Level 4 is dead, long live Seeing Machines

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Here’s the latest piece of analysis from Colin Barnden, Lead Analyst at Semicast Research on Seeing Machines, Driver Monitoring Systems (DMS) and the auto industry.

“EuroNCAP has moved to 2022*. This is why contracts aren’t being announced, as OEMs and T1s have more time to do evaluations (see Hansen Report). Ironically, the delay takes away the ‘Takata penalty’ hanging over Seeing Machines. Had 2020 stood for camera DMS, pretty much every OEM would have had to go with SmartEye, other Tier 2s or the in-house Japanese Tier 1s. The first half of 2019 is likely to be busy for OEM direct wins, ready for 2022.

Level 4 is dead for mass market vehicles. The trend I see is ‘less autonomy, more DMS’ (L2/3 with DMS). That suggests to me the technically best DMS. The key part of Fovio is the hardware accelerators for real-time vision analysis (and to lower power consumption). ‘Hardware agnostic’ is a trade-off not a free ride. The significance of the 1.3 bn kms RNS in the summer is also now clear. Artificial Intelligence/Machine Learning is all about quantity of data. I see Seeing Machines even put live updates of the total on their website. This is smart.

OEMs are acutely aware of regulatory and political threats. Dieselgate was a disaster and emissions in general has been handled poorly. Now the political threat is number of road deaths (hence Vision Zero) and that issue is also being dumped on OEMs’ doormats. Waymo and robo-taxis are an existential threat, OEMs have got to find a way to reduce fatalities fast and win political points. They won’t mess up twice and DMS is the obvious way to proceed. Again that suggests technical excellence over anything. If they are smart, OEMs will ‘front run’ the politics and put DMS into everything as fast as they possibly can. There could be a huge ramp from 2023-2025. Again, a fast ramp up supports longer evaluation times and careful decisions for T1s and T2s.

That’s as far as market analysis can go. What matters now is the actual decisions OEMs make. My role is to make an argument but it is up to everyone to make their own individual decisions about how they think things will play out. No one has a crystal ball.”

*’Europe on the Move’ announced Advanced Distraction Recognition (camera-based DMS) from September 2023. EuroNCAP 5* requirements are looking like they will move to demand camera DMS about a year before.

Chris Menon holds Seeing Machines stock.

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10 thoughts on “Level 4 is dead, long live Seeing Machines

  1. Thank you for this post. There is something I did not get. We were expecting major wins for SM a few months ago. Now wer are saying that these deals are not yet done because the regulatory push is being delayed to 2022. But in saying this, we say “Had 2020 stood for camera DMS, pretty much every OEM would have had to go with SmartEye, other Tier 2s or the in-house Japanese Tier 1s”. So in the first place, it was wrong to assume that SM would win these deals if things had stayed the same. I am confused. Thanks in advance for your reply.

    • Hi Francois,

      I can’t answer for Colin. If I get a reply from him I’ll post it here and give full attribution.

      For my part, I think SEE would have won most OEMs regardless. The direction of travel is clear: camera DMS will be as crucial as AEB very soon. SEE is the market leader and is the Mobileye of DMS. When the market understands this its share price will rise. However, I believe it is still very vulnerable to a takeover. Why wait until it has Toyota and FCA before bidding for it? With every win its price goes up.

      • Francois,

        I asked Colin about this and he explained that he was referring to the ‘Takata penalty’, which is diminishing over time. “By 1Q19 SM might have 10 Tier 1s; as recently as 1Q17 it was one (Takata). Expanding the Tier 1 base is a large part of what Nick DiFiore has been focused on, I expect,” says Colin.

  2. How much capital might they need to get them through this delay of sorts? I was thinking that the air force wouldn’t sign with a financially unstable company?

    GM’s news is bittersweet, eh? CT6 plant among the list that is getting mothballed but “zero crashes” (part of new motto) in any human-driven car likely requires DMS on all the rest of the future models! Huge net positive.

    • Hi Mitch,

      I’ve no idea. If they need more cash I’d prefer it didn’t dilute PIs and somehow leveraged the huge volume of car business that they have been contracted to deliver. Certainly, it is financially stable and I don’t worry on that score.

      In addition, I don’t see why a CAT-style deal for fleet couldn’t be negotiated with SEE providing Fovio chips for pure profit without the hassles of manufacture. An upfront payment would be most welcome under any such deal.

      My understanding is that the CT6 will still be sold in China, which will be a huge market for it. Moreover, GM is going to put DMS into all its models in time.

        • It made me smile. I wonder who he is thinking of? Can’t be me as I broke the BMW contract news (quickly followed by an RNS). Personally, I’m prepared to let history be my judge.

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