Harvard Case - Mobileye 2021: Robotaxi and/or Consumer AV?
"Mobileye 2021: Robotaxi and/or Consumer AV?" Harvard business case study is written by David B. Yoffie, Danielle Golan, Nicole Tempest Keller. It deals with the challenges in the field of Strategy. The case study is 26 page(s) long and it was first published on : Jun 2, 2021
At Fern Fort University, we recommend that Mobileye pursue a dual strategy, focusing on both the Robotaxi market through its existing partnership with BMW and the consumer AV market through direct sales and strategic partnerships with other automakers. This strategy will leverage Mobileye's core competencies in AI and machine learning, autonomous driving technology, and data analytics to create a sustainable competitive advantage in the rapidly evolving autonomous vehicle (AV) market.
2. Background
Mobileye, a subsidiary of Intel, is a leading developer of advanced driver-assistance systems (ADAS) and autonomous vehicle (AV) technology. The company faces a critical decision: should it focus on the Robotaxi market through its existing partnership with BMW or pursue the consumer AV market' This case study examines the strategic considerations, market opportunities, and potential risks associated with each option.
The main protagonists of the case study are:
- Amnon Shashua, CEO of Mobileye, who must navigate the strategic direction of the company.
- Intel, the parent company of Mobileye, which provides resources and strategic direction.
- BMW, a key partner in the Robotaxi market, with whom Mobileye has a long-standing relationship.
- Other Automakers, potential partners for consumer AV technology and key competitors in the market.
3. Analysis of the Case Study
To analyze the case study, we will use the following frameworks:
- Porter's Five Forces: To understand the competitive landscape of the AV market.
- Ansoff Matrix: To evaluate Mobileye's growth options.
- BCG Matrix: To assess the attractiveness of the Robotaxi and consumer AV markets.
Porter's Five Forces Analysis:
- Threat of New Entrants: High, due to the rapid influx of technology companies and startups entering the AV market.
- Bargaining Power of Buyers: Moderate, as consumers have a wide range of choices for vehicles, but AVs represent a significant investment.
- Bargaining Power of Suppliers: Moderate, as key suppliers like sensors and software companies have some leverage, but Mobileye's strong technology position provides some bargaining power.
- Threat of Substitute Products: High, as traditional vehicles and ride-sharing services offer alternatives to AVs.
- Competitive Rivalry: Intense, with established automakers, tech giants, and startups all vying for market share.
Ansoff Matrix:
- Market Penetration: Mobileye can increase its market share in the ADAS market by expanding its reach to new car models and geographic markets.
- Market Development: Mobileye can enter new markets by offering its technology to new vehicle segments, such as commercial trucks and buses.
- Product Development: Mobileye can develop new features and functionalities for its ADAS and AV systems, such as advanced lane-keeping assist and automated parking.
- Diversification: Mobileye can explore new markets outside of the automotive industry, such as logistics and transportation.
BCG Matrix:
- Robotaxi Market: High Market Growth, High Market Share, Star
- Consumer AV Market: High Market Growth, Low Market Share, Question Mark
Analysis Summary:
The AV market is highly competitive and presents both significant opportunities and challenges. Mobileye possesses strong technology and a solid partnership with BMW in the Robotaxi market. However, the consumer AV market is still in its early stages, requiring significant investment and market development.
4. Recommendations
Mobileye should pursue a dual strategy:
1. Robotaxi Market:
- Strengthen Partnership with BMW: Continue to develop and refine the Robotaxi solution, expanding its deployment in key cities and collaborating on marketing and regulatory efforts.
- Explore Partnerships with Other Automakers: Leverage the existing technology and expertise to enter partnerships with other automakers interested in developing their own Robotaxi offerings.
- Focus on Scalability and Efficiency: Develop strategies to optimize fleet management, operations, and cost structure to ensure profitability and sustainable growth.
2. Consumer AV Market:
- Direct Sales: Develop a consumer-facing brand and marketing strategy to promote Mobileye's AV technology directly to individual buyers.
- Strategic Partnerships: Partner with other automakers to integrate Mobileye's AV technology into their vehicles, leveraging their existing manufacturing and distribution networks.
- Develop a Competitive Value Proposition: Emphasize the safety, reliability, and user-friendliness of Mobileye's AV technology to differentiate it from competitors.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: Mobileye's core competencies in AI, autonomous driving, and data analytics align with both the Robotaxi and consumer AV markets. This strategy allows the company to leverage its strengths while expanding its market reach.
- External Customers and Internal Clients: Both strategies cater to the needs of external customers, including consumers, automakers, and ride-sharing companies. Internally, it allows Mobileye to engage its employees in developing and deploying cutting-edge technology.
- Competitors: The dual strategy allows Mobileye to compete effectively in both the Robotaxi and consumer AV markets, mitigating the risks associated with focusing solely on one market.
- Attractiveness ' Quantitative Measures: The Robotaxi market offers immediate revenue opportunities, while the consumer AV market presents long-term growth potential. By pursuing both, Mobileye can create a balanced portfolio with diverse revenue streams.
6. Conclusion
Mobileye's dual strategy, focusing on both the Robotaxi and consumer AV markets, provides the company with the best opportunity to achieve sustainable growth and become a leading player in the rapidly evolving AV industry. This strategy leverages Mobileye's core competencies, addresses the needs of various stakeholders, and positions the company for success in a highly competitive market.
7. Discussion
Other alternatives not selected include:
- Focusing solely on the Robotaxi market: This strategy would limit Mobileye's growth potential by excluding the large consumer AV market.
- Focusing solely on the consumer AV market: This strategy would require significant investment and market development, potentially delaying profitability.
Risks and Key Assumptions:
- Regulatory uncertainty: The development and deployment of AVs are subject to evolving regulations, which could impact Mobileye's business plans.
- Consumer adoption: Consumer acceptance of AVs is still uncertain, and widespread adoption could take longer than expected.
- Competition: The AV market is highly competitive, and Mobileye must continuously innovate and adapt to maintain its market position.
8. Next Steps
Mobileye should implement the following steps to execute its dual strategy:
- Develop a detailed strategic plan: Define specific goals, timelines, and resource allocation for each market segment.
- Secure funding: Secure sufficient funding to support the development, manufacturing, and marketing of its AV technology.
- Build strategic partnerships: Establish partnerships with key players in both the Robotaxi and consumer AV markets.
- Develop a strong brand: Build a recognizable brand that resonates with consumers and automakers.
- Monitor market trends: Continuously monitor market trends, competitor activities, and regulatory changes to adapt its strategy accordingly.
By taking these steps, Mobileye can successfully navigate the complex and dynamic AV market, creating significant value for its stakeholders and solidifying its position as a leader in the industry.
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Case Description
In March 2021, Amnon Shashua, co-founder and CEO of Israel-based Mobileye, was preparing to meet with Intel's new CEO, Pat Gelsinger, to review plans for the future. Mobileye had been acquired by California-based Intel in 2017, but still operated independently. Mobileye was the global leader in vision technology for Advanced Driver Assistance Systems (ADAS) with a 70% market share and $1 billion in revenue. However, for Shashua, ADAS was just the first step towards his dream of leading the autonomous vehicle (AV) revolution. It was this vision that led Intel to acquire Mobileye for $15.3 billion. Shashua's challenge was that consumer AVs were still years away due to concerns over safety, regulation, cost, and consumer acceptance. A nearer term use case for AVs was the robotaxi market-fully autonomous, driverless taxis. Shashua and his team were excited about the potential of robotaxis to change the future of mobility, projecting that the market would grow to $160 billion globally by 2030. Mobileye believed that it could generate at least $15 billion in annual robotaxi revenue by the end of the decade. Equally important, Shashua viewed robotaxis as a necessary first step toward consumer AVs. Mobileye could use its experience in robotaxis to improve AV technology, address regulatory challenges, and build high definition maps. The long-term question facing Mobileye was whether to: 1) invest billions of dollars to build-out a global, vertically integrated robotaxi business; 2) use robotaxis as an opportunity to learn and then revert back to a horizontal supplier of AV chips and software; and/or 3) do both? During most of Intel's history, the company had been a horizontal semiconductor company which avoided vertically integrating into its customers' businesses.
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