importance of that automated driving leadership was made more clear recently when an insurance company, for the first time, created a discount intended to reward Tesla drivers who use autopilot. Root insurance is making the following proposition:

How does the Tesla® Autopilot discount work?


  • During the test drive, Root’s app measures Autosteer-eligible highway miles.
  • We apply a tiered discount—above and beyond any good driver discount you’ve already earned! The higher the percent of highway miles driven, the higher the discount.
  • Good drivers of Tesla cars save a lot of $$$ with Root!

    More details: https://blog.joinroot.com/tesladiscount/

    Root is not alone. At least one other insurer is pondering a similar offer. Both offers promise to fundamentally alter the interaction between vehicle technology and insurance.

    Root’s offer appears to fall in line with Tesla’s own estimates showing fewer crashes occurring when autopilot is engaged. Of course, Tesla’s data, created in connection with the investigation of the Florida crash by the National Highway Traffic Safety Administration, may have been focused on the use of autopilot 1.0. We don’t know for sure.

    Tesla’s tinkering with autopilot may ultimately jeopardize the first advanced driver assistance system-based insurance discount related to cruise control. For now, the Root offer is a huge endorsement of Musk’s marketing acumen.

    As much as I admire Tesla for its technology and temerity, alienating Mobileye – which is also aligned with HERE and a variety of other strategic partners – forces Tesla into the arms of Nvidia for the short-term – even as it hedges its bets by flirting with Samsung. We may never know precisely what was behind the parting of ways between Tesla and Mobileye, but by now it is clear that Mobileye has landed the first blow in the form of diminished Tesla autopilot performance and its acquisition by Intel. But with the gloves now on the ice, the battle is on. One can only hope that somehow, some way, the consumer is the winner and not the victim in the end.

    Roger C. Lanctot is Associate Director in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here:https://www.strategyanalytics.com/access-services/automotive#.VuGdXfkrKUk

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