Mobileye shares sink on news Tesla contract won't be extended

July 26 (Reuters) - Shares of Mobileye NV, an Israeli maker of driving-assistance chips and software, plummeted on Tuesday after the company said its contract with Tesla Motors Inc would not be renewed after its expiry.

The company’s shares fell as much as 13.7 percent to $42.56, their biggest intraday fall since January.

“Mobileye’s work with Tesla will not extend beyond the EyeQ3,” Mobileye said in a statement, referring to its chips that provide image analysis for Tesla’s Autopilot technology, which helps drivers steer and stay in lanes.

“We continue to support and maintain the current Tesla Autopilot product plans,” Mobileye said.

The company did not say when its current contract with Tesla will expire.

Mobileye’s plans come at a time when the electric car maker’s Autopilot is facing scrutiny from regulators following a fatal accident.

Tesla Chief Executive Elon Musk said in his latest “master plan” last week that his company planned to make fully autonomous vehicles in the future.

Mobileye also reported better-than-expected second-quarter profit and revenue on Tuesday, helped by strong sales and higher prices for the EyeQ chip line.

About 9 million Mobileye shares had traded, more than double the 30-day average.

Up to Monday’s close, Mobileye’s shares had risen 16.6 percent this year. (Reporting by Sai Sachin R in Bengaluru; Editing by Ted Kerr)