Traditional car manufacturers in Europe, Asia, and the United States are facing many problems, some of which they themselves have created. To make matters worse, the creeping fear that tech companies could squeeze legacy companies out of the personal mobility market looms over manufacturers like a metaphorical sword of Damocles. This threat became apparent when Google’s parent company Alphabet and Apple announced their self-driving car efforts, Waymo and Project Titan.
Traditional automakers feared that they would be reduced to a hardware delivery service that provides motorized base frames for “smartphones on wheels.” But as of this week, those concerns may be a thing of the past, with Apple announcing it is canceling its Titan electric car project.
Instead, New York-based Business Daily wall street journal report Some of the company’s 2,000 car development staff will be shifted to artificial intelligence (AI) development.According to US media group Bloomberg, the move could affect hundreds of hardware developers..
The field of AI, particularly the use of programs such as ChatGPT to create new content from ever-growing troves of data, is considered far more promising. Nevertheless, layoffs are expected.
Electric cars are a difficult market for Apple
Many insiders were generally modest about Apple’s efforts to enter the auto industry, arguing that its business model is completely different from that of the tech industry.
They pointed out that electronic components for car manufacturing cannot simply be sent through the mail or digitally uploaded to a customer’s computer. Instead, the business required large, heavy parts to be shipped around the world and regularly maintained.
Insiders also claimed that development cycles for automotive products span years rather than weeks or months, especially because of the industry’s many regulations.
Finally, the auto sector’s profit margins are much lower than Apple’s technology business. Automakers warned from the beginning that building and selling cars would not be easy.
For the past few years, there has been speculation that Apple would scale back its own development efforts by simply acquiring major parts suppliers and automakers. The possible involvement of British luxury car manufacturer McLaren has been the subject of much discussion.
Elon Musk, the founder of US-based automotive and clean energy company Tesla, has offered to sell his car manufacturing business to Apple due to production challenges facing Tesla’s Model 3 product line. He said there is. But as Musk said, Apple CEO Tim Cook wasn’t even interested in talking.
Will billions be thrown away?
Project Titan will cost Apple more than $10 billion (€9.3 billion), according to reports this week. in new york times. Bloomberg estimated that the breakdown of vehicle development costs amounts to $1 billion each year.
Other market participants, including analysts at U.S. consulting firm Guidehouse, estimate that Apple has invested between $15 billion and $20 billion in development. The funds will be used for other projects in the future, including in the automotive sector.
In a report on Apple’s exit from the self-driving car race, Wall Street analyst Eric Woodring wrote that “Apple has shown welcome cost discipline on long-term future projects.” Ta. He suggested that AI could also be one of these efforts.
Regarding Apple’s efforts in electric vehicles (EVs) and autonomous vehicles (AVs), Mr. “We were unable to demonstrate a viable path to product differentiation,” he added.
The stock market reacted to the announcement with considerable relief, even if the cancellation did not lead to a spike in stock prices. But the slight rise in the company’s stock after the decision was announced suggests investors are happy to see Apple put its expensive car project in the rearview mirror.
Canceling the Titan project is a “good decision”
Most investors agree that Apple’s cancellation of Project Titan is the next logical step. Jonathan Curtis, chief investment officer at US-based Franklin Equity Group, told the German economic newspaper. handelsblatt He believed that Apple’s involvement in the auto industry was the right choice.
Citing the well-worn adage that today’s cars are essentially “computers on wheels,” he added that his trust has invested billions of dollars in Apple. Curtis also told the German newspaper that he thought Apple made a “good decision” by canceling Project Titan.
Curtis argued that Apple needs to focus on making sure the AI in its phones works smoothly. He listed one of Apple’s uncharacteristic failures and asked, “What’s the worst product Apple has released in the last 10 years?”
The answer, he said, is Siri, Apple’s virtual voice assistant. He argued, “If Apple can fix Siri, it could start a massive new iPhone cycle.” That would allow the tech giant to sell new services that provide real added value in conjunction with the Siri software, Curtis said.
At last week’s digital shareholder meeting, Apple executive Cook announced that his company is equipped with new AI capabilities. Traditionally, such promises to “break new ground” are reserved until Apple’s annual Worldwide Developer Conference in June.
This article was originally written in German.
