Mobileye's Volkswagen Partnership Brings 'Long-Sought Catalyst To The Forefront'

Mobileye NV (NYSE: MBLY) and Volkswagen AG (ADR) (OTC: VLKAY) have agreed to develop super navigation data for self-driving vehicles.

The partnership widens Mobileye’s market leadership, Baird’s David Leiker said in a report. He reiterated an Outperform rating on the company, with a price target of $61.

The REM Agreement

Under the agreement, known as the Road Experience Management [REM] supply agreement, the combination of data collected from Volkswagen vehicles and Mobileye’s software and hardware lays a foundation for crowd sourcing data for “real-time, high-definition maps that can be continuously updated across the fleet,” Leiker mentioned.

Moreover, the REM agreement gives the opportunity to combine data from different automakers, and anonymize and resell this for upscale features, such as real-time traffic, parking location, road conditions and road closures, Leiker noted.

Related Link: Mobileye Spikes On Volkswagen REM Cooperation

The formal agreement between Volkswagen and Mobileye “brings a long-sought catalyst to the forefront,” the analyst commented. He added that the first vehicles operating under this agreement were expected to be on the road as early as 2018.

“We have long viewed Mobileye’s REM offering as the best and optimal pathway for crowd-sourced, real-time mapping data, an essential input for autonomous driving. The structure of the agreement with VW solidifies this standing, in our view, by creating an immediate scale advantage that will only grow over time as Mobileye launches at other customers,” Leiker wrote.