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Apple cancels car-building project

2024-06-25 Update From: AutoBeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)03/03 Report--

On Tuesday, local time, Apple announced that it had shelved and cancelled all development plans for self-driving electric cars, which shocked nearly 2000 employees involved in the project. Jeff Williams, Apple's chief operating officer (COO), and Kevin Lynch, vice president in charge of the project, made the decision. The two executives told employees that the project would begin to be scaled down, while many members of the automotive team, the special project team, or SPG, would be transferred to the artificial intelligence department, led by executive John Giannandrea, while some of the more project-related employees, such as hardware engineers and car designers, could face reassignment to other Apple teams. At the same time, Apple will also make layoffs, but the exact number of layoffs is unknown.

Apple has yet to comment on the news. Apple has reportedly abandoned a decade-long effort to build a car as well as the most ambitious project in its history, an effort once seen as potentially transforming the auto industry. It is worth mentioning that Apple shares received a brief boost after the report, closing up 0.81 per cent at $182.63, with a total market capitalization of $2.82 trillion.

Maybe, from the point of view of the industry and the outside world, Apple building cars is not a feasible project, but in any case, Apple has been crawling along the road for more than a decade. Apple's car-building program, which began around 2014, invested billions of dollars, and the team involved in the car project is full of talent, not only Steve Zadesky, the head of the original iPod, but also Jonathan Ivy, the former Apple design director.

However, there are two voices inside Apple on the path of building the car. One is that Apple should build a production line to achieve high-quality vehicle production through cooperation with mature suppliers in the automotive industry. Another voice believes that Apple should look to the future market, that is, high-end self-driving and electric car products. Obviously, as a technology company, the latter is more in line with Apple's taste, so Apple decided in 2016 that it will focus on software and focus on self-driving research and development, but Apple is not interested in L3 and L4 self-driving. From the beginning, they set their sights on the highest L5, which is undoubtedly very difficult for Apple, which has no experience in making cars.

In 2019, Apple carried out a major internal reform, the management of the original automobile project has undergone major personnel changes, Apple's car-building strategy has also changed, and began to negotiate cooperation with Hyundai, Volkswagen, Toyota and other car companies. however, the stringent requirements on the supply chain made the negotiations unsuccessful. In the end, instead of building a car successfully, Apple, which spent a lot of money, had to examine its own car-building projects with the rise of cars in China, and changes in the market put more pressure on Apple.

From the industry's point of view, there are three main reasons for Apple to give up building cars: 1. The car-building business has a large investment, a long cycle, fierce competition, cash flow is squeezed, competitiveness and project returns are difficult to evaluate. 2, the outside world pays attention to the autopilot ability, and the safety supervision will be more and more stringent, and the company will be dragged into the whirlpool of public opinion and regulation. 3. Cook does not take the lead in All in, project leaders change frequently, project goals continue to downgrade, internal morale is low and morale is low.

On the outside, Apple cars will not be available until at least 2028, not to mention whether the product can match Tesla, compared with a large number of Chinese car companies, will face the situation of first launch and lag behind, even if it is Apple. Today, even Tesla is facing a huge development crisis. although it set a new high in 2023, it is the result of falling prices, with a fourth-quarter gross profit margin of only 17.6%, the lowest level since 2019. Therefore, Apple stopped building cars, although it has paid a huge amount of money for more than a decade, but compared to the volume of postpartum sales variables and money burning bottomless pit, timely stop loss is also good.

On the same day, Tesla CEO Musk forwarded the report that Apple had given up building a car on the social media site X, with emoticons paying tribute and cigarettes. For a long time, he is not optimistic about Apple car-building, on the one hand, Apple refused to save Tesla, on the other hand, the two sides made a feud over talent poaching for many years. If Apple gives up building cars, Tesla should have no decent competitors in the United States for many years to come, and Chinese car companies will not enter the American market very quickly. Therefore, Musk's "schadenfreude" is understandable, and the outside world does not seem to feel surprised or regretted that Apple has given up building cars.

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