Mobileye's latest win is another rejection of Tesla's self-driving approach

By William Gavin

Mobileye's technology features both cameras and radars. Tesla has bucked an industry trend by doubling down on a cameras-only approach.

Mobileye plans to deliver more than 19 million units of its EyeQ6H-based Surround systems to just a few customers, including Volkswagen and an unnamed major U.S. automaker.

Another U.S. automaker has signed on to buy Mobileye Global's advanced driving-assistance software as carmakers continue to double down on autonomous-vehicle technology - and show a clear preference for an approach that Tesla has panned.

Israel-based Mobileye (MBLY) described its new customer only as a "top 10 automaker" based in the U.S that will adopt its Surround advanced driver-assistance software (ADAS). That system uses a combination of up to 11 cameras and radars that are controlled by a single chip, which Mobileye says helps keep costs low. The technology enables hands-free, eyes-on driving in designated areas, along with a handful of additional features.

The new buyer will purchase 9 million systems, bringing Mobileye's estimates for future sales to 19 million units. Last March, Mobileye announced that its first customer, Volkswagen Group (XE:VOW3) (XE:VOW) (VWAGY), would use its technology to provide partially automated driving features.

Tom Narayan, an analyst at RBC Capital Markets, said in a Monday note that Surround ADAS likely costs between $100 and $200 per vehicle, compared to an estimated $2,500 for Mobileye's eyes-off, hands-off Chauffeur product.

Narayan added that the new customer may be General Motors (GM), which is developing its own eyes-off product with the goal of a 2028 launch. A representative for GM did not immediately return a request for comment.

Mobileye's stock rose 2.5% on the news Monday. Over the last 12 months, the stock has dropped by more than 47%.

Mobileye's approach involves designing two redundant systems - one based on cameras and another based on radars - and creating two models that work together to ensure safety. That's a bit different than the typical approach.

Most U.S. companies employ a combination of cameras and radar sensors that complement each other to map environments; some also add light detection and radar sensors to the mix. Rivian Automotive (RIVN), GM and Waymo, the robotaxi unit backed by Alphabet (GOOGL) (GOOG), have outlined approaches that involve a variety of sensors, while Ford Motor (F) CEO Jim Farley has called lidar "mission critical for self-driving efforts.

Proponents argue that, while pricier, those approaches provide redundancy that can help keep consumers safe. Only one major automaker has decided otherwise: Tesla (TSLA).

Instead, Elon Musk's electric-vehicle maker has adopted an approach that uses cameras alone and bets on using the massive amount of data it collects to refine its system. In 2021, Tesla's artificial-intelligence chief at the time, Andrej Karpathy, said the company's vision-only approach was already outperforming its previous method that also used radar after it was trained on more than 1.5 petabytes of data.

"Lidar and radar reduce safety due to sensor contention," Musk said in August, adding that "sensor ambiguity causes increased, not decreased, risk."

However, some experts dispute the severity of that risk. Many companies fuse data from cameras and radar to provide a better understanding of the environment.

"Each one has a full 360-degree coverage around the vehicle and they have different physical characteristics," Waymo co-CEO Dmitri Dolgov said of his firm's approach at a Google conference last May. "So they complement each other very nicely and give us redundancy."

On Monday, Chinese lidar maker Hesai (HSAI) said it would double its annual production capacity to 4 million units in 2026. The firm works with many fellow Chinese companies, including Xiaomi (HK:1810) and Zeekr, to provide sensors for their vehicles capable of autonomous driving.

In a statement, Hesai said 1 in 4 electric vehicles in China are equipped with lidar, and pointed to data from the carmaker Li Auto (LI) that found vehicles equipped with lidar reduced fatal highway accidents by 90% compared with camera-only systems. Hesai says it has made lidar for as cheap as $200 per sensor - a dramatic drop from the $75,000 it cost for a single unit about a decade ago.

Hesai also said it has signed a "top European" automaker and has a more than $40 million contract with a U.S.-based robotaxi company. Its push to capture more of the market comes shortly after Luminar Technologies (LAZRQ) filed for Chapter 11 bankruptcy. Luminar had secured deals with Europe's Volvo (SE:VOLCAR.B) (VLVCY), Polestar (PSNY) and Mercedes-Benz (XE:MBG) (MBGYY) before its plans fell apart.

-William Gavin

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01-05-26 1643ET