Mobileye’s Market-Ready Solutions Surge as Automotive OEMs Struggle to Digest “Open” Platforms

In the premium vehicle segment, being the first brand to market with a new function or consumer experience is a key objective, cementing the brand and its flagship model as the vessel by which future automotive driving experiences are first brought to market, and the model to buy for enthusiastic first adopters of these experiences. Competitive premium brands must quickly follow suit and deliver comparable or better experiences in order to retain their brand identity as premium automakers. An excellent case study can be seen in Tesla’s Electric Vehicle (EV) leadership, and the scramble by premium Original Equipment Manufacturers (OEMs) to respond in kind.

In the field of autonomous driving, Mercedes-Benz was first to productize its Level 3 offering, enabling eyes-off operation within a given Operational Design Domain (ODD), and was followed shortly afterward by BMW (see ABI Insight, “What Does the Launch of BMW’s Personal Pilot Tell Us about the Emerging Level 3 Autonomous Driving Market?”). In the meantime, however, the premium brands of the Volkswagen Group (Audi, Porsche, Lamborghini) have struggled to keep pace as the various internal efforts to develop and industrialize unsupervised autonomous driving systems stalled.

Now, through the adoption of Mobileye’s SuperVision and Chauffeur technologies in the E3 1.2 platform, Volkswagen AG will be able to equip its premium brands with capabilities such as eyes-off operation, autonomous overtaking, and automated stopping at red light and stop lines, catching up with and, in some ways, exceeding the capabilities of its two primary German competitors, BMW and Mercedes-Benz. In the meantime, Volkswagen AG has committed to long-term efforts to eventually create in-house autonomous vehicle platforms, one with China’s Horizon Robotics, and another with Bosch/Qualcomm as part of the E3 2.0 platform.

This begs two questions. First, just how long is long term? And second, what can Mobileye do to establish itself as a long-term supplier of autonomous products to VW?

Developing an autonomous vehicle platform, especially one capable of unsupervised operation, is very challenging—a fact best demonstrated by the troubled history of its development at Volkswagen AG. Prior to 2019, the Volkswagen Group followed the conventional development model—the premium brand leads development, with innovations later “trickling down” to the higher volume brands. Audi, therefore, leads the development of the Level 3 Traffic Jam Pilot, but faced major challenges achieving regulatory approval in the immature legislative environment of that era, and ultimately failed to enable the software, despite shipping vehicles with the necessary enabling hardware, including the first Light Detection and Ranging (LiDAR) sensor.

With the launch of CARIAD in 2020, VW pivoted to a new software development approach, whereby software development would take place at an OEM/“Volkswagen Group” level, with two platforms, 1.1 and 1.2, serving Volkswagen AG’s mass market and premium brands, respectively. Therefore, Audi lost its position as the sharp end of Volkswagen Group’s spear, and instead had to wait for a premium platform being developed at the group level.

To say that CARIAD faced teething problems would be an understatement, and the fact that the difficulties at CARIAD cost former Chief Executive Officer (CEO) Herbert Diess his position goes a long way toward explaining how Audi and Porsche found themselves falling behind their nimbler premium competitors, Mercedes-Benz and BMW, which do not have to wait for an enormous, multi-brand behemoth to stand up a new software division in order to deliver autonomous vehicle innovations.

The need to quickly field a competitive “hands-free” Level 2+ system led Porsche to adopt Mobileye’s SuperVision system in May 2023, and it seems that Mobileye’s foot in the door is paying off, as the most recent announcement sees Mobileye expanding the scope of its business with the Volkswagen Group, both in terms of the volume of brands, and the system capabilities, adding eyes-off operation through its Chauffeur autonomous vehicle product.

In August 2023, Polestar, an erstwhile customer for NVIDIA’s DRIVE platform, announced that the Polestar 4 would integrate the Mobileye Supervision product, and later the Chauffeur product, following similar adoption of Mobileye’s technology in other Geely brands. Therefore, this Volkswagen AG announcement is the second occasion in 6 months in which an OEM with a long-standing partnership with an alternative autonomous vehicle platform has opted to work with Mobileye in order to deliver an experience that was within the scope of the project with the competitor’s autonomous vehicle platform. This suggests that Mobileye’s market-ready products are gaining traction with OEMs that cannot wait for their in-house efforts to produce competitive experiences, at the very least as a stopgap measure.

Volkswagen AG has clearly stated that in the long term, it intends rely on its own in-house system, developed with Qualcomm and Bosch, or with Horizon Robotics for the Chinese market.

Automakers have often been enamored with “open” platforms with scope for automaker differentiation and technology ownership, but to date, most automakers have struggled to make effective use of this openness. Instead, automakers have continued to sink investments into duplicative autonomous vehicle software development with little to nothing to show in the way of marketable products to generate a return on that investment. A high degree of “ownership” or multiple differentiation avenues are of little value if the more open system cannot be commercialized, and automakers must seriously consider how many dollars they want to invest in creating in-house autonomous vehicle alternatives to what is already available from third parties. Indeed, in autonomous vehicles, most of the opportunities for differentiation between brands will have less to do with the “plumbing” of the autonomous vehicle stack, and more to do with what the automakers deliver through the time clawed back from unsupervised automation.

Autonomous vehicle platform suppliers that position themselves as more “open” alternatives to Mobileye must recognize some of the serious limitations that their OEM customers have in translating that openness into value, due in no small part to their comparative immaturity in software development. Continuing to invest in both hardware and software, and providing easier avenues for customization and differentiation will be important for maintaining business with all but the most software-savvy automakers.

Getting a foot in the door could prove to be enough for Mobileye. The enormous cost pressures of widespread electrification are already causing greater scrutiny of in-house autonomous vehicle spending at automakers, and future macroeconomic shocks or supply chain crunches could cause some OEMs to abandon their plans to become autonomous platform experts in favor of turnkey solutions with minimal, but more feasible customization avenues.