CHRIST (DEEMED TO BE UNIVERSITY)

SCHOOL OF BUSINESS & MANAGEMENT

MOBILEYE : THE FUTURE OF DRIVERLESS CARS

ARTIFICIAL INTELLIGENCE FOR MANAGERS

Navmeen Latif 2027644

F4
Executive Summary :
Mobileye is an Israeli company and in 2014, after 15 years of study and work, it launched
driverless cars. Mobileye is the automatic car's future, and the case study addresses the various
situations faced by the company. Amnon Shashua and Ziv Aviram co-founded the company and
the case study discusses the Company's competitive environment and the threats to its survival
and its competitive advantage. The case study also clarified some of the facts of working with
Google, which is an autonomous leader. The case study reveals that the organization is facing
many obstacles to maintain itself and achieve the competitive edge and ongoing discussion about
the future of the company between the two partners Shashua and Aviram. There are two issues or
difficulties faced by the company. Firstly, the maintenance of the stable market pricing. Shashua
and Aviram, however, are uncertain about holding the market share either by reducing their
prices or operating at current prices and giving up low-end market share. The other issue is the
role played by Google for the auto revolution, in this case, study as google can be Mobileye's
rival or its potential performance partner.
Problem Statement :
1. How Mobileye should react to the competitors at the lower end of the market?
2. How partnering with Google will impact the business?
3. How adapting to cutting-edge technology will make Mobileye more successful?
Alternatives :
After analyzing the case study, it can be concluded that the following alternatives are available to
Mobileye for the above-mentioned problems:
1. Pricing Strategies for OEMs: The three alternatives available to this problem are :
a) Premium Pricing: The company can choose to sell its product at a premium price
as Mobileye is offering highly technological and precise applications in one unit.
The offerings are unique and different from its competitors, so the company can
enjoy the benefit of raising its price and gaining a high-end market share, and
achieve a greater profit margin.
b) Stable Pricing: Mobileye can choose to price its software and apps at a moderate
and stable price which will attract new customers and also retain the current
customers.
c) Discount Pricing for smaller bundles: The company can choose to give discounts
on lower bundles to retain the low-end market share also while selling higher
bundles to the high-end market.
2. Partnership Strategy: It was noted that the company was attempting to grasp Google's
true intentions. Owners offer two thoughts, either Google is a partner or it is a direct competitor
for Mobileye. Mobileye’s one alternative is to partner with Google and make them its customer.
The business has also the other available alternative in the market, Tesla, as Elon Musk has
already announced in October 2014 its breakthrough in the market by installing Mobileye’s
camera and its most advanced functions. Mobileye should continue with TESLA without
exploring Google.
3. Cutting-edge Technology: The alternates available to the company are as follows:
a) To enhance its high-end products in the market such as camera sensors and driverless
cars by implementing cutting-edge technology like vehicle-vehicle communication.
b) Diversify the business from high end to low end and gain both the market shares and high
profits.
Criteria :
1. Pricing strategy for OEMs: The criteria for the alternatives are :
a) Market share
b) Price Erosion
c) Profit Margin
2. Partnership Strategy: The criteria for the alternatives are :
a) Jeopardization
b) Differences
c) Similarities
3. Cutting-edge technology :
a) Market capitalization
b) Market share
c) Differentiation of product
Evaluation of Alternatives against criteria :
(A) PRICING STRATEGY :
(i) Premium Pricing: If the company chooses to raise the prices, it will be able to hold a
high-end market only while losing the low-end market share to its competitors. The
company will be able to prevent price erosion and rather will broaden the profit margin.
(ii) Stable Pricing: Moderate pricing will allow the company to capture the whole market
share but will result in Price erosion and decrease the profit margin. However, the
company cannot choose to do so as it is creating high-end technologies without risking
safety. It may also lose high-end customers.
(iii) Discount Pricing: This type of pricing will help the company to keep a hold of both
high and low-end markets without decreasing the selling price for high-end buyers. The
company can give discounts on the lowest bundles i.e.,$40.It also results in Price erosion
but less as compared to stable pricing and profit margin may also decrease but with a
lesser percentage than stable pricing.
(B) PARTNERSHIP STRATEGY :
(i) Google: If Mobileye partners with Google and make them a customer, they might be
risking their strategy and the ways they are developing technology as google itself is in
the same domain. Google and Mobileye have a major difference in the ways both the
companies are utilizing technology. Mobileye is using mainly camera sensors, capturing
data and updating software using ML while Google is using high-definition maps and
sensors to align with the pre-stored descriptions. However, both companies are trying to
achieve a target of developing driverless cars independently.
 (ii) TESLA: If Mobileye partners with TESLA, it will become a Tier 1 supplier and
nothing more as Elon Musk announced that it would lead autonomous driving, installing
Mobileye’s camera and its most advanced functions in all new cars. . Tesla will not have
any dealings with its strategy and technology. Tesla is also at a phase where the company
can outsource such technologies, so Mobileye can retain the customer for a longer period.
(C) CUTTING-EDGE TECHNOLOGY :
(i) Retain High end: If the company develops technology for high-end customers only, it
will increase the profit margin and therefore, increase overall market capitalization. It
will, however, lose the low-end customers but as its products would be differentiated on
the basis of accuracy and cutting-edge technology, it will gain a brand image in the
market while working with high-end companies only.
(ii) Diversification: Adding technological innovations equally from low to high end will
help the company to capture all the market share but it may result in reducing the average
selling price, therefore, reducing profit margin and indirectly market capitalization. The
products may stand out but chances are the products won’t make major breakthrough as
the R&D will have to divide the attention.
Solution :
Mobileye provides different products and the company can develop the latest diversified
products. Semiconductor, sensor cameras, audiovisual display, unique steering, LDW, PCW, and
TSR are the various types of products available. In order to cover the greater portion of global
markets, the organization can retain the high-end products and diversify to the lower products.
The demand for these vehicles should rely on people's needs and customers' demands. The price
for domestic driverless cars sold by the company Mobileye must be premium since the company
sells high-end goods. On the quality element, there should be no compromise. The price of the
product, as well as the cars, should take into account both the dynamic market price and
long-term costs of the product. The company should partner with TESLA rather than Google to
safeguard its technology and secure its future.