Mobileye NV Chairman Amnon Shashua didn’t mince words when a group of Michigan CEOs dropped by headquarters in Jerusalem 16 months ago: Silicon Valley, he said, is “not interested in automotive.”
It sure is now. Intel Corp. said Monday it will acquire the Israeli maker of digital automotive cameras and sensors for $15.3 billion. The move is validation by one of the valley’s heaviest heavyweights that the battle for autonomous driving will be waged with data collected under the metaphorical hood.
The global auto industry and its high-tech rivals are scrambling for leadership in the emerging mobility sector of car-sharing, self-driving cars and everything in between — and Intel’s move is a sign that the pace is quickening. At stake are positions in the $70 billion vehicle systems space and a worldwide transportation services business Ford Motor Co. pegs at $10 trillion annually.
“Many of you have asked why we think autonomous cars and vehicles are so important to Intel’s future,” CEO Brian Krzanich wrote to Intel employees Monday. “The answer is data. At four terabytes of data per day, the average autonomous car will put out the data equivalent of approximately 3,000 people.
“Put just one million autonomous vehicles on the road and you have the data equivalent of half the world’s population. The addition of Mobileye to our family provides the data path to our computing solutions becoming the intelligent set of eyes that will allow a vehicle to see and define the world around it.”
Mobileye and Intel already partner with Delphi Automotive PLC on a self-driving car system the three showcased in January at the CES electronics show in Las Vegas. Mobileye’s digital vision systems are the eyes transmitting the contours of the outside world to Intel processors, which then issue commands to drive the car.
In a note to investors, Wells Fargo Securities LLC called the Intel-Mobileye tie-up a “positive” for the three-way partnership and said it means the “autonomous drive platform can accelerate.” Emphasis on accelerate, an apt metaphor for the mobility fervor sweeping the auto and tech industries.
While President Donald Trump and his economic nationalist message cast attention on the auto industry’s traditional decision-making on plant investments, product allocation and blue-collar job creation — notes the president is likely to hit when he comes to Michigan on Wednesday — the real action in the industry continues to be in mobility.
It commands increasing amounts of attention from auto industry CEOs, even as a new White House and near-record sales focus interest on the cars, pickups and SUVs that still account for all their automotive revenue and profits. And the mobility craze is proving Mobileye’s Shashua wrong: Silicon Valley is very interested in next-generation automotive because that’s where growth and profits are.
More, leaders in both industries have tempered their historic arrogance and come to understand that neither has the technical capability to master mobility without the other. That’s why Google’s Waymo is partnering with Fiat Chrysler Automobiles NV on self-driving vans. It’s also why Apple for now is scaling back its autonomous car ambitions; getting there ain’t easy.
Intel’s move is a simultaneous play for two trends animating deal-making in mobility: the bids for capability and scale. Same for General Motors Co.’s acquisition of Cruise Automation, its investment in Lyft Technologies Inc. and its creation of the Maven car-sharing brand; to get capability and scale, mobility players are buying it or leveraging what they already own.
What Intel’s move likely is not is the beginning of a tech industry roll-up of the auto supply space. Too many of the industry’s largest suppliers still produce low-margin commodity products for today’s car and truck business, hardly the high-margin whiz-bang gadgetry that makes a “pure play” acquisition like Mobileye so attractive to Intel.
The same logic holds for automakers. The “haves” like GM, Ford, Toyota Motor Corp. and Germany’s Big Three are investing in mobility to grow their business, to answer rising demands from China and the European Union to deliver emissions-free mobility solutions in crowded cities, to fatten profit margins and reduce capital investment in traditional manufacturing.
Think of it this way: California-based Intel gets the techy present and future of the next-generation auto industry without the past burdens of Old Auto baggage. The biggest beneficiaries of any trend signified by the Intel-Mobileye deal are likely to be tech startups whose expertise can strengthen the pushes for integration and scale.
The biggest players in both industries — from GM, Ford and Toyota to Intel, Apple and Google — are in what appears to be a continual hunt for capability that can bolster their chances to emerge as major players in a space that accounts for little, if any, revenue and profit. Outside of the car- and ride-sharing businesses, mobility is an if-come play.
But it’s real. And the surest way to know is to follow the money going after the technologies most likely to make it happen.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.