TomTom Shares Rise 9% After European Union Decision
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Shares in Dutch navigation and mapping company TomTom closed 9.3% higher on Wednesday, after the European Union published rules specifying that cars must incorporate a technology that the company supplies, starting in 2022.
TomTom works with carmakers to provide the technology that helps drivers comply with speed limits, called “intelligent speed assistance.”
The publication in the Official Journal of the European Union specified that new car models must use the technology starting in July 2022, and all cars sold must have it by 2024.
Chief Executive Harold Goddijn was scheduled to meet with investors at a conference during the day, though it was not clear whether he discussed potential financial benefits to the company.
A spokesperson for TomTom could not immediately comment. Sebastian Marland, an equity research analyst at AFS Group, said he believed the news was the trigger for the stock’s surge.
“This creates a momentary opportunity for TomTom as it provides the tech required to ‘add-on’ to the cars,” he said.
However, “from 2024 onwards, all cars in the EU must have it installed, making TomTom’s tech redundant in the long term.”
Questions & Answers
Q.When do new car models have to start using this specific technology?
When do new car models have to start using this specific technology?
New car models are mandated to incorporate the intelligent speed assistance technology from July 2022. This ruling was published in the Official Journal of the European Union, affecting all new designs first.
Q.Will all new cars sold in the EU have to include this technology?
Will all new cars sold in the EU have to include this technology?
Yes, all cars sold within the European Union must have the intelligent speed assistance technology installed by 2024. This follows the initial requirement for new car models starting in July 2022.
Q.How will this EU decision impact TomTom in the long term?
How will this EU decision impact TomTom in the long term?
An equity research analyst believes the technology could become redundant for TomTom in the long term, starting from 2024. The mandatory installation across all cars in the EU might change market dynamics.
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