Apple cancels electric car project after 10 years – 02/27/2024 – Market

Apple has canceled a decade-long effort to build an electric car, abandoning one of the most ambitious projects in the company’s history, according to people with knowledge of the matter.

Apple made an internal announcement this Tuesday (27), surprising the almost 2,000 employees who worked on the project, said these people, who asked not to be identified because the announcement is not public.

The decision was shared by the COO, Jeff Williams, and Kevin Lynch, director responsible for the project.

The two executives informed employees that the project will begin to close and that many employees from this team — known as the Special Projects Group, SPG — will be transferred to the artificial intelligence division under the command of executive John Giannandrea.

These employees will focus on projects related to generative AI, which has been given increasing priority at the company.

The team behind the Apple Car also includes several hundred hardware engineers and vehicle designers. They may be able to apply for jobs on other Apple teams. There will be layoffs, but it is unclear how many.

When contacted, Apple, which is based in Cupertino, California, did not comment.

The decision was a relief for investors, who made Apple shares rise this Tuesday (27) after falling the previous day. Shares rose about 1% after Bloomberg published the news.

Elon Musk, CEO of Tesla, also celebrated the decision. He wrote a post on X using a greeting emoji and a cigarette emoji.

The decision to end the project is a blow to the company, ending a multibillion-dollar effort called Project Titan that would have placed Apple in a completely new industry.

The tech giant began working on a car around 2014, aiming for a fully autonomous electric vehicle with a limousine interior and voice navigation.

But the project faced difficulties from the start, with Apple changing the team’s leadership and strategy several times. Lynch and Williams took charge of the venture a few years ago — after the departure of Doug Field, now an executive at Ford.

Apple was also facing a slowing market for electric vehicles. Sales growth has lost steam in recent months as high prices and a lack of charging infrastructure discourage ordinary buyers from switching to all-electric vehicles.

General Motors and Ford decided to produce more hybrid vehicles after facing weak demand for electric vehicles and manufacturing bottlenecks. Automakers across the industry are slashing prices, production targets and profit forecasts for battery-electric cars.

Even Tesla, the pioneer of the electric vehicle revolution in the US, has warned that its rate of expansion will be “notably slower” this year. Electric vehicle sales growth will slow to 11% this year, after an estimated 47% growth rate in 2023, according to a forecast from UBS AG.

Apple’s top executives made the decision in recent weeks, according to the people familiar with the matter. This comes just a month after Bloomberg reported that the project had reached a crucial point.

The most recent idea discussed internally was to delay the launch of a car until 2028 and reduce the technology’s autonomous driving specifications from Level 4 to Level 2+.

Under the new arrangement, Lynch will report to Giannandrea. He previously reported to Williams, who also oversees Apple Watch software engineering.

Apple had already imagined creating a car without a steering wheel and pedals, but abandoned the idea. The company also spent time working on a remote command center that could take control over for the driver.

More recently, Apple estimated the car would be priced at around $100,000. But executives were concerned about the vehicle’s ability to deliver the profit margins that Apple typically makes on its products.

The company’s board was also concerned about continuing to spend hundreds of millions of dollars a year on a project that might never see the light of day.

Apple continues to invest heavily in other areas. The company has spent $113 billion on research and development over the past five years, with an average annual growth rate of about 16%.

The company also recently launched the Vision Pro headset — its first product in a new category in nearly a decade — and established this new arm.

The company has abandoned projects before, including a plan to make a TV that was scrapped around 2015. But few ventures have lasted so long, involved so many employees or racked up billions of dollars in expenses.

So far, Apple’s biggest foray into the auto industry has been its CarPlay software, which allows drivers to access iPhone features like maps and Siri. It is being redesigned to integrate more deeply with vehicle controls and entertainment systems.

By not competing with car manufacturers, Apple could boost this software, helping to spread it to more models.

Focusing on AI may be a better bet for the company, Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a note.

“Apple’s decision to abandon electric cars and shift resources toward generative AI is a good strategic move, we believe, given the long-term profitability potential of AI revenues compared to cars.”