Greetings, and welcome to the Mobileye 3Q '25 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Galves. Mr. Galves, you may begin.

Thank you. Hello, everyone, and welcome to Mobileye's Third Quarter 2025 Earnings Conference Call for the period ending September 27, 2025. Please note that today's discussion contains forward-looking statements based on the business environment as we currently see it. Such statements involve risks and uncertainties. Please refer to the accompanying press release, which includes additional information on the specific factors that could cause actual results to differ materially. Additionally, on this call, we will refer to both GAAP and non-GAAP figures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. Joining us on the call today are Professor Amnon Shashua, Mobileye's CEO and President; Moran Shemesh, Mobileye's CFO; and Nimrod Nehushtan, Mobileye's EVP of Business Development and Strategy. Thanks. And now I'll turn the call over to Amnon.

Hello, everyone, and thanks for joining our earnings call. Starting with the results. Q3 revenue of $504 million was up 4% year-over-year. The driving force was 8% EyeQ volume growth significantly outpacing the 1% growth in overall vehicle production among our top 10 customers in Q3. Operating cash flow was again a highlight. We generated $167 million of operating cash flow in Q3, well above net income. On a year-to-date basis, we have generated nearly $500 million of operating cash flow, up around 150% year-over-year. This reflects the cash generative nature of our business and our continued discipline in managing working capital. The core ADAS business is performing well, with volumes in a very healthy range for the last 5 quarters and expected to do so again in Q4 based on our updated guidance. We again raised the midpoint of our full year outlook this time by 2% in terms of revenue and 11% in terms of adjusted operating income. Compared to our initial 2025 guidance, these increases are even more pronounced, 7% for revenue and 27% for operating income at the midpoint. Overall, we expect volumes to come in about 2 million units higher than our original guidance. This outperformance reflects a combination of stronger-than-expected launch activity, ADAS adoption growth, and better than expected results in China both from our shipments to Chinese OEMs and from the performance of our top 10 Western OEM customers in China. If we adjust our inventory digested in 2024, our 2025 volume growth is expected to outperform the production of our top 10 OEM customers globally by about 5 percentage points. We see continued momentum as EyeQ6 light is generating ADAS program wins at a high rate. So far this year, we have already been nominated for programs with future expected volumes well above our full year 2025 volume. We have added a new customer in Volvo. The growth potential in India is becoming increasingly clear as strengthening adoption trends and supportive regulatory environment. Additionally, we are seeing continued traction in adding REM to front-facing camera programs further reinforcing our base business. On the advanced product side, our position is differentiated in the fact that we are an OEM neutral platform that is cost-efficient and scalable with a credible technology path to eyes-off autonomy in both privately owned vehicles and robotaxis. All 4 of our advanced products surround ADAS, SuperVision, Chauffeur and Drive share common building blocks including the EyeQ6 high inference chip, substantial portions of our perception policy AI stacks, and the REM crowded crowdsourcing driving intelligence and robust safety frameworks and the company's comprehensive data and validation infrastructure. The EyeQ6 high-based surround ADAS systems continue to develop as the next generation of standardized driving assist on high-volume vehicle platforms. This system addresses multiple objectives in a cost-efficient package. It's designed to meet stricter late-decade safety standards, enables highway hands-free performance for lower cost compared to current systems, and supports OEM goals to consolidate ECUs and to integrate technology on a single SoC. We have meaningful traction with a number of OEMs and very recently, received confirmation from a leading Western OEM that we were nominated for a high-volume EyeQ6 high-based surround ADAS program across mass market vehicles. We continue to pursue a number of promising SuperVision and Chauffeur opportunities, although timing remains difficult to predict. The best way to ensure eventual new customers is to focus on the execution of the SuperVision and Chauffeur production programs with Volkswagen Group, where we are first movers. Near-term execution includes major software drops in the coming few months that embody significant innovation in AI. A few weeks ago, we received the first silicon sample of our next-generation SoC, the EyeQ7 high and all initial tests have been successful. EyeQ7 and its successor EyeQ8, now in design stages, are designed for upgrading eyes-off autonomy to minds-off autonomy. Eyes-off systems is what Mobileye is bringing into production in early 2027 and also describes the current technological state of robotaxis. In both cases, there is a human, either the driver or a teleoperator, that can resolve issues when needed. In the minds-off system, which we are targeting for 2029 and beyond, there is no human to resolve issues, and therefore, the driver can sleep and the robotaxi no longer needs teleoperators to intervene. This transition from eyes-off to minds-off is where EyeQ7 is going to play a meaningful role. More details will follow in the coming months. Turning to robotaxi. Our engagements are expanding through both Volkswagen and Holon, a division of Benteler. Once we remove safety drivers in our first U.S. city in 2026 and secure type approval for self-driving vehicles, the Volkswagen ID.Buzz and Holon urban shuttle in Europe, we anticipate geographic expansion. VW and Uber in Los Angeles, Lyft and Holon in the U.S., and multiple commercialization initiatives with Volkswagen and public transport operators across Europe. Additionally, we continue to get closer to naming an automaker and vehicle platform to complete the Lyft Marubeni value chain. That will enable preparations for commercialization in Dallas and other cities to accelerate. On the robotaxi technology front, we continued to outfit more of the ID.Buzz test fleet with a full EyeQ6 high-based production hardware and have successfully completed the first closed-loop testing with the Holon production vehicle. The MTBF performance is tracking well against the KPIs that are required to remove safety drivers in 2026 and begin commercialization. Everything continues on track. In summary, the opportunity set in front of us today is larger, broader and more urgent than it was when we went public in 2022. Near-term volumes remain strong. The demand for higher performance at lower cost is intensifying and eyes-off capability, whether for personal cars or robotaxis, is no longer seen as an experimental science project, but as an achievable and commercially viable reality. This is exactly where Mobileye excels.

Thank you, Amnon, and thanks for joining the call, everyone. Before I begin, please be aware that all my comments on profitability may refer to non-GAAP measurements. The primary exclusion in Mobileye's non-GAAP numbers is amortization of intangible assets, which is mainly related to Intel's acquisition of Mobileye in 2017. We also exclude stock-based compensation. Our Q3 results exceeded the color we provided on the Q2 2025 earnings call in July, with revenue up 4% year-over-year versus our prior outlook of roughly flat. The upside was a combination of EyeQ volume, which came in at 9.2 million units compared to the outlook of 8.7 million to 9.3 million and SuperVision volume, which was higher than 20,000 units in the quarter, a meaningful uptick versus Q2. Just a quick note on SuperVision. Volumes were higher than prior quarters, but should not be viewed as establishing a new higher run rate. We now expect around 50,000 units this year. This full year number is significantly higher than our original expectations and a good reflection on what we see as a sustainable run rate heading into next year for the current first-generation programs applied to ZEEKR export volume and Polestar 4. These programs remain relatively small within our overall business and quarterly volumes can fluctuate as they have this year. Our gross margin declined by just over 100 basis points year-over-year. EyeQ ASP was down about $0.50 year-over-year. This was primarily due to a higher volume of Chinese OEMs where pricing remains a significant headwind, as we've discussed before. Another factor was a higher volume of ADAS program based on EyeQ5 which carries lower gross margin due to higher costs. EyeQ5 currently represents about 10% of volume and is expected to peak at around 15% next year, creating some continued pressure. Beginning in 2027 and the more profitable EyeQ6 Lite significantly ramps up EyeQ5 share will go down, providing a tailwind to margins. Operating expenses were up 4% year-over-year, which was a bit higher than what we expected due to the timing of engineering reimbursement. We continue to expect overall non-GAAP operating expenses in 2025 to be up about 7% to just below $1 billion. As Amnon mentioned, operating cash flow was $489 million through the first 3 quarters of the year. This is primarily due to strong cash flow from the core business. However, we've also managed tight control over the working capital accounts, particularly our balance sheet inventory, which came down by about $100 million year-to-date. We are now well aligned with our 6-month target for balance sheet inventory, and we expect working capital to be more cash natural going forward. Turning to full year guidance. We are increasing the revenue midpoint by 2% and the adjusted operating income midpoint by 11%. Our full year outlook is based on EyeQ volumes of 35 million to 35.5 million, up from 33.5 million to 35.5 million. Earlier in the year, we maintained an unusually wide range to reflect macro uncertainty and ensure conservatism. Without condition now better clarified, we have greater confidence in narrowing the range and increasing the midpoint. Given 27.3 million units year-to-date, the implied outlook for Q4 is 7.7 million to 8.2 million. At this point in the year, we expect that Q4 volume will end at the higher end of the guidance. We retained a small buffer to account for any unforeseen year-end logistical issues or OEM production constraints to stay cautious. In terms of understanding the current run rate of volume, we think it is best to look at the full year. This is particularly the case in 2025 where normal seasonality was affected somewhat by tariff timing and expectations. Typically, global production is stronger in the second half than the first, but that pattern did not hold this year. Bottom line is the lower Q4 volume compared to Q3 and Q2 should not be interpreted as a trend. It simply reflects an alignment of supply and demand across the full year to ensure customers enter 2026 with lean inventories. As noted earlier, SuperVision volumes are tracking ahead of expectations, and we are modestly raising the outlook to low 50,000 units at the midpoint versus prior outlook of around 40,000 and original outlook in the low 20,000. We expect full year gross margin to be right around 68%, implying a slight uptick in Q4 versus Q3. The full year is expected to be up about 30 basis points year-over-year, pretty consistent with our July commentary. Operating expenses, as noted earlier, are expected to be up 7% year-over-year to just below $1 billion, in line with our original outlook. Thank you, and we will now take your questions.

Our first question comes from the line of Aaron Rakers with Wells Fargo.

I guess the first question is, you mentioned a Western OEM design win that you've achieved. Can you just remind us again, is that additive to the prior kind of development engagement status that you've outlined previously? Is that reflective of the prior Western OEM that was on that list? And just anything around timing of volume contributions? And then I have a quick follow-up.

So to be clear, the confirmation for a nomination that Amnon referred to in his remarks is for a second surround ADAS program. We have announced previously in the year our first surround ADAS program. This is the second from a second OEM, a leading Western OEM with significant volumes with multiple vehicle models, and we expect this to be a significant portion of that OEM's vehicle lineup in the future. And we will disclose more details on this in the next few weeks.

Yes. And Aaron, this is Dan. You might be referring to the IR Day, the Investor Day slide from last year. It is one of the OEMs that was on that chart for surround ADAS.

Yes. I appreciate that. And then talk a little bit about gross margin. You highlighted the fact that EyeQ5 volumes at 10% would go to 15%, and that would continue to be a headwind to gross margin. As the EyeQ6 volumes start to ramp, how do we think about the delta or the gross margin inflection as we think about 2026 between those platforms?

Yes. To emphasize, the EyeQ5 volume currently lacks many running or production programs, and we do not expect any new programs for EyeQ5. Instead, all new launches will come with EyeQ6 Lite. The profitability between EyeQ5 and EyeQ6 Lite is not significantly different; EyeQ5 has slightly lower profitability compared to our EyeQ4. In terms of EyeQ6, which is being launched for our new programs, its gross margin is higher than EyeQ5 and very close to EyeQ4, which we are actively selling. Therefore, while there may not be a considerable headwind, the situation depends on various factors such as vehicle launch specifics, product mix, and the ramp-up of different projects. Nonetheless, gross margin fluctuations are not expected to be dramatic.

Exactly. Yes. I don't think we're going to specify like the impact, but the bottom line is EyeQ5's percentage of total will be the highest next year, around 15%, so not too meaningful versus this year and then start to go down.

Our next question comes from the line of Edison Yu with Deutsche Bank.

This is Winnie on for Edison. My first question is on the 4Q expectations. Just curious if there's any other factors that you're factoring into the market or recently, we've heard about the chip issue, whether you're baking that into the outlook? And then the second question is wondering if you can provide a bit more details around the Lyft and demo program, the launch time, the economics, et cetera.

Yes. Regarding the Q4 volume, the key point we're making is that you should consider the full year volume of approximately 35.5% as the appropriate figure. For 2026, the starting point is 35.5%, not Q4 volume multiplied by four. There's nothing notable happening other than the seasonality being different this year, which we believe is due to the tariffs and efforts to accelerate some production into Q2 and Q3. This situation aligns with our expectations and shouldn't be viewed as a trend. We anticipate a trend of around $9 million per quarter. Regarding Nexar, we have not received any requests to decrease production or shipments; quite the contrary, it’s a very different scenario. Based on discussions with customers, we don't foresee any significant impact in Q4, and we have some margin in our guidance to accommodate any potential minor production decreases, but we don't expect this to influence Q4.

What was the second question, if you can repeat it?

It was on the Lyft and demo program, you can talk about the evolution to that win, the launch time, and the economics.

So if you refer to the Lyft robotaxi program, so we are working with Lyft and Marubeni and a vehicle producer on a robotaxi program in the U.S. We disclosed that the first city will be in Dallas-Fort Worth. We are now in advanced testing stages of this program, and it follows the leading program we have with Volkswagen Group for robotaxi activities in the U.S., and it's been tracking well. And the launch date will be disclosed in the near future.

Our next question comes from the line of Joshua Buchalter with TD Cowen.

I wanted to ask about the metric you gave about normalizing for inventory. I think you said you grew volumes 5% more than your top 10 customers. Is this sort of a rule of thumb we should be using of your expectations for sort of normalized unit growth in '26 and beyond as you see ADAS market and attach rates develop, and then we layer in ASPs more? I'd just be curious to hear if that's like sort of a normalized growth rate you think is the right level for us to benchmark to on a unit basis?

Yes. I think the key here is that investors and analysts should focus on kind of the expected volume of our top 10 customers, which are mostly legacy OEMs and has been a bit below kind of the overall vehicle production for the last few years, not meaningfully, but a bit below. And then we would expect to grow faster than in volume and revenue, we would expect to grow faster than that level because of things like ADAS adoption growth, because of things like growing share within some of those customers, because of things like emerging markets like India. So this year, we consider the performance pretty good. We grew about 5 percentage points faster than the top 10 OEMs, which were down 2% to 3%. And we're not going to put a precise number on what we think it should be going forward, but something in that range is probably fair.

Got it. Dan, I appreciate the insight there. For my follow-up, it sounds like you're discussing the ongoing progress in engagements for eyes-off technologies. There appears to be significant momentum in the industry, both in robotaxis and consumer passenger vehicles regarding eyes-off features. What do you believe the OEMs need to see to move forward in these engagements, and what timeline do you expect for announcing additional Chauffeur or SuperVision wins?

The focus now is on execution. With SuperVision, the hardware is at the C sample stage, which is quite advanced for production. We have several significant software updates planned in the next six months. I believe that by the first half of 2026, we will be close to being production ready with the SuperVision and Chauffeur platforms. This should allow us to gain more opportunities for new program wins. Therefore, the company's emphasis in that area is on execution, including for the robotaxi with a driver. In essence, 2026 will be a year for execution rather than concentrating on acquiring new business, at least in the first half of the year.

If I can add color to what Amnon said, in the last 1.5 years, we've been working simultaneously on SuperVision, Chauffeur robotaxi for execution in the past, let's say, 8 months, we've added also surround ADAS production program that execution process. Right now, we are on track with the original timelines of all of these programs, and we are in B sample or C sample hardware and stable platforms, which is an important achievement in order to maintain the original timeline. And now we're focusing on software iterations, AI innovation and integrating the latest AI stack into these platforms. Doing so simultaneously is a significant achievement for us. And we believe that now within the next few months, we will show a very mature production platform that uses production hardware with the latest AI technologies that shows meaningful performance improvement compared to what exists today in the industry is the next big thing for us to show in general to our customers and also for new engagements, and that's expected within months from today.

Our next question comes from the line of Chris McNally with Evercore ISI.

Amnon, I wanted to dive in on the Surround and congratulations on the big win. It sounds like there's a different technology path that maybe you and the industry had thought a couple of years ago, where supervision would sort of be the kind of a walkway to higher forms of Chauffeur and eyes-off, and it sounds like given the industry has been a little bit slower on that front. Maybe how much they would charge for it, et cetera, it seems like Surround is now that technology gateway. And I just would love to understand from your standpoint, is it sounds like a must for the OEM to hit 2029 regs, meaning they really can't do this with an internal solution or even the solution that you've been providing them originally with the $50 chip. So is this one of the reasons you're seeing so much traction? This is the logical step up of your Level 2 customers to Surround?

Okay. So I'll let Nimrod first answer and then I'll complete if necessary.

Chris, so I think Surround ADAS is a very important category for OEMs because it's not just about new user experiences, but also adhering to emerging regulation in developed markets. And it's a very, very cost-optimized product segment because it's designed for high-volume vehicles and for pretty much $20,000, $30,000 vehicles and above, it requires very, very efficient design and a close software hardware integration. Mobileye is known to have a very efficient chip and very efficient software, and we can achieve pretty much, we think, the most competitive price point for this product category. And from an OEM standpoint, thinking about whether you want to buy or build a product in that category, it's not just about understanding AI or different software technologies; can you get to such a level of efficiency on vehicles that are in tens of millions per year? If you fail, you may jeopardize your core business. And so forcing an existing available solution that is very mature is the safe choice. And maybe if you're into in-house development, you can focus this on the higher end of applications and smaller volumes, maybe 1% of your cars, and then if it fails or is significantly delayed, there is no damage done to the core cash cow of the company. And that's where we see their interest. Just yesterday, GM announced their Level 3 eyes-off development that is designed for a very specific vehicle category. I think they disclosed the type of vehicle, and it's a very high price point. As you all know, GM sells cars in $30,000, $40,000 also. Obviously, that solution is not appropriate for these vehicle price points. And it may make sense for them to find a proven, reliable, trustworthy high-performing, cost-efficient solution for the vast majority of volumes, while they focus on the high end.

And I think I'll continue. I think likewise going into Level 2 plus with 11 cameras, our SuperVision. We are working very diligently on very innovative cost-reduction schemes. So looking into 2028 time frames and beyond, we can offer significant price reduction on SuperVision. The next level that OEMs are considering are eyes-off systems. And there, as I said before, execution is the key. If we launch an eyes-off system, and that's what we are planning to do in 2027 with Audi, that will be kind of an inflection point. Seeing such a product at work passing through all the regulation, the sub-certification and regulatory approvals, passing the MTBF bar that is needed to have eyes-off, this is a significant achievement. Once we pass that bar, I think that will be a big inflection point.

I believe there is no doubt that eyes-off driving and eventually mind-off driving represent the ultimate value for consumers. Most OEMs are quite interested and optimistic about this concept. The main question is whether now is the appropriate time for them to fully commit to a partner, considering the current technology maturity and associated costs. Outside of China, there is no other technology provider, apart from Mobileye with Audi, that is closely collaborating on the complete system, including hardware, software, silicon, and AI, while also obtaining necessary testing approvals and homologation. A lot of attention is on us, and we expect to demonstrate more evidence of technology maturation in the coming months. As Amnon mentioned, we anticipate that this will mark a crucial inflection point for that product.

Nimrod, my only clarification or a summary of what you said is super helpful. So is it logical then to think like your first customer, which is VW, that basically your target audience it's not going to be 100%. But your target audience for Surround is existing basic ADAS customers that now need to convert for 2029, and so your second customer, as an example, upgrades ADAS into Surround. And then there's a future path beyond that to eyes-off?

That's exactly the case in that nomination we disclosed. It's an upgrade from EyeQ6 Lite to EyeQ6 High. That's the decision that OEM made. And so that's the right summary of how we see things.

Our next question comes from the line of Mark Delaney with Goldman Sachs.

I hope you can double-click on the DRIVE opportunity with Lyft and Marubeni. I believe the company said today, I think it can name the OEM partner for that engagement soon. So should investors assume that the OEM partner is already effectively finalized? Or is there still uncertainty as to which OEM Mobileye is going to partner with? And if there is still uncertainty, what would the timeframe need to be to line up the OEM partner in order to meet the 2026 start of operations objective?

So there's no uncertainty who that OEM is, but it's not finalized yet. So I cannot say with 100% guarantee that it will be finalized, but it looks on track and it looks good. I would say that this is in parallel to our existing activity with Volkswagen of the ID.Buzz and with the Holon platform with Benteler. So we have quite a lot of scale opportunity with the existing relationships. This is why I mentioned before that it really focuses execution. Scale and business will come once execution is there.

Just one more clarification, Mark. The vehicle provider isn’t one we will only start working with after finalizing the agreement. Over the past 18 months, we have been collaborating closely with Marubeni, the vehicle OEM, and Mobileye to create multiple prototype vehicles and develop the actual vehicle platform. We are integrating our self-driving system with the sensors. We have several vehicles equipped with all the necessary sensors and computing infrastructure, similar to what we are doing with the ID.Buzz in our leading program. Therefore, we are poised to hit the ground running once the agreement is finalized and disclosed. This marks a natural transition into serious development toward a commercial launch.

Yes. And I would just add one more point here is that if there's a bit of wait and see on consumer-owned high-end eyes-on and eyes-off technology, robotaxi is exactly the opposite. There's so much activity, but the key is removing the safety driver and starting to commercialize. And that's our main priority right now. And the core technology is the same, no matter what the vehicle platform is. There's integration work to be done, but it's the core technology that's being worked on. And once we kind of can remove the safety driver, then we can start to commercialize and scale.

That's all very helpful. My follow-up question is also on Drive with VW and the ID.Buzz, you mentioned you're tracking to be driver out next year. Could you just speak a bit more on what still needs to happen in order to take the driver out next year? And any sense of when within the year that milestone may occur?

Well, there are a number of milestones. One is the readiness of the vehicle that should be ready in the next weeks or a few months. And second is the MTBF KPIs, which we are tracking, that are on track. And we believe that in the first half of 2026 we can start removing the safety driver in one city in the U.S. and to prepare for a commercial deployment later in the year and beginning of 2027.

Our next question comes from the line of Joe Spak with UBS.

Just going back to the surround ADAS nomination. I was wondering if you guys could provide a little bit of color as to sort of what got the customer over the line, maybe a little bit of detail on the level of integration that you were doing versus maybe the automaker's DXP involved? And then just in terms of the rollout, is this a case where we need to wait for new model launches? Or can this product be placed on refreshes?

I will take this, Joe. We believe the main reasons for upgrading from EyeQ6 Lite to EyeQ6 High are related to the standard sensor set for that OEM, which includes at least 5 cameras and 5 radars. In the past, some of these cameras were primarily used for top-tier visualization, such as for parking, while only the front camera and radars were employed for ADAS, leading to inefficient design. The OEM opted to streamline their ECU architecture, essentially simplifying it and routing all sensors to the EyeQ6 High. This processor is capable of handling all these sensors, resulting in a richer sensing environment and enhanced user experience, offering features like hands-free driving on highways and meeting advanced ADAS requirements. The cost increase for the OEM was justifiable given the added value, as their decision shows. The chip is not excessively more expensive; it's generally 2 to 3 times costlier. As they recognized, the transition makes perfect sense. We're also exploring similar future consolidations with other OEMs, incorporating parking applications, driver monitoring systems, and ADAS, all manageable by the EyeQ6 High at a competitive cost. This is an appealing option for OEMs. As for vehicle launches, this involves a new architecture, but we are also developing for existing architectures simultaneously, so it's a mix of both.

And then I guess just as a follow-up, I think in the prior update there were maybe 3 or 4 other sort of advanced engagements about Surround. I was wondering if you could just get an update there. And maybe going off of some of the commentary on Chris' question, like have you seen sort of more initial maybe SuperVision move more towards surround in the near term?

I wouldn't say that SuperVision engagements are transitioning to Surround. It's more about our existing ADAS engagements expanding to Surround based on our observations. The first two design wins we have for Surround ADAS involve OEMs with high volumes that typically sell cars at lower price points. These companies previously sourced a front camera solution and have now opted for a Surround ADAS solution for the same vehicle category. This serves as evidence for our assessment. Additionally, Mobileye collaborates with nearly all OEMs regularly regarding our offerings, and we are seeing significant interest. We prefer to provide updates when we have formal nominations, similar to what we shared today. Nevertheless, we remain confident in the robustness of our outlook.

Our next question comes from the line of Shreyas Patil with Wolfe Research.

Maybe just to follow up on the earlier one. How do you think about the competitive landscape when it comes to Surround ADAS? I think there are 3 or 4 other major suppliers that are trying to win awards here as well. And maybe just to give a little bit of background on the bidding process that went into securing this award, the second award that you just announced.

We're talking about a very highly competitive market in terms of cost, cost-optimized product. So all the high-performance chips that you hear, the price point is not relevant for such a product. Our chip, the EyeQ6 High, is both the core chip for our AV, for example, in SuperVision we have 2 of those chips and in Drive, we have 4 of those chips and in Chauffeur 3. But one chip is highly cost-optimized, and we can meet the cost desires of OEMs with our SoC that can process all those multiple sensors, 5, 6, or 7 cameras and 5 radars and ultrasonic and so forth. So we're talking about the game in which cost is highly critical. So we have first mover advantage. So we were the first to receive nomination with the Volkswagen Group on Surround ADAS. And the new win of today shows that we are successful in leveraging our first-mover advantage. So it's all about here cost and performance, but cost is critical because we're talking about high-volume vehicle categories. And so it's not that there is no competition, but we do have first-mover advantage, and we are showing that we can leverage that.

Another aspect of efficiency that should be considered beyond just the price is that our EyeQ6 High chip can deploy nearly all state-of-the-art AI architectures while being very efficient in power consumption. This allows us to offer a passive cooled solution, for instance, that does not require liquid cooling. While this may seem like a small technical detail, it significantly impacts overall system cost and complexity for OEMs; for example, combustion engine vehicles may not have liquid cooling available. Other competitors are trying to rely on more sophisticated processing of sensors and using some AI technologies, and they may opt for a high-performance chip in that product category. This not only creates a price disadvantage but also complicates the overall system. Our chip's low power consumption is a crucial element that is difficult to compete with without sacrificing performance.

Yes, I'll just give a color in terms of performance of the EyeQ6 High. Our internal benchmarks running on both convolutional METs and vision transformers show that we are on par and in many cases, better than the Orin-X, which is now the choice of competition when OEMs are considering the Level 2+ systems. But at a price point, which is less than 25% of it. So this gives us a great advantage. On one hand, we have a high-performance chip, which is on par with the latest high-performing chips in the automotive industry. On the other hand with a cost structure and power consumption constraints that are way, way more appealing.

Okay, that's really helpful. And then maybe, Amnon, I think last quarter, you talked about Drive potentially becoming a more material revenue contributor by 2027. Wondering if maybe you can expand on that a little bit. And you've talked about in the past at a relatively high upfront revenue stream, maybe $40,000 to $45,000? How should we think about the rate at which you can bring that down, especially as robotaxi operators are looking to bring down vehicle costs to improve overall unit economics?

Our economics from every robotaxi is comprised of both one-time fee and revenue sharing on price per mile. And over time, we will kind of change the equation, maybe reduce the one-time fee, increase the cost per mile. So we both will have a recurring revenue and also the one-time fee of the system. With the robotaxi, it's really just execution because the current contracts that we have with the existing partners talk about many tens of thousands of vehicles in the end of the decade. Just to give you a proportion, today's very, very successful Waymo is based on 3,000 vehicles. So it's really just a matter of execution. If we execute, we execute our plans of removing the driver during the first half of 2026 and prepare this for commercialization beginning of 2027, the volume is there and in very, very big numbers.

And in terms of the upfront cost, we have the room to switch around upfront cost versus recurring revenue because we have low costs in general. So we can stay profitable on the upfront cost down quite a bit and kind of replace that with more recurring revenue.

Our next question comes from the line of Luke Junk with Baird.

I want to stick with robotaxi. We've talked a lot about U.S. robotaxi and Driver Out this morning. Hoping we could get an update on progress towards Driver Out in Europe as well, especially relative to the different regulatory homologation there and just maybe Europe versus U.S. dynamics in general right now for Mobileye.

Yes, there are distinctions between Europe and the U.S. The U.S. predominantly follows a self-certification process, which we are currently utilizing. We have nearly 100 vehicles operating in three U.S. locations for testing and are collaborating with additional car manufacturers and robotaxi platforms to expand further. In Europe, we have a comparable number of vehicles; however, launching commercially requires more emphasis on homologation and prior engagement with regulatory authorities. We are pursuing this process in partnership with Volkswagen Group, which is directly working with the German government. At the recent IAA conference in Munich, we had the opportunity to meet the German chancellor, who visited the Mobileye booth and participated in a test trial with our ID.Buzz vehicle in Hamburg. He expressed his admiration, and his remarks were widely reported in the German media. He highlighted Germany's ambition to be a leader in Europe for autonomous driving and stated that government funds should be allocated to accelerate this initiative. He was pleased with the successful collaboration between Volkswagen and Mobileye, and this has been covered in the media, so there is no confidential information in what I've said. We believe we have strong support from the German government and plan to launch first in Germany, starting with Munich, Hamburg, and Berlin. This collaboration raises the entry barriers for other competitors looking to enter the European market, and we see the advantage of being a first mover by working with Volkswagen, which has solid connections with the German government.

And then for my follow-up, Amnon, you mentioned just a wrinkle in terms of more OEMs adding REM to front-facing programs, just curious your thoughts on that. Is it mainly around increasing the data collection? Could it be maybe a precursor of something in terms of future advanced product engagements with those customers as well?

So it's both for data collection, what we call harvesting. We have more OEMs using REM for harvesting, and that's a precursor to also using REM for hands-free driving. Maybe Nimrod, do you want to add more?

We recently secured a partnership with a major OEM that has significant production capabilities, aimed at enhancing global harvesting volumes and utilizing the REM database to optimize the performance of front-facing cameras. The strategic advantage for us lies primarily in expanding our OEM network that uploads data. This data is crucial not only for leveraging the REM database as one of our competitive advantages, which we have discussed previously, but also for its elegant application in our AI training and development. We may provide further details about this in the future. This represents a significant competitive edge, as we can offer enhanced performance in front cameras without a substantial price increase. We are gathering data from numerous OEMs, with over 7 million vehicles worldwide currently uploading data, including more than 2 million in the U.S. and similar figures in Europe, Japan, Korea, and soon India. Our global coverage is robust and diverse in terms of the types and numbers of OEMs, which gives us confidence in our harvesting capabilities.

Our next question comes from the line of Dan Levy with Barclays.

I wanted to just follow up on the prior question first and on the driver out, specifically in the U.S. for some of the programs you had. I know you said it was a self-certification process, maybe you can just go into maybe what are some of the gating factors that you need to see from a technical side to get comfortable to actually pull the driver? And what is the expected timing on driver out?

In terms of expected timing, we said it's going to be the first half of 2026 in one city in the U.S. In terms of the technical milestones, now we have a very elaborate safety program. It's called the PGF that we talked about in the past IR meetings and at the CES and we made that public also in terms of an academic paper that we published around it. And also in terms of mileage driven in order to prove to ourselves what is the MTBF. So together with ADMT, which is the daughter company of Volkswagen, who was responsible for this program, we have agreed on MTBF milestones per type of accident. So it's not just one number. There are a number of different types of accidents. What is the MTBF, and we're tracking those numbers. And the trajectory that we see gives us confidence that we can achieve that by the first half of 2026.

Great. As a follow-up to Tesla's call last night, Elon discussed their efforts with AI, the AI5 chip, and the overall design performance, emphasizing that this is a significant advantage. I believe you've mentioned something similar during this call and in broader discussions. Regarding EyeQ6 and eventually EyeQ7, could you remind us how customer engagements are assessing the strength of your SoC design in comparison to competitors? For those who are SoC agnostic and prefer to bring their own silicon, how much are customers actually leaning towards your solution because of the SoC?

The first question to consider is why more computing power is necessary. Tesla and Mobileye have different approaches; Tesla depends solely on cameras for its sensor modality. This reliance creates a challenge in machine learning where reducing variance requires more data and compute power to achieve a high Mean Time Between Failures (MTBF). Currently, Tesla's Full Self-Driving (FSD) performance, based on public FSD tracker records, falls significantly short of the benchmark needed for unsupervised driving. Thus, the demand for increased compute and data is critical in their AI competition. On the other hand, Mobileye's strategy includes redundancy. We focus on enhancing computer vision through cameras while also incorporating imaging radars and front-facing LiDAR for driverless systems. This redundancy alters the requirements. Our PGF framework aims to create numerous redundant subsystems, allowing us to launch the EyeQ6 High on a cost-effective platform. The Chauffeur utilizes three EyeQ6 chips, which are highly cost optimized, similar to our Drive 4 EyeQ6. Thus, the question arises: why do we need additional compute? Our switch from EyeQ6 to EyeQ7 raises questions about its purpose. If the goal is price reduction, that's not necessarily the case. We believe more computing power is essential to transition from eyes-off to minds-off driving—an aspect typically overlooked in industry discussions about eyes-off benchmarks. Our target for minds-off capability is 0.29 and higher. Achieving this requires AI with robust perception abilities, which may function at lower frame rates without compromising safety mechanisms. We perceive the EyeQ7 and EyeQ8 as supplements to the EyeQ6, not replacements. It's a different approach; transitioning from EyeQ6 to EyeQ7 entails extensive validation processes to ensure driver removal safety, which would not necessitate chip replacements due to the immense validation workload. We hold a unique perspective on where additional compute is essential in advancing our technology.

This will be our last question.

Okay. Our final question is coming from Colin Rusch with Oppenheimer & Company.

I just have a quick one around the cadence of your own chip design. Given some of the tools that we're seeing out there and the potential for accelerated time frames, are you seeing meaningful opportunities in terms of accelerating some of those development timelines and really being able to validate some of these more simplified designs that you guys are talking about?

Our chip portfolio includes options for both low-end models like EyeQ6 Lite and high-end models such as EyeQ6 High, which is currently in production and comparable to Orin-X for running programs like convolutional nets, ResNet, vision nets, and transformers. EyeQ7 is on par with Thor in terms of performance, and EyeQ8, which is in the design phase and set for production in 2029, is expected to be 3 to 4 times more powerful. EyeQ7 and EyeQ8 are designed for minds-off operation, while EyeQ6 suffices for eyes-off capability, enabling robotaxis with no teleoperators. Our goal with robotaxis is to eliminate the need for teleoperators, and for consumer-operated vehicles, we aim to allow drivers to sleep while using the system, which requires more computing power. We will have new designs approximately every two years, which fits well with the industry's pace and technological advancements.

Colin, thanks for the question. I don't think we have time for a follow-up. I want to respect everyone's time.

Thank you. This now concludes our question-and-answer session. I would like to turn the floor back over to management, Dan Galves for closing comments.

Thanks, everyone, and looking forward to the Q4 call in January. Thank you. Have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.