Apple's car making project ultimately turned yellow.
The Titan Project, officially launched in 2014, once carried Apple's beautiful vision of sharing the nearly $200 billion global electric vehicle market. However, ten years later, Apple failed to bring its ambitions to fruition, and the project struggled repeatedly in twists and turns such as executive turnover and test drive accidents, and came to an end on February 27th.
According to Bloomberg, abandoning the "Titan Plan" was jointly made by Apple's Chief Operating Officer Jeff Williams and Vice President responsible for car manufacturing Kevin Lynch. With the suspension of the car manufacturing project, nearly 2000 employees of the relevant project team (internally known as the "Special Project Team" or SPG) are also facing unknown paths ahead.
It is reported that some members of SPG will focus on generative AI projects under the leadership of executive John Giannandrea. And hundreds of other members, many of whom are hardware engineers and automotive designers, can either apply for another job within Apple or be fired. It is currently unclear how many people will be laid off.
From the overall environment, behind Apple's massive cuts in car manufacturing projects is also the cooling of the electric vehicle market. According to Bloomberg's forecast, the growth of electric vehicle sales in the United States in 2024 will not exceed 9%, while the compound annual growth rate over the past three years has been as high as 65%. After Apple's decision was made public, Tesla CEO Musk responded on X. In a fiercely competitive market environment, Tesla, as the industry leader, may be the biggest beneficiary of Apple's decision.
After the collapse of the Titan Project, whether Apple can reshape its glory in the world of generative AI as expected remains to be seen from the outside world.
After 10 years, the "Titan Project" has finally turned yellow
The decision by Apple to end its car manufacturing program was undoubtedly a significant turning point for the company, as the project called Project Titan cost Apple billions of dollars to compete with Tesla on the same platform. If the Titan project were successful, Apple could have carved up nearly $200 billion in the global electric vehicle market.
For many years, Apple has been secretive about its electric vehicle project. The company has never publicly acknowledged the project, and executives only occasionally make public comments. In 2016, Cook was asked by a shareholder about the project, and he only joked that "it will be Christmas Eve for a long time"; In 2017, Cook talked about Apple's plan to develop autonomous driving technology in an interview with Bloomberg TV, calling it the "mother of AI projects.".
"Titan Plan" started in 2014, aiming to build a fully autonomous vehicle with luxury interior and voice navigation. Unlike competitors such as Tesla and Google Waymo, Apple cars have completely autonomous features and luxury sedan like interiors, without a steering wheel or pedals.
However, the Titan Project was almost in trouble from the beginning. Frequent changes in leadership have always been a dark cloud hovering above Apple's car making project. According to reports, a few years ago, Doug Field, the top engineer responsible for the project, resigned from Ford, and Williams and Lynch took over. In 2022, renowned scientist Ian Goodfellow, the head of the machine learning department of the Titan Project, also left the company.
During the vehicle test drive, the Titan project encountered new challenges. In 2022, during a test drive around Apple's Silicon Valley headquarters, the vehicle encountered difficulties while driving on the street - it often collided with curbstones, deviated from the lane, and entered the middle of intersections, and even almost collided with slow-moving pedestrians.
This directly led to Apple changing its originally ambitious plan - adding a steering wheel and pedals - and postponing the release date from 2025 to 2026.
According to records submitted by Wired magazine to the California Department of Motor Vehicles, from December 2022 to November 2023, Apple's test vehicles recorded over 450000 miles of autonomous driving in California, almost four times the previous 12 month period. However, vehicles under other autonomous driving technology companies have undergone millions of miles of testing runs.
A month ago, foreign media reported that the project was on the brink of survival, and Apple postponed the release of the car until 2028, lowering the specifications of autonomous driving technology from L4 to L2+.
According to Bloomberg, Apple had imagined the price of this car to be around $100000, but executives were also concerned whether the car could provide the profit margin that Apple typically enjoys on its products. In addition, Apple's board of directors expressed concerns about spending hundreds of millions of dollars annually on a project that may never see the light of day.
This concern came to an end on February 27th.
Apple withdrew, and the Musks breathed a sigh of relief
It is worth noting that Apple made this difficult decision against the backdrop of changes in the entire American electric vehicle market.
According to reports, as the electric vehicle market cools down, mainstream buyers' enthusiasm for pure electric vehicles gradually weakens, and sales growth loses momentum. Traditional car manufacturers such as General Motors and Ford have turned to the production of hybrid vehicles in the face of sluggish demand and production bottlenecks for pure electric vehicles. The entire industry is significantly lowering the prices, production targets, and profit expectations of pure electric vehicles.
Even Tesla was not spared. On January 25th, Tesla released its fourth quarter financial report last year, but its profit did not meet expectations and warned that the growth rate of sales in 2024 may "significantly slow down". According to Bloomberg, electric cars are still too expensive for most consumers, and charging services in the United States are also uneven. According to Bloomberg Intelligence, sales of electric vehicles in the United States are expected to only grow by 9% this year, compared to a compound annual growth rate of 65% over the past three years. This means that each listed company will compete for only 9% of new buyers in the US market.
Perhaps it is precisely because of this that market investors welcome Apple's decision. After the Bloomberg report was released, Apple's stock price rose slightly. As of the close of the US stock market on February 27th, Apple's stock price has risen by about 1% to close at $182.63 per share.
On the other hand, some Wall Street insiders believe that the sudden end of Apple's electric vehicle plan is a bleak sign for the automotive market, but for other electric vehicle manufacturers facing market challenges, it is a breathing opportunity. Due to the slowdown in the growth of the US electric vehicle market, Apple's withdrawal means eliminating a threat and providing the market with a large number of engineers and other talents who may lose their jobs as a result.
For veteran car manufacturers such as Tesla, General Motors, and Ford, Gartner Inc. analyst Mike Ramsey said, "They may have breathed a sigh of relief. The news of Apple entering the market has been frightening for people for a long time."
Tesla may be the biggest beneficiary of Apple's end to the Titan Project. Ramsey said that after reducing car prices by 25% or more, the last thing Musk wants to see is a Silicon Valley competitor with the same high-tech appeal. "Apple's launch of electric cars is undoubtedly the most unfavorable for Tesla," he said. "Tesla cars are seen as a symbol of identity by people, which has benefited the company a lot. And Apple's electric cars are definitely a tool to showcase their identity."
After Apple's decision was made public, Tesla CEO Elon Musk posted a tribute emoji and a cigarette on social media website X.
X platform
Several executives from new domestic automotive companies have also expressed their respective opinions. Xiaomi Chairman and CEO Lei Jun expressed shock, while Ideal Automobile Chairman and CEO Li Xiang said, "Apple's decision to abandon car manufacturing and focus on artificial intelligence is an absolutely correct strategic choice, and the timing is also appropriate."
Weibo screenshot
Will Generative AI be Apple's New Growth Path?
In recent years, Apple has been striving to find new ways of growth. This is mainly because its most important product, the iPhone, is facing market saturation, and consumers are upgrading their phones less frequently than before.
In the fourth quarter of fiscal year 2023 (as of September 30, 2023), Apple's total net sales were $89.498 billion, a decrease of 1% from the same period last year; The net profit was 22.956 billion US dollars, an increase of 11% compared to the same period last year. This is the fourth consecutive quarter of revenue decline for the company, setting a record for the longest decline since 2001.
In the first quarter of fiscal year 2024 (as of December 31, 2023), Apple's net revenue was $119.575 billion, a year-on-year increase of 2%; The net profit was 33.916 billion US dollars, an increase of 13% over the same period. Although net revenue and net profit recorded year-on-year growth, revenue in the Greater China region decreased by 13% year-on-year. Analysts are concerned that facing fierce competition from Chinese electronic products, Apple is losing market share in China, the most critical growth region.
Besides automobiles, Apple is also investing heavily in other fields. According to foreign media, the company has invested as much as $113 billion in research and development over the past five years, with an average annual growth rate of about 16%.
According to reports, Apple has also abandoned multiple projects, including the TV production plan that was put on hold around 2015. By June 2023, Apple had launched its first hybrid reality headset Vision Pro, the company's first groundbreaking new product in nearly a decade. Foreign media believe that this product is very important for Apple because it can reverse the perception that Apple has lost its innovation ability.
Dan Ives, Managing Director of WedBush Securities in the United States, previously believed in an interview with reporters that Vision Pro represents a new beginning, with 2.2 billion active iOS devices (users) worldwide, and Apple's ecosystem will provide a huge market for it. In the future, Apple will be committed to integrating generative AI into headsets, which will mark the beginning of a new growth area for Apple's golden user base.
He also said, "This is Apple's first step into the AI field, and it is expected that Apple will first discuss establishing an independent AI app store at WWDC this summer."
The discussion surrounding generative AI has always been enthusiastic, but Apple has been absent from this competition as Google, Microsoft, and Amazon compete to develop powerful generative AI tools. Until July last year, Bloomberg revealed that Apple had established its own big language model framework, "Ajax," and had also created a chatbot service based on Ajax, which some engineers referred to as the "Apple GPT.".
As Apple abandons its electric vehicle project and joins the fierce battle of generative AI, will this become a new growth path for Apple in the future? The outside world can only wait and see.
