The automotive industry is undergoing massive changes, and Mobileye is one of the foremost innovators causing the waves of disruption. As one of the first companies to develop software for ADAS and autonomous vehicles, Mobileye has quickly grown into a multibillion-dollar company. The organization sets the foundation for how automotive software companies can structure and monetize their business in this new autonomous industry.
For anyone considering entering the automotive technology market, it’s crucial to understand the strategy behind Mobileye and the successful decisions they’ve made that have catapulted them to one of the most valuable companies in the automotive industry today.
Phase 1: Creating a Revolutionary Automotive Software Solution
Continuing his academic research, the Founder of Mobileye took his idea from paper to reality by building the industry’s first perception algorithm that could work with inexpensive cameras to identify and classify objects on the roads. This was a critical step in developing and deploying the advanced driver assistance systems (ADAS) we see on vehicles today.
Mobileye was not only the first to come to the industry with a perception algorithm that could identify and automatically brake for objects, such as people, vehicles, and a tire on the road, but it came before the industry even knew it needed it.
Mobileye’s 2008 release of the EyeQ1 opened the automotive industry to using software and technology intelligence to create safer driving experiences. The company has set the foundation for popular ADAS features, such as automatic emergency braking, lane keeping, and traffic sign and speed limit recognition, that are becoming a standard on new vehicle designs.
Because Mobileye was so early in the game, it set the tone for how automotive tech and traditional automakers would work together. Until then, OEMs had only purchased hardware and weren’t sure how to incorporate automotive software into their supply chain. Mobileye took the lead by embedding its software onto semiconductors that it could sell to the OEMs and Tier-1 suppliers.
With this model, Mobileye grew from an estimated $400 million valuation in 2010 to a whopping $4 billion when it went public in 2014, with only six years on the market and roughly 150 employees.
Phase 2: Monetizing Data
At phase one, Mobileye was already a huge success. They were able to drastically grow their business, go public, and forever change the way we think of vehicle and driver safety. But they didn’t stop there. Mobileye disrupted the market again by establishing a business model that allowed them to monetize not just from selling their software but also to create an entirely new income stream from the data they produced.
To do this, Mobileye sold their product at a discount to the OEMs with a caveat that the automaker would allow Mobileye to collect and sell the data produced by the vehicles.
Mobileye harvested massive amounts of localized data from everyday passenger vehicles, such as landmarks, traffic patterns, road conditions, etc., and then encrypted that information and sold it to interested third parties, such as mapping companies and the Department of Transportation. In some cases, this information could be turned around and sold back to the car companies to assist with AV and ADAS design.
In this phase, Mobileye once again created a solution that no one knew they needed and was, therefore, able to set the terms in their favor and, once again, disrupt the market. This eventually led to a massive buyout from Intel in 2017, priced at $15.3 billion. In less than ten years on the market, Mobileye went from a lean start-up to a $15.3 billion company bought out by one of the most prominent names in the tech sector.
Phase 3: Going Public Again
Mobileye has now developed its product into a self-driving software stack system for autonomous vehicles. Mobileye has done this by embedding all its automotive software with all the necessary vehicle controls and combining it with a powerful Intel Artificial Intelligence chip. This can then be sold to car companies as an all-inclusive software stack that will turn their products into self-driving vehicles.
Smaller automakers, such as Nio and others that don’t have the scale, size, or expertise to develop their AV systems, are benefiting from this because it allows them to compete in a market with much larger automakers with significant customer scale.
With its technological evolution, Intel has realized that Mobileye is far more profitable on its own and plans for Mobileye to go public (again). The IPO, expected sometime by the end of this year, was initially estimated to enter the market at a value of $50-60 billion but has been reduced to about $16 billion due to current economic conditions. Still, despite the discounted opening rate, a $16 billion valuation makes Mobileye one of the most valuable companies in the auto industry.
