Car Industry

Dear Elon: Mobileye breaks up with Tesla

Mobileye's investors are not taking it well, sending the stock down after the news broke.

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Elon Musk, chairman, CEO and product architect of Tesla Motors.

Tesla's declining to comment means the company was likely as blindsided by this as anyone else.

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Well, this is awkward. Not terribly long after Tesla and Mobileye, one of its suppliers, disagreed on a fatal accident, it appears the two companies are moving in different directions. Tesla's not talking about it, but Mobileye's comments appear pretty darn salty.

During its quarterly earnings call, Mobileye stressed a strong desire for safety and reputation management as the industry moves forward on autonomy. Bloomberg quotes Mobileye's CTO as saying that it's not in Mobileye's best interest to move forward with Tesla.

Thus, the company will no longer supply components to the electric automaker after its EyeQ3 system. While Mobileye will continue to update and provide support for its current partnership with Tesla, it won't be developing successors and contracts will not be extended. While it did send the stock price down after the news broke, Mobileye claims Tesla represents a "not material" contribution to the company's bottom line. Salty, right?

Elon Musk himself issued a statement regarding the matter: "This was expected and will not have any material effect on our 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. 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."

Tesla isn't building all of its parts by itself. It relies on Mobileye to provide chips, software and other parts of its semi-autonomous Autopilot system. Of course, Tesla continues to in-house parts of its vehicle development, and it could very well make moves to develop its own systems for use in future Autopilot iterations.

It appears Mobileye will instead focus its efforts on full autonomy. The company recently partnered with BMW and Intel in an attempt to get autonomous cars on roads by 2021.

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