By Tova Cohen and Steven Scheer
SHFAYIM, Israel (Reuters)
Technology that has helped Israel’s military drive tanks, guide and intercept missiles, and keep its computer systems secure is being redeployed in the development of driverless cars
Investment from firms seeking access to Israeli expertise in automated driving, much of it gathered by engineers during their conscription, is pouring into startups.
U.S. chipmaker Intel, German auto supplier Continental, Samsung, Daimler, Ford Motor Co and GM are among those to have bought startups or set up their own development centers in Israel.
Inexperience in car-making, distance from traditional auto centers and competition from other tech sectors for top staff are a challenge for investors.
Israeli auto tech startups still raised almost as much as similar U.S. companies last year.
“A lot of the entrepreneurs are coming out of the Israel Defence Forces and they tend to be older than the traditional Silicon Valley (entrepreneurs),” Ford Executive Chairman Bill Ford Jr. told Reuters.
“They have a lot of judgment and wisdom. Particularly in areas like cybersecurity, there’s tremendous activity coming out of Israel.”
The United States attracts the most investment in the sector with companies raising $1.2 billion last year, according to venture capital data provider CB Insights. Silicon Valley, Pittsburgh and Detroit are making efforts to be leaders in the driverless car era.
Israeli auto tech startups are not far behind. They raised $814 million last year, triple the 2015 level, and $182 million in the first quarter of 2018, in line with last year’s pace, according to Start-Up Nation Central.
Investment in Israeli autotech including venture capital, acquisitions and joint ventures, totaled $3.5 billion in 2017, said Micki Shapira, a partner at law firm Weinstock Zecler & Co.
Startups elsewhere are making a push. Beijing has emerged as a hot spot, with strong backing from the Chinese government.
But Israel’s innovation, often in elite military departments such as the cyber intelligence Unit 8200, wireless sensors, security, location finding and analytics software means it is well positioned to rival Silicon Valley.
Cybersecurity expertise ensures that the computers of driverless cars keep hackers out while radar, sonar, sensors and positioning systems are used to keep the cars on the road and stop them crashing into other vehicles or objects.
Cyber and fraud detection techniques are rooted in counterterrorism while breakthroughs in optical and sonar software may stem from missile defense, said Evercore ISI analyst Chris McNally.
On an empty highway built by Israel’s government to test self-driving cars near Shfayim, north of Tel Aviv, a Samsung-backed startup called Imagry last month demonstrated its technology on a modified Kia Soul.
The five-seater, equipped with cameras, infrared and artificial intelligence, kept a safe distance from another car. Autonomy – without relying on the expensive laser detection system known as lidar which Waymo and GM use – has become a quest for the industry.
“Cameras provide the most high resolution information and they are available and commoditized,” said Imagry’s chief executive officer (CEO) Adham Ghazali. His goal is to produce cheaper technology than lidar.
Another Samsung-backed startup, Innoviz, whose CEO spent 7 years in an elite technological unit of the IDF’s Intelligence Corps, wants to lower the cost of lidar rather than replace it.
Together with partner Magna it signed a deal last month to supply lidar to BMW. Innoviz raised $73 million in 201.
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