Tesla Ends Partnership with Mobileye

Tesla recently ended its contract with Mobileye, one of the leading suppliers in its Autopilot semi-autonomous driving system, after a fatal May accident that killed a male Tesla Model S driver.

Mobileye is known as a leader in developing the materials needed for fully self-driving cars. The tech company will continue to support and maintain existing Tesla products, including upgrades that should improve the Autopilot system’s crash evasion and to better enable the car to steer itself, according to Chairman Amnon Shashua.

Shashua noted that shifting cars to higher levels of self-driving capability is an archetype change both in terms of function complexity and the need to ensure an extremely high lever of safety. He also said that there is much risk in terms of Mobileye’s reputation, and that it is best to cut the relationship with Tesla by the end of 2016.

Tesla CEO Elon Musk, said in a meeting with reporters at Tesla’s new battery Gigafactory that the company can advance without Mobileye.

“Us parting ways was somewhat inevitable. There’s nothing unexpected here from our standpoint," Musk explained. "We’re committed to autonomy. They’ll go their way and we’ll go ours."

The split of the two companies trails the tragic accident that killed Joshua Brown on Florida highway. He was said to be driving his car with the Autopilot function activated, when a truck turned in front of him. His Model S failed to detect the bigger vehicle.

Mobileye issued a statement after the collision, saying its system was not designed to distinguish cross traffic yet. The National Highway Traffic Safety Administration and National Transportation Safety Board are both looking into the facts of the accident.

Tesla’s self-driving system was named Autopilot, however, company insists that it has repeatedly reminded owners that it is not a substitute for staying attentive behind the wheel.

According to Musk’s new master plan for Tesla, self-driving capability is still a primary goal for Tesla.

Shares of the giant automaker tumbled nearly 1 percent.

Tesla’s Expensive Move

Tesla’s next strategic decision could cost the automaker tens of billions of dollars over the long term. However, Musk pointed out that it will likely require only a slight capital increase.

Musk’s remarks during a media conference at Tesla’s Gigafactory, come at a time when the car manufacturer is losing funds and dealing with investigations into a fatal accident that killed a Model S driver.

Last week, he announced his ambitious plan to extend the company into electric trucks and buses, as well as car sharing.

For more market news, visit www.trade12.com and www.options12.com. Both brands are supported by Exo Capital Markets Ltd.