As Intel Acquires Mobileye For $15 Billion: Is Tesla Vision Worth Even More?

8 months ago by EVANNEX 11

Tesla

Tesla Autopilot 2.0

IF MOBILEYE IS WORTH $15 BILLION, WHAT IS TESLA VISION WORTH?

During times of rapid technological and social change, the future is devilishly hard to predict. The big movers and shakers may have a clearer picture of what’s to come than we mere mortals do (well, not always), but they generally prefer to keep their insights to themselves. However, an acquisition is a matter of public record, and it often provides valuable clues, if not to what’s going to happen, at least to what the men (and a few women) in the corner offices think is going to happen.

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

Intel’s $15 billion acquisition of Mobileye, an Israeli provider of autonomous driving technology, tells us (at least) three interesting things. The first is common knowledge: self-driving tech is expected to be huge, and companies are busily investing money and R&D efforts to position themselves as players.

The second point, also obvious to observers in the tech world if not to the popular press, is that automotive OEMs will not be the only players, and perhaps not even the dominant players, at the table. At the heart of autonomous systems are software and specialized hardware, which are not the forte of automakers, but rather of companies like Intel. CEO Brian Krzanich wrote to his employees that the Mobileye acquisition will give Intel the “entire package” of autonomy hardware: “This acquisition essentially merges the intelligent eyes [Mobileye’s sensors] of the autonomous car with the intelligent brain [Intel’s chips] that actually drives the car.” We know that other tech giants, including Apple and Google, are also gearing up for the game – we may see evidence of their progress in the near future.

A look at some other recent deals in the self-driving space (Image: Wall Street Journal)

The third interesting thing about this acquisition is what it implies about Tesla’s market value. The fact that a company that consistently posts losses has a larger market capitalization than much older, much larger companies that produce many more cars has long perplexed stock market analysts, especially those who still see Tesla as an automaker instead of a technology company.

The $15-billion price Intel just paid for Mobileye is approximately 30 times the firm’s projected annual revenue. On the other hand, the stock market values “overhyped” Tesla at somewhere around $40 billion, only four times projected annual revenue (as reported by Electrek). This seems rather odd when you consider that (to use a crass metaphor) Intel is marrying a girl that Tesla broke up with.

Above: Behind the Intel + Mobileye deal (Youtube: Wall Street Journal)

Mobileye sells its system, which includes cameras, sensors and the EyeQ3 chip, to several major automakers, and until recently, that included Tesla. However, last August, the companies announced that they would part ways once their current contract ended. The split got a bit ugly – Mobileye claimed that it had concerns about safety following the tragic fatal crash of an Autopilot-equipped Model S; Tesla said that Mobileye turned salty after learning that Tesla was working on its own autonomy hardware.

Whatever the issues that led to the breakup may be, they’re in the past, and Tesla’s new system is now on the job. When it introduced Autopilot 2.0, Tesla replaced Mobileye’s hardware with its own sensor system called Tesla Vision, which is powered by Nvidia’s Drive PX2 computer. Elon Musk has said that Tesla Vision will be hardware-agnostic, and capable of being upgraded with a more powerful computer. It could also theoretically be packaged and licensed to other automakers.

Tesla

Tesla Autopilot

It’s rumored that Tesla is even working on its own custom chipset. Last year it hired renowned chip architect Jim Keller for the new position of Vice President of Autopilot Hardware Engineering, as well as other expert chipsters from companies such as AMD, Apple and Nvidia. It’s also been reported that Tesla signed a contract with Samsung to build a System on Chip (SoC).

While all new Tesla vehicles contain the necessary hardware for Autopilot 2.0, according to Electrek, Tesla’s image processing is currently “not on par with Mobileye’s, based on a simple comparison of the features it enables in Tesla’s second generation Autopilot versus the first generation.” Of course, regular software updates are steadily improving the system’s capabilities. Tesla’s own predicted timeline puts it far ahead of Intel, or any other player in the game. Intel CEO Brian Krzanich says that he expects full level 5 self-driving capability to be available by 2024. Musk has promised to demonstrate a driverless drive from Los Angeles to New York by the end of this year.

Whether Tesla will succeed in meeting its ambitious goals is a topic that’s hotly debated everywhere from Detroit to Wall Street to a vast network of online forums. But here’s the point: if Tesla has, or soon will have, a system that’s at least as good as the one Intel just bought for 15 big ones, then one could make a very good case that TSLA stock is not overhyped, but in fact substantially undervalued.

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Source: Electrek

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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11 responses to "As Intel Acquires Mobileye For $15 Billion: Is Tesla Vision Worth Even More?"

  1. jamcl3 says:

    Probably true. And in my view, autonomous driving is little more than a distraction to throw the competition off of the most valuable goal, which is zero local emissions driving.

  2. SJC says:

    I assume Tesla is working with Nvidia who have a vision platform development set. Ford and GM seem to be in the lead, it takes deep pockets and lots of resources for this.

  3. Pushmi-Pullyu says:

    “The $15-billion price Intel just paid for Mobileye is approximately 30 times the firm’s projected annual revenue.”

    Perhaps so, but just because Intel reportedly paid the astoundingly sky-high price of $15 billion for Mobileye doesn’t necessarily mean that Mobileye is actually worth $15 billion. Perhaps it’s more of an indication of how desperate Intel is to get a running start into this new market than the true value of what Mobileye has.

    Nor do I think this should be taken as a sign that Tesla’s stock, TSLA, isn’t overvalued. Let’s not forget that back during the “dot-com bubble”, there were a lot of companies paying highly inflated prices for other companies which had little if anything more than a website and a business plan which was nothing more than a vague idea.

    By any rational analysis, TSLA is overvalued, and I say that as a strong advocate for Tesla. Even if Tesla grows to the size the current market cap indicates, that will take years. Tesla’s market value is based more on emotion and hope than logic and facts.

    1. ffbj says:

      I think there are some good points in this summation.
      Intel missed out on the handset, phone revolution. They were not going to be left out of this one.

      Regarding the question of the value of what Tesla has with it’s system is interesting because, according to a recent Navegant (suspect) report, they are 12th in the race.

      But anyway their “science project” proceeds apace, with willing guinea pigs testing & improving their autopilot, which will be worth more tomorrow than it is today.

      1. Nix says:

        Mobileye is saying that their systems are already in 15 million different cars around the world, with “planned implementation into for 313 models from 27 vehicle manufacturers”.

        I wonder how many of those car makers on Navegant’s list are simply reselling Mobileye hardware? Navegant’s list might just be based on Mobileye’s customer list…

    2. JB says:

      Very goof points.

      “Fear of missing out” is one of the main drivers of overvaluation in a sector, and indeed traditionnal companies that can be impacted by autonomous driving/new mobility (OEMs, automotive suppliers, tech companies) are buying quite erratically.

      There are so many uncertainties about the future relevant technologies that some are just buying anything that “could be it”. And sure, a happy few will live up to expectations and probably exceed their already ridiculous valuation, given the enormous market at stake.

      But in general, it’s a huge gamble. Not sure comparing and discussing valuations is even relevant in that context.

  4. Nix says:

    For Tesla’s system to have that same $15 Billion dollar valuation, they would need to be marketing and selling it to other car makers.

    The value of mobileye is that they are selling to other companies, not just installing it in their own cars.

    It is apparently already in 15 million different cars around the world, with “planned implementation into for 313 models from 27 vehicle manufacturers”.

    The value isn’t in the quality of the system, or anything like that. The value is in the sales volume for all these deals.

    1. Pushmi-Pullyu says:

      Thank you, Nix, for once again putting things into perspective for us. Much appreciated!

    2. M3- Reserved says:

      Betamax vs VHS –

      Betamax was a superior product, but Sony selfishly kept it to itself.

      VHS OTOH licensed out freely and became the standard until a new format came around.

      But Tesla’s advantage over SONY’s betamax is that their SEXY car lineup 🙂

      1. Jason says:

        But wouldn’t it be awesome if Tesla also supplied their autonomous tech to other companies? I think one problem with the car industry is competition and ego, otherwise why hasn’t even one auto company joined with Tesla and use the SC network. Could be something more to it, but I just think the other auto companies don’t want to give credibility to Tesla by using their systems.

        Also, I can’t wait to see Tesla drive autonomously across the US, but if it is anything like the Model 3 feeling like a spaceship, then I think Elon’s ideas might be a bit ahead of themself. So far Model 3 doesn’t look like it will be like a spaceship, it looks like a very plain car (talking about the interior).

  5. Doggydogworld says:

    Mobileye only has 663 employees. 500m in annual revenue, if real, indicates very high profits. They’re also growing very fast. That’s a valuable combination. Not sure about 15 billion, but it’s much different than Tesla.