Why Did Mobileeye Part Ways With Tesla?

Shares of Mobileeye NV went south on Tuesday after it was determined that the company would not be renewing their contract with Tesla. The stock sank more than 7 percent after the announcement.

Israeli Mobileye has been the maker of chips for Tesla’s semi-automated Autopilot system. The company’s EyeQ chips provide image analysis for Tesla’s Autopilot system. The image analysis helps the automaker’s vehicles steer and stay in lanes.

Mobileye is working with about two dozen global vehicle manufacturers including Volkswagen AG and General Motors Co, next to the contract it had with Tesla. Tesla only accounted for less than 1 percent of Mobileye’s current revenue and about 2 percent of projected 2019 sales.

Tesla nor Mobileye would state which company it was that decided not to renew but Mobileye said in a statement that it would continue to support Tesla’s ongoing upgrades to Autopilot but without any hardware updates.

Tesla has been facing wide scrutiny from regulators in recent weeks over the company’s Autopilot fatal accident in early May.
Tesla said in a statement that the company was “transitioning to internally developed software for the camera portion of Autopilot.”

Disclaimer: We have no position in Tesla Motors Inc. (NASDAQ: TSLA) nor Mobileye NV (NYSE: MBLY) and have not been compensated for this article.