Limitations in Achieving Initial Goal of Full Level 5 Autonomous Driving
Key Personnel Resignations and Electric Vehicle Market Cooling Also Negative Factors
Impact on Stock Price Is Limited
Bloomberg News reported on the 27th (local time), citing sources, that Apple is abandoning the development of its self-driving electric vehicle, the 'Apple Car,' which it has been working on for 10 years.
Sources said that Jeff Williams, Chief Operating Officer (COO), and Kevin Lynch, Vice President, informed about 2,000 employees involved in the project that Apple's electric vehicle research organization, the 'Special Projects Group,' will be disbanded. They added that most of these employees will be transferred to the artificial intelligence (AI) development division.
The report also mentioned the possibility that some employees may be reassigned to other departments or laid off. However, the exact scale of layoffs is unknown, and Apple declined to comment on the matter.
Apple is known to have planned the development of its first self-driving electric vehicle, the Apple Car, under the name 'Project Titan' since 2014. However, the plan has been delayed due to restructuring and changes in company strategy, and recent reports indicated that the launch of the electric vehicle has been postponed to 2028.
According to the report, the Apple Car initially aimed to implement autonomous driving technology at 'Level 5.' Level 5 refers to fully autonomous driving technology capable of operating without human intervention under any geographic conditions, adverse weather, or unexpected situations. However, the target level was revised down to 'Level 4,' which supports full autonomy only on highways, and then further downgraded to a 'Level 2+' system requiring human drivers to take control, leading to internal dissatisfaction that it was no different from Tesla.
The departure of key personnel from the Apple Car project is also seen as a negative factor. Doug Field, who led the project, left in September 2021 to join Ford Motor Company, and last month, DJ Novotny, Vice President of Hardware Engineering involved in Apple Car development, resigned. Additionally, the lead engineer for radar system development and the engineering manager of the battery systems group are also reported to have left the company.
Bloomberg analyzed that the recent cooling of the once rapidly growing electric vehicle market also influenced Apple's decision to withdraw from the electric vehicle business. Bloomberg Intelligence predicts that electric vehicle sales, which grew at an average annual rate of 65% over the past three years, will increase by only 9% this year.
Major automakers are also preparing for this contraction in the electric vehicle market. Last year, General Motors (GM) postponed the opening of an electric vehicle factory, and Ford cut its production plan for the electric F-150 Lightning pickup by half. Tesla also announced in its earnings report last month that "the growth rate of vehicle sales in 2024 may be significantly lower than last year."
Anurag Ana, an analyst at Bloomberg Intelligence, commented on Apple's decision, saying, "Focusing on AI may be a better choice," and added, "Considering the revenue potential, giving up on electric vehicles and concentrating resources on AI seems like a good strategic move."
Despite the news of abandoning Apple Car development, the impact on Apple's stock price appears limited. On the day, Apple's stock closed at $182.63, up about 1% from the previous close. It also rose slightly in after-hours trading.
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