Mobileye (MBLY) A Step Closer To Self-Driving Cars

Leading auto-parts and electronics company Delphi Automotive and Israeli tech firm Mobileye (MBLY) are coming together to make the dream of having a fully autonomous car by 2019 a reality.

Mobileye stock

The two companies issued a joint statement wherein Delphi’s automated driving software would be coupled with Mobileye NV (NYSE:MBLY) vision and sensor systems to produce an automated driving solution.

The partnership, which was disclosed on Tuesday, came out as a surprise since top auto suppliers and tech firms are considered to work separately on self-driving systems.

Kevin Clark, the Chief Executive of Delphi, mentioned in an interview that the two companies will take charge of the development burden for auto suppliers and makers that are accustomed with outsourcing necessary technology development.

Clark also said that they are able to pool the investment as well as the technology and execution risk in one place so it doesn’t have to be duplicated by multiple [auto makers] repeatedly.

The partners disclosed that they will invest “several hundred million dollars” in their cause, however, no other details have been provided.

A system that can navigate harsh road conditions (e.g. tackling highway traffic, making difficult turns across several traffic lanes, and entering a roundabout), is expected by both Delphi and Mobileye to be achieved by January.

The companies declared that their self-driving system won’t be ready until 2019, however, it would still take them a longer time to apply the technology to future vehicles. The partners state that their system are unlikely to be showcased until 2021 or 2022.

It is to be noted that the longer time frame that the two companies stated, may prove advantageous to their top competitors- Volvo Car Corp., Nissan Motor Co., Tesla Motors Inc. (NASDAQ:TSLA), Google parent Alphabet Inc. (NASDAQ:GOOGL) and others, which had already put on airs about their earlier releases and public demonstrations of their self-driving vehicles. The main asset of Mobileye and Delphi lies with their pull to small and mid-cap car companies that don’t have enough funds like the big players necessary to develop an independent vehicle system. Partnerships for their technologies with BMW AG and semiconductor manufacturer Intel Corporation (NASDAQ:INTC), were already secured by Mobileye.

This tie-up definitely served as a huge benchmark on the development of autonomous-vehicle platforms. With the partnership serving as a catalyst, both stocks rose up on Tuesday. Delphi had a 3% gain to $66.08, while Mobileye surged up more than 7% to $50.21.

Mobileye

Chart: Investing.com

A quick look at Mobileye shows an impressive spike in volume amounting to 21.14 million. Indicators (MACD, RSI, STS) provide a bullish perspective on the recent price hike of MBLY. With the company having a major positive outlook, its upward momentum may still continue until it re-tests the 52-wk high price at $57.73.

It may also be noted that from January to the end of March 2016, Mobileye NV had a huge increase in its revenues by 65% amounting to $75.2M. Net income also rose from $10.1M to $21.9M. The immediate rise in its revenues show that there is an increased demand for the company’s vision and sensor systems due to favorable market conditions. Net income was boosted by the increase in interest income from $175K to $1.2M.

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