The shares of vehicle technology developer Mobilyeye (MBLY) are surging after Bloomberg reported that the company is collaborating with Intel (INTC) to create autonomous vehicle systems for BMW (BAMXY), scheduled to be unveiled at an event co-hosted by the companies tomorrow. The potentially "game changing" announcement will help settle a debate between Mobileye bulls and bears as to whether chip makers will work with or against the company in the autonomous vehicle space, according to research firm Evercore.

WHAT'S NEW: Israel's Mobileye, which already sells products to BMW, is working with Intel on developing self-driving technology for BMW, Bloomberg reported last night. The three companies announced that they would hold an event tomorrow featuring their CEOs. At the event, the are expected to unveil their alliance and divulge details about it.

GAME CHANGER: Mobileye bulls and bears had previously debated about whether chip companies would look to compete with the Israeli company or partner with it, noted Evercore analyst Chris McNally. The news announced last night indicates that Intel isn't interested in competing with Mobileye, McNally believes. Noting that Mobileye has said that the selling prices of its self-driving systems will be much higher than its current offerings, McNally estimates that Mobileye will obtain about $300 per vehicle for its self-driving technology. The company obtains about $150 per vehicle for the semi-autonomous technology it currently develops, the analyst reported. Furthermore, most analysts who are bullish on Mobileye value the company based on 2018-2020 forecasts which include autonomous safety and "small amounts" of revenue from semi-autonomous systems, McNally wrote. "Very few" analysts have speculated about the revenue that the company could obtain from selling fully autonomous technologies in the late 2020s, he wrote. Mobileye's deal with Intel could be a game changer for the Israeli company, contended McNally, who kept a $60 price target and Buy rating on the shares.

WHAT'S NOTABLE: Even more bullish on Mobileye in the wake of the Bloomberg report was research firm CLSA. BMW will probably announce that it will launch a new, full autonomous vehicle, based on Mobileye's technology, in 2021, the firm wrote. Such a development would constitute a "strong vote of confidence" by BMW in Mobileye's autonomous technology, according to CLSA. The firm, which had previously said that Mobileye's new dynamic mapping service "could rapidly give it an insurmountable moat" in the autonomous driving space, kept a Buy rating on the stock.

PRICE ACTION: In early trading, Mobileye surged $6.00, or about 14%, to $48 per share.