Shares of Mobileye N.V.MBLY gained more than 3% on Sep 11 after the U.S. Department of Transportation, its National Highway Traffic Safety Administration (NHTSA), and the Insurance Institute for Highway Safety (IIHS) announced new braking standards to enhance vehicle safety. The joint announcement was made at the dedication of IIHS' newly expanded Vehicle Research Center.
Over the past several years, dramatic improvements have been made toward automotive safety which includes airbags, seat belts, and rear and front cameras to reduce accidents. At the event, the world's 10 major automakers committed to make automatic emergency braking (AEB) a standard feature in vehicles to be manufactured henceforth.
Per the announcement, these vehicle manufacturers "will work with IIHS and NHTSA in the coming months on the details of implementing their historic commitment, including the timeline for making AEB a standard feature."
The system, as described in the announcement, will "use on-vehicle sensors such as radar, cameras or lasers to detect an imminent crash, warn the driver and, if the driver does not take sufficient action, engage the brakes". As per a recent IIHS report, the AEB technology, if successfully implemented, will reduce insurance injury claims by as much as 35%.
The technology, which was available only in some luxury cars, will become a standard feature for all vehicles plying the U.S. roads, following Friday's announcement.
Therefore, we believe that various automotive technology suppliers, including Mobileye, will benefit from the widespread adoption of the AEB technology.
Mobileye offers essential components for the emerging advanced driver assistance systems (ADAS) market. Its EyeQ chip and software algorithms are used for taking pictures of the route to be taken to determine lanes, vehicles, pedestrians, obstacles, traffic signals, congestion and other relevant information to assist the driver.
The company also provides AEB technology which is already being used by some of the leading car manufacturers such as BMW, General Motors and Ford Motor.
Earlier this year, in a move to enhance its capabilities in AEB technology, Mobileye signed a technology cooperation agreement with Valeo to develop front-facing camera-based safety systems. Initially, the partnership will focus on developing cameras and sensors for collision avoidance and other safety purposes for cars that will run on a single Mobileye EyeQx system-on-chip.
The product portfolio will include monocular cameras which will conform to collision avoidance regulations, and satisfy high-end customer demand for fusion with non-scanning LED as well as radar and trifocal camera configurations.
Therefore, as the demand for collision avoidance technology increases after Friday's announcement, we believe that Mobileye is well positioned to capitalize on the opportunity.
Currently, Mobileye sports a Zacks Rank #1 (Strong Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.