Apple Inc is canceling a decade-long effort to build an electric vehicle (EV), people with knowledge of the matter said, abandoning one of the most ambitious projects in the history of the firm.
Apple made the disclosure internally on Tuesday, surprising about 2,000 employees working on the project, the sources said.
The decision was shared by Apple chief operating officer Jeff Williams and Kevin Lynch, a vice president in charge of the effort, the sources said.
Photo: Reuters
The two executives told staff that the project would begin winding down and that many employees on the EV team — known as the Special Projects Group — would be shifted to the artificial intelligence (AI) division under executive John Giannandrea.
Those employees would focus on generative AI projects, an increasingly key priority for the firm.
Ultimately, focusing on AI might be a better bet, Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a note.
“Apple’s decision to abandon electric cars and shift resources toward generative AI is a good strategic move, we believe, given the long-term profitability potential of AI revenue streams versus cars,” Rana and Girard said.
Under the new arrangement, Lynch would report to Giannandrea, the sources said.
He previously reported to Williams, who also has overseen software engineering for the Apple Watch.
Apple declined to comment.
The move came as a relief to investors, who sent Apple shares climbing on Tuesday and closing up about 1 percent at US$182.63 in New York.
Tesla Inc head Elon Musk also celebrated the move.
He shared a post on X with a saluting emoji and a cigarette.
The decision to ultimately wind down the project is a bombshell for the company, ending a multibillion-dollar effort called Project Titan that would have vaulted Apple into a whole new industry.
The tech giant started working on an EV in about 2014, setting its sights on a fully autonomous vehicle with a limousine-like interior and voice-guided navigation.
However, the project struggled nearly from the start, with Apple changing the team’s leadership and strategy several times.
Lynch and Williams took charge of the undertaking a few years ago — following the departure of Doug Field, now a senior executive at Ford Motor Co.
Apple was still years away from producing a vehicle and contemplated many different designs. Beyond the look of the vehicle, cracking self-driving technology was a major challenge. Apple had road-tested its system since 2017 using a Lexus SUV exterior, putting dozens of vehicles on roads in the US.
The firm also tested more secretive components on a gigantic track in Phoenix, Arizona, that was once owned by Chrysler.
In the end, Apple was facing a cooling market for EVs. Sales growth lost steam in the past few months after high prices and a lack of charging infrastructure discouraged mainstream buyers from shifting to all-electric vehicles.
General Motors Co and Ford are pivoting to producing more hybrid vehicles after confronting lackluster EV demand and manufacturing bottlenecks, and vehicle manufacturers across the industry are slashing prices for battery-electric vehicles, production targets and profit forecasts.
Even Tesla, the pioneer of the EV revolution in the US, has said its rate of expansion would be “notably lower” this year.
Domestic EV sales growth would decelerate to 11 percent this year from an estimated 47 percent growth rate last year, a forecast by UBS AG said.
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