In the past couple of years, the autonomous vehicle has disappeared from the public agenda in Israel, and it seemed as though investors too had started to lose interest. In 2018-2019, the Israeli autotech industry raised capital of over $2 billion; by 2022 this dwindled to a trickle of less than $150 million (excluding the flotation of Mobileye).
Quietly though, behind the scenes, Israel is still a leading global player in this field. Local companies that have accumulated a reasonable amount of cash, have real-world products in hand, and a concrete business plan, are now winning decent contracts from auto industry giants, and at the annual CES show that opened last week in Las Vegas it was evident that they are not stagnating.
A long way to a driverless car
The center of the autotech industry’s interest at CES was Mobileye, whose successful flotation when the stock market was at a low was a light in the darkness for the capital market in general. The company, which was floated at a valuation of $16 billion, now has a market cap of some $25 billion, and if the remarks of company CEO Amnon Shashua are to be believed it can be expected to unlock considerable value in the future.
Mobileye has 80% of the global ADAS (advanced driver assistance system) market, covering automatic braking, smart cruise control, steering control, and so forth. The company sees revenue of $17 billion from ADAS by the end of the decade, and it announced that it had won hundreds of new contracts for installing systems of this kind in future vehicle models.
Mobileye’s management knows very well, however, that in order to justify a serious p/e ratio and "dream value" on Nasdaq, they have to sell to investors plans for creating new sources of revenue. There were several of these in Shashua’s presentation, which mainly focused on strategy.
Mobileye’s CEO opened his remarks with what he called "the pendulum of public opinion" on the autonomous vehicle. In the past four years, that pendulum has swung from enthusiasm and expectations of an autonomous vehicle just around the corner, to loss of public interest in the autonomy vision.
According to the roadmap set out by Mobileye at CES, the next stage along the way to automating private cars is "eyes on, hands off" systems. In other words, systems that remove from the driver most of the physical task of driving, but still require him or her to be in charge and to intervene as necessary, aided by systems for monitoring the driver.
Shashua added that Mobileye’s SuperVision system can already provide these capabilities, on the basis of eleven peripheral cameras. The system is already installed on vehicles of Chinese group Geely, and contracts have been signed for supplying it by 2026 for nine future models of six other automakers around the world. According to Shashua, the profit margin on these systems is significantly higher than on simpler ADAS products.
The next stage, which will start within about three years, will be upgraded versions of this system, with the addition of imaging sensors based on radar and lasers (LiDAR), alongside upgraded processing hardware and software, advanced mapping, and so on, facilitating driving without hands on the wheel and without eyes on the road. Mobileye is developing the radar and laser ensemble itself independently.
Mobileye calls the next generation system "Chauffeur", and claims that it will be more reliable and make fewer mistakes than human drivers. Its selling proposition is that it offers people free time in their cars without having to bother about driving. This will happen close to 2026.
The final stage will be driving with no driver in the car at all, although remote control technology will be needed.
Expectations of autonomous taxis declining
What about the great promise of robo-taxis that can transport people commercially without drivers? Only three years ago, Mobileye presented its robotic taxi as "the next big thing". Mobileye’s parent company Intel even acquired Moovit for about $1 billion with the aim of offering smart shared-transport services.
The presentation at CES, however, gave the impression that Shashua’s current approach to this area is much cooler and more sober, as it should be at a listed company measured by its bottom line. "The challenge for autonomous taxis today is not the technology, but building a profitable business that won’t incur losses," he said.
Shashua said that Mobileye had no intention of becoming a transportation services provider, but only of working in partnership with manufacturers of platforms and shuttles for autonomous taxis, and with end operators who are supposed to generate the demand for such platforms. Mobileye expects contracts in connection with autonomous taxis to generate revenue of $3.5 billion between 2025 and 2028, which is a fairly modest amount.
Israeli autotech companies in their sights?
As mentioned, Mobileye is independently developing laser and radar sensors for high-level autonomous vehicles, and prototypes of these devices were displayed at CES. It will take a long time, however, before they are ready for mass production; around two to three years for the laser unit, and three to four years for the radar chip, and in any event they will probably be expensive, high-end components.
Which brings us to two other honorable representatives of the Israeli autotech sector on Nasdaq, Innoviz Technologies and Arbe Robotics, both of which exhibited breakthroughs at CES.
Innoviz presented a spinning LiDAR unit that can scan the vehicle’s environment through 360 degrees at a range of up to 300 meters. This solution will be several orders of magnitude smaller and cheaper than existing 360 degree solutions, and it already has a respectable customer base in the global auto industry, including authorized supplier status to the Volkswagen group.
Arbe also exhibited an advanced radar system that perceives the vehicle environment in four dimensions and through 360 degrees. It is one of the first solutions of its kind. The company has a customer base in Asia.
These two companies have something else in common besides being Israeli and capable of offering immediate solutions that advance the global market - both are currently traded a rock bottom prices after sharp declines since they went public. Arbe has a market cap of $221 million and Innoviz $560 million.
Will Mobileye take a short cut to the goals it presented through acquisitions of Israeli companies at bargain prices? That would involve giving up a great deal of ego on Mobileye’s part, but I wouldn’t rule it out.
Published by Globes, Israel business news - en.globes.co.il - on January 9, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.