NIO Partners with Intel's Mobileye for Self-Driving EVs

NIO as the "Tesla of China" has a long way to go with a cash burn and strong headwinds, but this partnership is sort of a big deal. We know China will become the major market for electric vehicles, and the number of major automakers getting into EVs in 2020 will be astounding.

I have huge respect for Mobileye's capacity to be part of the self-driving market of the future and Intel as a major AI-related company.

It's important to realize that Mobileye's CEO Shashua thinks robo-taxis are the most likely business application for autonomy as it's currently developing. NIO could one day be well-positioned to take on Tesla and the auto-giants, as unlikely as it appears in 2019 with its stock down to practically nothing.

Mobileye, the Israeli-based automotive sensor company acquired by Intel in 2017 for $15.3 billion, is partnering with Chinese electric car startup Nio to develop autonomous vehicles that consumers can buy and it's more important news than it appears. You had to be following NIO to even notice this footnote in November 2019.

We think of Waymo One has being a pioneer the last decade on this kind of tech. But consider this, Israel-based Mobileye has been at it for a decade longer, TechCrunch reminds us. Founded in 1999, the company was acquired by Intel in 2017 for just over $15 billion. That's not by accident.

For all the incredible innovation out of Israel in recent years, Mobileye has to be one of the crown jewels. While the deal with Nio lacks details, the future synergy could be quite good.

In an op-ed published at Intel's corporate website Tuesday, Mobileye's CEO gives us a sense of the excitement of the future possibility of Intel's involvement in this.

Essentially as part of the partnership, Nio will build a self-driving system designed by Mobileye, and will mass produce the system and integrate the technology into its electric vehicles and for Mobileye's driverless ride-hailing services. Nio will target an initial release in China, and plans to expand into other global markets.

The self-driving system will be based on Mobileye’s Level 4 AV kit and be engineered for automotive qualification standards, quality, cost and scale, the companies said in a joint statement.

• The partnership follows news from June that Mobileye plans to launch a robotaxi service in its home market of Israel in 2020.
• German automaker BMW forged a deal with Chinese tech titan Tencent in July to launch a computing center to support AV development in China by the end of 2019. 
• Japanese automotive giant Toyota partnered with China-based AV developer Pony.ai in August to test AVs in the country.
• German carmaker Volkswagen (VW) and Chinese auto manufacturer JAC joined forces in May to test self-driving tech in the Chinese market. 

Partnerships in the EV and self-driving car sector with traditional automakers are really exciting to witness.

There are three aspects to automotive-technology-artificial intelligence (auto-tech-AI) that are unfolding:

1. Advanced driver-assistance systems (ADAS)
2. Robotaxi ride-hailing as the future of mobility-as-a-service (MaaS)
3. Series-production passenger car autonomy

NIO could have some skin in the game in the robo-taxis phase of deployment circa 2025 to 2035. By 2025, Google's Waymo One will already be in several U.S. major cities.

NIO as a home-grown Chinese EV maker also will have the favor of the Chinese Government. Think about it, China has the potential to be the world's largest market for self-driving technology. Chinese consumers have already expressed a higher preference rate for AVs than their global peers, per Capgemini.

Nio will also develop a version of self-driving electric vehicles that Mobileye will deploy as robotaxis for ride-hailing services in global markets. So Intel and Nio are very well aligned.

Mobileye’s claim to fame is its EyeQ chip which uses proprietary image recognition software to help self-driving cars see the world. The technology was initially used for electronic driver assist features like collision warning but Mobileye is now using it for fully self-driving capability.

Mobileye's self-driving system operates at Level 4 capability on the SAE scale. A Level 4 self-driving car can operate without a driver in select conditions. 

The Intel Mobileye partnership gives Nio credibility for the future of a potentially really huge market. At the time of writing its stock is at $1.88 per share.