(Bloomberg) -- Auto-parts suppliers Mobileye NV and Delphi Automotive Plc said they are teaming up to develop a low-cost system for self-driving vehicles that will be available to carmakers by the end of the decade.
The companies are spending “hundreds of millions of dollars” to develop the system, which will be ready to sell by 2019, Kevin Clark, chief executive officer of U.K.-based Delphi, said in a conference call Tuesday.
Their technology will rely less on costly lidar sensors, which bounce light off objects to assess shape and location, resulting in a more affordable system for carmakers that might lack funding to develop the technology on their own, Amnon Shashua, chairman and chief technology officer of Israel-based Mobileye, said on the call.
“Together, we’re planning to build a new class of machine intelligence capable of mimicking true human driving capabilities,” Shashua said. “Our alliance provides a solution with a much smaller investment to our customers” to deploy fully autonomous cars.
Automakers and technology companies are scrambling for partnerships to compete in self-driving technology with Alphabet Inc.’s Google, which has already clocked 1.8 million miles of public road tests. Uber Technologies Inc. last week announced a $300 million development deal with Volvo AB. Ford Motor Co. last week pledged it would have fully self-driving cars for ride hailing by 2021 and has jointly invested $150 million with China’s Baidu Inc. in Velodyne Lidar Inc. BMW AG is teaming up with Mobileye and Intel Corp. and promises to put out a self-driving car by 2021.
Analysts at Evercore ISI said in a note that the partnership announced today “is a vocal statement on the collaborative efforts of Mobileye and Delphi,” because the companies previously had been seen as potential competitors in autonomous driving.
Mobileye shares climbed 7.2 percent to $49.93 at 11:14 a.m. in New York, after reaching $51.15, their highest intraday price since Oct. 16. Delphi rose 3 percent to $67.
Delphi’s Clark said his company and Mobileye will demonstrate their new system early next year at the Consumer Electronics Show in Las Vegas and then begin road-testing it in Singapore shortly afterward. That would put it in line for use on the road in the early 2020s.
“This partnership will allow us to give our customers an increased level of automated capabilities faster and more cost-effectively,” Clark said.
The system will draw on the two companies’ existing technology, which is “camera and radar-centric,” Shashua said. Lidar will be a “redundant sensor,” rather than having a primary role, which “could enable reducing the cost of industrializing,” he said.
Unlike with Google and Ford’s proposed driverless cars, the Delphi-Mobileye system will still include a steering wheel, brake pedal and accelerator that a human driver could use to take over, Clark said.
But he said demand is rising from regulators and others to remove humans from responsibility for taking the wheel in an emergency. U.S. regulators say human error is the cause of 94 percent of crashes, which last year resulted in more than 35,000 deaths on the nation’s highways.
“Given the issues with regulators wanting fewer accidents, municipalities dealing with congestion and dealing with the challenges of limited parking and demand from consumers, what you’re seeing is accelerated demand for active safety solutions, ultimately pulling forward the demand” for fully self-driving cars, Clark said.