From an Israeli perspective, the 2017 annual CES consumer electronics products exhibition in Las Vegas provided insights about the global status of Israeli high-tech companies in the smart vehicle sector. Research on the subject is well known. Everyone is familiar with the names and numbers behind the financing rounds and exits. The CES exhibition, however, gave us a deeper look at the auto industry's strategic roadmap for the next 10-15 years. Not only are Israeli companies present on this roadmap; they are drawing it.
10-year visibility
The best portrayal was in Mobileye(NYSE: MBLY) chairman Prof. Amnon Shashua's annual review of the smart car market. This review, which has become a tradition at CES, is now attracting as much attention as the iconic lectures by Bill Gates and the late Steve Jobs, who used to open the exhibition. Mobileye currently fulfills a unique role as a "super-supplier" in the auto industry. It provides products and technologies to 25 strategic customers, among them most of the major auto manufacturers and important auto components suppliers.
Mobileye's sensors are already installed in millions of the latest vehicles on the road, and hundreds of thousands more are rolling off the production lines daily. According to Shashua's review, the company sold 4.5 million chips in 2016 alone, and won 16 new "plans" in that year - auto industry jargon for a development project for future vehicle models. These "plans" are likely to materialize by 2026. This presence gives the company 10 years of visibility ahead. The auto industry is slated to put six new auto models on the global market with Mobileye's systems just in 2017. One of these, apparently the new Audi A8, which will be launched in the summer, will be equipped for the first time with a very advanced degree of autonomy, called "Stage 3." This includes sensors scanning 360 degrees around the vehicle, and makes it possible to allow the computer to drive the car on a high-speed road. Switching control to the driver when necessary is not immediate; there is a 10-second delay during which the computer still controls the vehicle. These figures are now giving Mobileye a lead of several years on its competitors, including giant chip companies with deep pockets scurrying to enter the sector. The figures are also probably reflected in the company share, which is currently traded at a 45 profit multiple.
Mobileye in the wake of Waze and Google?
It seems, however, that this is not enough for Mobileye. The company is now striking out in new directions with the aim of leveraging its standing in the industry, while at the same time overcoming one of the main stumbling blocks in the way of realizing the vision of a fully autonomous vehicle - the need for very precise 3D mapping of the world's roads accurate to within a few centimeters, so that the autonomous systems in the car will be able to locate themselves in space and plan their progress in advance.
The "traditional" ways of attaining such mapping at a high resolution are expensive, slow, and complex by any standard. One prominent example is Google's method for sending manned cars equipped with laser radar to map the roads. Such methods also find it difficult to provide a solution for the critical need for continuously updating the "map" in real time, so that the changes constantly taking place in the roads and in the objects next to them appear on the map. Mobileye's solution involves the use of crowd sourcing technology - producing frontal information about the roads from millions of sensors already installed and the tens of millions to be installed in vehicles by the company. These data will be transmitted through a communications component to a "cloud," and will be processed for the purpose of creating a high-resolution 3D digital map, the precision of which is derived from the vehicle's repeated travel on the same routes, among other things.
The problem is that applying the idea depends on extensive cooperation from the auto industry. The temptation for the auto manufacturers is a substantial saving on costs and time in the mapping process, but there are now quite a few hostile auto manufacturers not eager to share internal information from "their" vehicles with the competitors. Judging by the annual CES review, it looks like Mobileye's status as an "independent intermediary of the auto industry" is enabling the company to make progress towards this almost utopian vision. Mobileye has obtained the consent of auto manufacturers for "mining" mapping data from two million vehicles equipped with its sensors. According to Shashua, "very advanced" contacts are now taking place to establish a consortium of the entire auto industry for the production of the critical mapping data. Shashua described the matter as "joining forces to solve a common problem," and was careful not to insert Mobileye's own interest into the equation. Between the lines, however, it is clear that such a "global mapping vision," if it pans out, has exciting business significance. It is possible to imagine spinning off a mapping subsidiary combining Waze's idea of producing and processing data from millions of drivers on the roads, but frontally through Mobileye's "hostage" sensors.
Will Mobileye challenge Google? Shashua quickly said that there is no such intention, but there is no doubt that the mass-based mapping action can in the future create multi-billion dollar added value for the company, and perhaps put in motion comprehensive social and transportation changes. If you like, you can imagine a future federal law requiring companies to disclose to the government frontal information from tens of millions of vehicles on the roads for the purpose of producing information about traffic accidents and safety management, in a utopian vision, or for attaining "security" goals in the dystopian case.
The joke is at our expense
From a narrow Israeli perspective, the depressing part of Shashua's CES review is the comical aspect. In his lecture, the Mobileye CEO commented on another key stumbling block, the "Achilles heel," as he put it, that is delaying the development of a fully autonomous vehicle. This involves the adoption of a "driving policy," in other words, how to program the autonomous car's "brain" to response properly to innumerable dangerous and unexpected scenarios in driving on the roads resulting from faulty and unpredictable behavior by human drivers. To highlight this problem, Shashua elected to screen video clips filmed with transportation cameras on several roads in Jerusalem on which he travels to work.
"Driving in Israel," he told the audience in Las Vegas, "isn't like driving in Boston. The laws are different," he joked. The films showed "Israeli" situations very familiar to us, in which drivers drive across two or three lanes, disobey the traffic laws, do not yield the right of way, and jeopardize their surroundings. In short, a nightmare for anyone planning to put an autonomous vehicle in the traffic of manned vehicles. As expected, the audience responded with an embarrassed burst of laughter of the kind accompanying a viewing on YouTube of films of uncontrolled drivers running amuck. Someone having to deal with this situation on a daily basis, however, understands that the joke is at our expense. Who knows - maybe our chaotic road reality will produce a global safety solution.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 9, 2017
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