Apple is ending a decade-long effort to build an electric car, according to insiders. Mark Gurman of Bloomberg says that on Tuesday, the company surprised the 2,000 employees who worked on the project with this decision.
The non-public decision was agreed upon by the company’s COO Jeff Williams and Vice President Kevin Lynch. These executives informed employees that the project was being scaled back. Many employees of the automotive team, known as the «Special Projects Group», or SPG, will be transferred to the artificial intelligence department led by John Giannandrea. These employees will focus on generative artificial intelligence projects, which is becoming a higher 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 positively received by investors: on Tuesday, the value of Apple shares rose by about 1% to $182.63.
Elon Musk greeted the news with a tweet with emoticons:
— Elon Musk (@elonmusk) February 27, 2024
The decision to finally wind down the project was a bombshell for the company and put an end to the multi-billion dollar «Project Titan» program, which was supposed to take Apple into a whole new industry. The tech giant started working on the car around 2014, aiming for a fully autonomous electric car with a limousine-like interior and voice navigation.
But the project was plagued by problems almost from the start, with Apple changing team leadership and strategy several times. Lynch and Williams took over the venture a few years ago — after the departure of Doug Field, who is now a senior executive at Ford Motor Co.
Apple was many years away from producing a car and was considering many different design options. Autonomous driving technology was a major concern. Apple has been testing its system on the roads since 2017 using the exterior of a Lexus SUV and dozens of cars on US roads. The company also tested more secretive components on a giant track in Phoenix that once belonged to Chrysler.
According to insiders, Apple’s top management made the decision in recent weeks. The last decision before that was postponement of the car production until 2028 and lowering autonomous driving specifications from Level 4 to Level 2+. Apple once planned to create a car without a steering wheel and pedals, but abandoned this idea. The company also spent time working on a remote command center that could replace the driver.
Apple is facing a cooling in the electric car market. Sales growth has slowed in recent months, with high prices and a lack of charging infrastructure preventing ordinary buyers from switching to all-electric vehicles. General Motors and Ford are trying to produce more hybrid cars after facing weak demand for electric vehicles and production bottlenecks. Other automakers are significantly reducing prices for electric vehicles, production plans, and profit forecasts.
Tesla, the pioneer of the electric car revolution in the United States, warned that its expansion rate this year would be significantly slower. According to UBS AG’s forecast, the growth of domestic sales of electric vehicles this year will slow to 11% from the 47% projected for 2023.