Apple is ending its decade-long effort to create an electric car, according to insiders. Bloomberg's Mark Gurman says the company surprised the 2,000 employees who worked on the project on Tuesday with the decision.
The non-public decision was agreed upon by the company's chief operating officer Jeff Williams and vice president Kevin Lynch. These executives informed employees that the project was being phased out. Many employees of the automotive team, known as the Special Projects Group, or SPG, will be transferred to the artificial intelligence department under the leadership of John Giannandrea. These employees will focus on generative artificial intelligence projects, which is becoming a larger priority for the company.
The Apple Car team also consists of several hundred hardware engineers and car designers. It is possible that they will be able to apply for jobs in other Apple teams. Layoffs are expected, but it is unclear how many there will be.
This unofficial information from Bloomberg was received positively by investors: Apple shares rose about 1% to $182.63 on Tuesday.
Elon Musk greeted the news with a tweet with emoticons:
🫡 🚬 https://t.co/f5wn0y95gx
— Elon Musk (@elonmusk) February 27, 2024
The decision to finally shut down the project was a bombshell for the company and marked the end of the multibillion-dollar “Project Titan” program, which was supposed to take Apple into an entirely new industry. The tech giant began working on the car around 2014, aiming for a fully autonomous electric vehicle with a limousine-like interior and voice-activated navigation.
But the project had problems almost from the very beginning, Apple changed the team's leadership and strategy several times. Lynch and Williams took over the reins several years ago following the departure of Doug Field, now a senior Ford Motor Co. executive.
Apple was many years away from producing the car and considered many different design options. A major challenge was autonomous driving technology. Apple has been road testing its system since 2017 using the exterior of a Lexus SUV and dozens of vehicles on US roads. The company also tested more secretive components at a giant track in Phoenix that was once owned by Chrysler.
According to insiders, Apple's senior management made the decision in recent weeks. The last decision before that was to delay the car's release until 2028 and lower the autonomous driving specifications from Level 4 to Level 2+. Apple once planned to create a car without a steering wheel or pedals, but abandoned this idea. The company also spent time working on a remote command center that could replace the driver.
Under the new arrangement, Lynch will report to Giannandrea. He previously reported to Williams, who also led software development for the Apple Watch.
More recently, Apple envisioned the car costing around $100,000. But executives were concerned about whether the vehicle could generate the profits Apple typically makes from 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.
Focusing on AI may be a better choice, say Bloomberg Intelligence analysts Anurag Rana and Andrew Girard: “Apple's decision to move away from electric vehicles and focus resources on generative AI is a good strategic move in our view, given the long-term profitability potential of AI revenue streams compared to cars.”
Apple faces a cooling market for electric vehicles. Sales growth has slowed in recent months, with high prices and a lack of charging infrastructure preventing everyday buyers from switching to all-electric vehicles. General Motors and Ford are trying to make more hybrid vehicles after facing weak demand for electric vehicles and production bottlenecks. Other automakers are significantly reducing electric vehicle prices, production plans and profit forecasts.
Tesla, a pioneer of the electric vehicle revolution in the US, has warned that its expansion rate will be significantly slower this year. Domestic electric vehicle sales growth will slow to 11% this year from a forecast of 47% in 2023, according to UBS AG.
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