For more than a decade, we've been hearing reports that Apple is building an electric vehicle (EV) that would rival Tesla and eventually turn one of the world's largest tech companies into an automaker. But that's not happening. And it's calling plenty of Apple's plans into question.
Apple senior executives told employees recently that the company has decided to stop work on Project Titan, the codename Apple used for its Apple Car business, according to a Bloomberg report. Instead, the executives told employees that some of them would be moved to Apple's generative AI division and others would be laid off. Still, others would be given the opportunity to apply for a new job at the company in another division.
The decision sent shockwaves through both the technology and automotive industries. For years, a countless number of rumors and reports surfaced about Apple's vehicle ambitions. We heard reports of Apple poaching Tesla employees (and catching the ire of Elon Musk) and watched as Apple filed patent after patent for car innovations.
Focus on AI
But as Apple's competitors increasingly invest in artificial intelligence, Apple has clearly seen a need to catch up. Microsoft has taken an early lead in the space, thanks to its OpenAI investment, and Google is quickly gaining ground with its own Gemini alternative. Samsung unveiled a Galaxy S24 earlier this year that is replete with artificial intelligence features. And at least so far, we're only hearing AI promises from Apple.
At the Apple annual shareholders meeting earlier this week, Apple CEO Tim Cook said the company's AI innovations were coming, but we'd need to wait a bit longer.
"Later this year, I look forward to sharing with you the ways we will break new ground in generative AI, another technology we believe can redefine the future," Cook said.
Cook didn't discuss the Apple Car but did say that when Apple designs products, it's "about focus." And for now, it appears Apple's focus is on AI.
"Autonomous EVs are for the 2030s, while AI is for the here and now in the 2020s," Strategy Analytics analyst Neil Mawston told Tech Times in an interview, suggesting that Apple needs to think about where it wants to go now before it can think about future technologies.
For his part, Loup Ventures analyst Gene Munster believes Apple understands that AI, and not electric vehicles, presents the biggest opportunity for future growth.
"AI is a bigger opportunity than the car," Munster said. "Trying to achieve success with both AI and the car would not work."
Will Apple Car Return?
However, Apple is rumored to have spent more than $10 billion on the Apple Car project. Simply sunsetting in favor of AI is a tough pill to swallow. It begs the question of whether Apple will eventually revive the project when it believes its AI footing is strong and the Apple Car opportunity is still there.
"We would expect Apple Car to restart in the long-term future once the company's AI shortfall is dealt with," said Mawston. "The worldwide autonomous electric or hydrogen vehicle market for the 2030s and beyond is simply going to be too big for Apple to ignore. Whether Apple's Car project is restarted organically or via a takeover of an established brand remains to be seen."
It's an interesting concept. But it's one that Munster disagrees with. Instead, he believes Apple has made up its mind that the EV market isn't right for its long-term plans.
"It's very unlikely that Apple would restart its car development," said Munster. "Apple rarely kills a project and then comes back to it."
Instead, Munster believes that Apple's decision speaks to the significant importance of AI not only in the industry but on Apple's business itself.
"This is a very big deal," Munster said. "Killing a car after investing more than $10 billion speaks of the newfound urgency around AI."
If done right, Munster believes Apple's AI investment could grow its revenue growth but as much as 10 percent. Without AI, Munster believes, Apple's revenue growth would organically rise by 5 percent in the coming years.
What About Tesla?
Where the analysts both agree on the winner in this scenario. They argue that Apple is signaling to the world it needs to "catch up" in AI and is rededicating resources to reflect that. They also say Elon Musk is happy right now.
"This is good news for Tesla," said Mawston. "A major rival is de-prioritizing EVs and switching focus into a different market elsewhere."
Munster put a finer point on the decision, saying that Apple was Tesla's "biggest possible threat." And now that it's moved on, it could be smooth sailing for Tesla in the coming years.
"This is a huge win for Tesla," Munster said.
How this plays out for Apple, meanwhile, remains to be seen. The company has seemingly moved on from the car business and needs to find a way to catch up in AI. We'll know later this year if it can - or even has a chance at doing so.
About the author: Don Reisinger is a longtime freelance writer who has written on topics as far-ranging as technology and business to science topics. His work has appeared in a variety of publications, including Fortune, Inc., The New York Times, Business Insider, Tom's Guide, and many others. Follow him at https://muckrack.com/donreisinger and https://twitter.com/donreisinger
