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Out for Apple Car, the reasons and the new focus on AI

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Out for Apple Car, the reasons and the new focus on AI

What would an Apple car look like? The company spent ten years and ten billion dollars searching for the answer. Now the end came as a surprise. If you look closely, there are good reasons for this.

There is nothing left of the plan to build your own car with autonomous driving capabilities: the Apple car will not exist.

Bing Guan / Bloomberg

The fact that Apple was making plans for its own car was one of Silicon Valley’s worst-kept secrets. Test cars drive around on public highways; A striking number of managers from BMW and Tesla switched to Apple; Details repeatedly ended up in the press – for example, that they wanted to install steering wheels for video games in the car.

After the computer, the cell phone and the watch, Apple now also wanted to “disrupt” the automotive industry. That wasn’t really surprising: cars had increasingly become computers on wheels. Software now played a key role, the combustion engine increasingly gave way to batteries, and complex driver assistance systems became more and more standard equipment.

The fact that the auto industry would soon have to compete with Big Tech brought beads of sweat to the faces of managers from Shanghai to Detroit to Wolfsburg. “Apple had such a reputation for creating truly innovative, user-friendly products that they felt if they ever brought a car to market, it would be hard to compete with it,” said former General Motors executive Phil Abram to the Wall Street Journal.

Although Apple has been working on the car since 2014, the company has never officially confirmed the plans. And so today he does not confirm that he is now crushing them. As the New York Times reported, the employees were informed about this on Tuesday in a meeting that lasted less than fifteen minutes.

The decision is surprising because the project was already quite advanced after several strategy changes. Two thousand employees worked on it, ten billion dollars were invested over almost ten years. But the setbacks increased. Just a few weeks ago the news came that the car would not come onto the market in 2026 as planned, but in 2028 at the earliest. Recently, as Bloomberg reports, the supervisory board and management had discussed vigorously and for months about the direction in which the project should develop. Now it has been buried.

What happened?

A car as the company’s new driving force

Shortly after the death of Apple’s co-founder and long-time CEO Steve Jobs, his successor set his sights on the car market. Tim Cook was looking for growth markets and products that could one day replace the iPhone as the driving force. The automobile industry, valued at two trillion dollars, seemed particularly tempting.

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The iPhone remains the engine of the Apple Group

Sales share of individual products, in percent, October to December 2023

Wearables and home devices

Under the internal names Titan and Project 172, Apple set itself an ambitious goal: They wanted to build a fully autonomous car that could drive practically anywhere, without any steering wheel or pedals. It would be controlled via the voice assistant Siri. The then chief designer Jony Ive had in mind the look of a European minivan like the Fiat Multipla 600 – a cute-looking car with eight windows and a curved roof.

But Project Titan has been plagued by aimlessness since its launch. The only constant seemed to be the changes in course. The four senior managers in eight years all had different ideas. Should the Apple car be self-driving? Or would you rather have an electric car that would compete directly with Tesla? Maybe not a car at all, but just software for autonomous driving?

And should Apple build it alone? Or enter into a cooperation with an experienced car manufacturer? The name McLaren came up, BMW, Nissan and Mercedes-Benz were also mentioned. Or should Apple better buy an existing car manufacturer – Elon Musk’s Tesla, for example? Such a partnership would have offered a way out of the threat of entanglement in manufacturing processes and security requirements. The Apple car could also have been built in the same way that Tesla makes its cars today using a fraction of the individual parts thanks to mega-casting. But there was a lack of expertise in Cupertino. It is also typical for Apple to always only label products with its own logo. Only unknown car manufacturers, such as those from China, would have allowed this to happen.

Finally, a partnership with an existing car manufacturer may have failed because Apple usually claims data sovereignty over its products. A connected car is a data octopus that collects vast amounts of information about the environment and users with every kilometer driven. However, car manufacturers usually want this treasure trove of data exclusively for themselves. An insoluble conflict.

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Apple’s car drove into curbs – and once almost into a pedestrian

Internally, as the New York Times reports, Project Titan soon had a different nickname: “Titanic disaster.”

It never really gained traction – literally. The vehicle only worked really well under “laboratory conditions”, i.e. carefully selected streets in the deserted expanses of Montana, wrote “The Information” in the summer of 2022. In Apple’s home in Silicon Valley, the test vehicles – converted Lexus off-road vehicles – wandered on the highways around, driving into curbs and getting lost in the lanes at intersections. Once a test vehicle almost ran over a jogger.

Personnel changes and significant departures also put a strain on Titan. Apple developer Doug Field, who worked for electric car pioneer Tesla for a while, returned to Cupertino in 2018 to oversee the vehicle project. His first act was to lay off 190 chassis experts in 2019 because he wanted to focus on a car’s operating system with other experts instead. In 2021, electric car expert Ulrich Kranz, formerly responsible for the i3 electric car at BMW, joined Apple. But he was unable to fulfill hopes for a breath of fresh air in the Titan project. Another key figure, manager Ian Goodfellow, left the group in spring 2022. The well-known machine learning expert had worked on the software for autonomous driving at Apple, and today he works at Google’s AI unit Deepmind.

It has also recently become clear that the market for electric cars, which once seemed so sexy, actually works like quicksand: If you don’t move fast enough, you will get lost in it. Tesla, until recently the industry leader with the highest profit margins, now has to lower prices and has Chinese competition breathing down its neck. The initial enthusiasm for zero-emission cars has also waned in the USA and demand for electric cars is falling. It is also questionable how big the market would have been for a luxury electric car for $100,000, as Apple allegedly had in mind. This was the only way the high pre-investment would have paid off.

The recent scandals surrounding self-driving cars may also have deterred Apple’s supervisory board. The General Motors subsidiary Cruise recently lost its test license in San Francisco, and Uber even had to sell the entire business after a fatal accident in Arizona in 2018. One can imagine what a similar accident would do to the reputation of the Apple brand.

Ultimately, as the New York Times summarizes, Apple’s car plans also failed because it proved too difficult to produce software and algorithms for a self-driving car. For safe operation without a human driver, at least three redundant systems with their own sensor groups that constantly check the environment are required. So far, only a few companies have been able to build such powerful systems, including Baidu from China and Mobileye from Israel.

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AI ties up resources

Apple’s leadership concluded that its money and staff would be better spent on AI. The key technology is currently providing market opportunities for newcomers such as Mistral, Galileo and Open AI, but it is also reshuffling the cards among tech companies: Thanks to AI, Microsoft has now overtaken Apple as the most valuable company in the world, and other giants such as Meta and Alphabet are making ambitious announcements about AI. Only Apple remains silent. More will be announced “later in the year,” Tim Cook put off investors at the last presentation of the quarterly figures. However, they are gradually losing patience.

But AI research is expensive – Meta’s CEO Mark Zuckerberg recently calculated how expensive: By the end of the year, his company wants to own 350,000 high-performance chips from the industry leader Nvidia, which cost $30,000 each. The bottom line is that this amounts to the same amount – around $10 billion – that Apple’s car plans swallowed up.

Seen this way, saying no to Apple’s car is also saying yes to AI. A large part of the employees will be transferred to the so-called Special Projects Group, which is also dedicated to AI issues. The findings from Project Titan will flow into Apple’s other research areas. Media reports on artificially intelligent Airpods with cameras and robot assistants. Apple’s latest addition to the family, the Vision Pro headset, should also benefit from the end of the car. More employees can now devote themselves to luring users into virtual worlds with exciting content.

Ironically, Apple is now more present in cars than ever before, even without its own vehicle. According to the market research company Wards Intelligence, 90 percent of all new cars last year had the Carplay application, which users use to connect their iPhone to the car’s infotainment system. Seen this way, Apple drives in numerous cars even without Project Titan.

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