Volkswagen-Mobileye-Champion: A Blueprint for Autonomous Vehicle Deployment?

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By James Hodgson | 4Q 2018 | IN-5305

In October 2018, Volkswagen, Mobileye, and Champion Motors announced a Joint Venture (JV) called “New Mobility in Israel” to deploy a fully driverless ride-hailing service in Israel, with development and limited rollout scheduled for 2019 followed by full operational deployment in 2022. Volkswagen will provide an electric vehicle platform into which Mobileye will integrate a “turnkey” autonomous platform consisting of the necessary hardware and software components to enable full automation, while Champion Motors will handle fleet management and maintenance.

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OEM, Autonomous Platform Developer, and Fleet Manager: The Perfect MaaS Joint Venture

NEWS


In October 2018, Volkswagen, Mobileye, and Champion Motors announced a Joint Venture (JV) called “New Mobility in Israel” to deploy a fully driverless ride-hailing service in Israel, with development and limited rollout scheduled for 2019 followed by full operational deployment in 2022. Volkswagen will provide an electric vehicle platform into which Mobileye will integrate a “turnkey” autonomous platform consisting of the necessary hardware and software components to enable full automation, while Champion Motors will handle fleet management and maintenance.

The triangular partnership sets out a blueprint for how Original Equipment Manufacturers (OEMs), autonomous platform developers, and fleet management providers can cooperate to bring autonomous vehicles to market and to pursue new revenue opportunities in the Mobility as a Service (MaaS) market.

Emerging Strategies

IMPACT


The announcement by this mobility-oriented JV not only gives insight into the shape of future MaaS deployments but also gives a clearer understanding of the strategies held by the constituent members:

  • Volkswagen: The deal with Mobileye and Champion will bring a vital boost to Volkswagen’s fledgling MaaS efforts. While premium brand competitors Daimler and BMW have cultivated car-sharing initiatives over many years, Volkswagen’s MOIA brand has been slow to make traction, with the We Share Electric Vehicle (EV) sharing initiative not expected until next year. Investments in Gett notwithstanding, Volkswagen has also trailed behind direct mass-market competitor General Motors (GM), whose Maven platform has rapidly expanded over course of two years to cater to over 150,000 members. Engaging with the JV will help Volkswagen to ramp up their experience in the shared mobility space with an initiative that will eventually mature into a bona fide revenue-generating operation
  • Mobileye: Intel’s Mobileye is the lead player in the current Advanced Driver Assistance Systems (ADAS) market and has clear ambitions to maintain their dominant position as the market develops toward higher autonomy. While the more recent launch of Software Development Kits (SDKs) have suggested a more open approach, Mobileye’s blackbox and walled-garden approach has served them well in the past, with ease of integration driving Mobileye’s share of the ADAS market to around 70%. Similarly, this turnkey solution will enable Volkswagen to rapidly integrate the hardware and software required for full automation, allowing Volkswagen to focus on deployment rather than on autonomous technology development.

Further, the announcement confirms that Mobileye’s ambitions for autonomous driving stretch all the way to the top. Mobileye has always adopted a scalable philosophy in their autonomous technology development, preferring to enable “something everywhere” rather than “everything somewhere.” As such, Mobileye has aggressively pursued a vision-first strategy, shying away from any reliance on technologies such as LiDAR, LiDAR-based maps, Vehicle to Everything (V2X), or 5G, often giving the impression that Mobileye’s ultimate target is high volume and semi-autonomous—rather than the smaller-volume—fully driverless vehicle market opportunity. However, this JV confirms that Mobileye is willing and able to pursue fully driverless robotaxi applications.

  • Champion: The forthcoming shift from widespread passenger car ownership to the use of shared mobility services will have a significant impact on the automotive maintenance space, requiring incumbents to pivot to Business-to-Business (B2B) relationships while simultaneously fending off competition from established fleet management suppliers already operating in the commercial vehicle space. Players in the consumer vehicle maintenance space therefore should aggressively target JV opportunities to establish a foothold in the nascent MaaS market and to ensure their continued relevance in the shared mobility future.

Recurring Revenues for All JV Members?

RECOMMENDATIONS


The development of autonomous technology is radically overhauling the automotive ecosystem, resulting in far greater engagement between OEMs and Tier 2 suppliers as well as triangular development models including OEMs, Tier 1s, and component suppliers for system development, integration, and validation. This transformation is set to continue with the deployment of robotaxi mobility services.

In the traditional structure, component and engineering services suppliers depend on high shipment volumes on behalf of the ultimate OEM customer to drive revenues. Therefore, the shift toward higher utilization of shared vehicles represents a significant threat to any supplier who simply relies on ever-increasing shipments of consumer vehicles for profitability. By establishing themselves as partners in a joint venture operating a shared mobility service, hardware and software component suppliers (such as Mobileye) can gain access to new, ongoing revenue streams tied to vehicle utilization rather than new vehicle shipments.