Intel’s $15 billion acquisition of Mobileye is all the talk in the auto industry today. The biggest question is how do they value the company at 30 times its projected revenue for the year? It’s a historic acquisition in term of size and valuation. For comparison, Tesla is valued at $40B, about 4 times its projected revenue for the year.

The answer is that Intel sees the acquisition as bringing in-house the “entire package” of autonomous driving. CEO Brian Krzanich wrote in an email to employees today: “this acquisition essentially merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car.” The eye being Mobileye and the brain being Intel.

The fact that they are willing to pay $15 billion to accomplish that is quite interesting and somewhat validates Tesla’s own new approach which aims to do same thing since discontinuing Mobileye’s system in the Autopilot. In fact, Tesla considers its in-house efforts an improvement over the Mobileye platform.

In the first generation of Tesla’s Autopilot, the company was using Mobileye’s computer vision technology powered by its EyeQ3 chip. This package, when combined with the third-party recommended sensors (cameras and radar antennas), constitutes the bulk of the Israeli company’s offering. Aftermarket products used on existing vehicles also represent about 20% of the company’s volume.

Different configurations power safety features and driver assist features in different vehicles from OEMs. It can vary from active safety features, like automatic emergency braking, to convenience features, like active lane keeping.

Tesla had already been building features on top of Mobileye system with the first generation Autopilot, but the company has also long been working to discontinue the system. In 2015, Tesla CEO Elon Musk offered George Hotz a contract with a “multimillion-dollar bonus” for him to build a new Autopilot system in order for Tesla to discontinue Mobileye’s image processing system.

With the introduction of the second generation Autopilot in October 2016, Tesla got rid of Mobileye with its own computer vision system called ‘Tesla Vision‘ and they powered it with Nvidia’s Drive PX2 onboard computer. Here’s Tesla Vision at work and Nvidia’s Drive PX2:

Musk said that Tesla is building Vision to be hardware agnostic and they can even somewhat easily upgrade the computer in existing vehicles. At some point in the future, Tesla could even, conceivably sell its technology to other auto manufacturers.

The hardware itself is mounted on the passenger side of the dashboard right above the outer panel of the glove box. By removing it, it can be accessed and technically swapped for a more powerful computer if the need ever arise.

Tesla could eventually replace current chipsets with a computer powered by its own custom chip.

Tesla has been rumored to be working on its own SoC (System on Chip) optimized for self-driving cars since we reported that the company quietly hired legendary chip architect Jim Keller from AMD as new “Vice-President of Autopilot Hardware Engineering” last year. While Keller’s hardware engineer experience could be useful for other projects at Tesla, the fact that the automaker poached a team of chip architects and executives from AMD following Keller’s hire fueled the rumor.

While the company has never confirmed working on its own custom chip for self-driving, the automaker has built a world class team of expert chip architects from Apple’s PA Semi, Nvidia, and AMD. All of the pieces are there.

Furthermore, a report from South Korea came out 3 months ago claiming that Samsung Electronics signed a contract with Tesla to build an ASIC (Application-Specific Integrated Circuit) system – meaning to build its System on Chip with Samsung semiconductors.

Everything points to a Tesla chip being in the works.

At the moment, Tesla’s own image processing is certainly not on par with Mobileye’s based on a simple comparison of the features it enables in Tesla’s second generation Autopilot versus the first generation. But a software update expected in the coming weeks could bring the system to parity.

If it turns out to be true and Tesla also ends up building its own chip, the company’s Autopilot program would technically be the equivalent of Mobileye’s system considering only future generations of its EyeQ chip are expected to enable fully self-driving capabilities.

The two companies have very different timelines for level 5 full autonomy. After the announcement of the acquisition of Mobileye, Intel CEO Brian Krzanich says that they expected the tech to be ready by 2024. As for Tesla, Musk said that they could do Los Angeles to New York in level 5 by the end of the year, but again the parity with Mobileye is 3 months late now – so we will see.

What is clear it that the autonomous driving space keeps getting more interesting every day, contrary to certain hype and gloom analyst predictions.

Gartner thinks we've passed peak-hype for "autonomous vehicles." God I hope so. pic.twitter.com/SmnPd7d17M — Tr🚘nsP🤔ntification (@EricPaulDennis) March 13, 2017

Now it’s about transforming the hype into a widespread safe and usable product.

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