Text/Image: Reporter Pan Liang from Yangcheng Evening News
Recently, Apple has decided to shelve its ten-year, multi billion dollar electric vehicle development plan, causing industry shock. Apple CEO Tim Cook revealed at the annual shareholder meeting that the company plans to announce more plans in the field of artificial intelligence later this year. Apple's move has also affected other automotive giants, such as Mercedes Benz CEO Kang Linsong's announcement of adjusting sales targets for electric vehicles. Industry insiders such as Lei Jun, Chairman and CEO of Xiaomi Group, and Li Xiang, CEO of Ideal Automobile, expressed surprise at this.
It is understood that this change reflects the intensity of competition in the global new energy vehicle market. Although the EU announced in 2022 that it would ban the sale of new gasoline and diesel vehicles from 2035, it has now quietly withdrawn its commitment. Standing at the milestone of 2024, the global automotive market is experiencing an unprecedented reversal, highlighting the harsh reality of competition in the new energy vehicle market.
The car making project comes to an end
It is worth noting that although Apple has never publicly confirmed its electric vehicle production plan, its ambition in the automotive field has already been evident from its personnel layout and patent applications. Since 2014, Apple has been actively recruiting automotive industry executives, such as the President of Autonomous Driving Research and Development at Mercedes Benz and the Director of Autonomous Assisted Driving Systems at Tesla. In 2017, Apple obtained a California autonomous driving testing license, and in 2019, it acquired the autonomous driving startup Drive.ai and successively obtained multiple patents related to automobiles.
However, despite investing a significant amount of resources in the automotive industry, Apple's research and development progress lags far behind industry leaders. According to a report by an analyst from Da Mo, Apple tested its autonomous driving ability for 450000 miles using only 67 cars between December 2022 and November 2023. In contrast, Tesla drives about 50 billion miles per year, and its fleet's 5-minute mileage exceeds Apple's annual mileage. This data fully demonstrates that Apple's research and development progress in the electric vehicle field is a mystery, raising concerns about its future competitiveness.
In recent years, the leadership of Apple's automotive projects has undergone frequent changes, which is also one of the important factors leading to the mystery of research and development progress. The Titan project, launched in 2014, has undergone multiple leadership changes in just a few years. In early 2019, there were reports that Apple had laid off over 200 employees of the Titan program. Frequent changes in leadership have led to constant adjustments in project direction and objectives, seriously affecting research and development progress. In addition, according to reports, there are also disagreements within Apple regarding product development, resulting in slow project progress.
It is reported that Apple originally planned to create a fully autonomous driving Apple Car without a steering wheel and brake pedal. However, since 2022, the project has encountered numerous difficulties. Apple has postponed its release date to 2026 and abandoned the L5 fully autonomous driving route to support autonomous driving on highways. In addition, Apple has lowered its high-end positioning for cars, adjusting prices from over $120000 to below $100000, but the situation has not improved. In September 2023, there were reports that Apple's car making project had "disappeared".
According to the latest news, Apple is considering postponing the car release until 2028 and lowering the specifications of autonomous driving technology from L4 level to L2+level, which is equivalent to the level of existing manufacturers. If it cannot be completed by 2028, Apple may consider shutting down the project. Now, Apple has announced the cessation of car manufacturing, which undoubtedly marks the end of the entire project, but its layout and ambition in the automotive industry still deserve attention.
Market and technology are the main obstacles
Against the backdrop of slowing global growth in the new energy vehicle market and interest rate hikes in the United States, the electric vehicle industry is facing severe challenges. Among them, the US electric vehicle industry is laying off employees and reducing production, Ford and General Motors are delaying their plans to increase production of electric vehicles, the European Union has withdrawn its commitment to ban the sale of new fuel vehicles, and a wave of price reductions in the domestic car market has emerged after the Spring Festival. For Apple, launching electric vehicles directly is clearly not an easy task under such market conditions. At the same time, technical problems are also the main reason why Apple's L4 autonomous vehicle has been delayed. Despite Apple's strong technological reserves, the difficulty of fully autonomous driving technology is extremely high, requiring a considerable amount of time for research and verification.
However, Apple's decision to abandon car manufacturing goes far beyond this. From an economic perspective, although Apple's gross profit margin is as high as 45.2%, car manufacturing requires a large amount of capital investment, including technology research and development, talent introduction, and other aspects. This is undoubtedly a huge burden for Apple. In addition, the new energy vehicle industry has shown a trend of "the stronger, the stronger", with giants such as BYD, Tesla, and NIO Xiaoli occupying significant advantages in the market. As a latecomer, it is difficult for Apple to catch up with and surpass these competitors in a short period of time.
More importantly, Apple also has ambitious goals in areas such as VR, AR, and AI. The investment return cycle of VR and AR industries is short, and market competition is relatively small, while AI is one of the core tracks that Apple is currently focusing on. Under limited resources, Apple needs to balance the priorities of various projects. Compared to car manufacturing, these areas may be more attractive to Apple. Specifically, as tech giants, compared to Google, Microsoft, and Meta, Apple appears conservative in the field of AI. In the mobile phone market, manufacturers such as Huawei, Xiaomi, OPPO, and vivo are also creating products with AI as their new selling point. In February, OPPO announced its entry into the era of AI mobile phones and launched the ColorOS AI Spring Festival version system to users before New Year's Eve, including AI elimination, AI calling, AI intelligent voice and other functions. On January 18th, Samsung launched its first AI smartphone - the Galaxy S24 series.
Recently, Zhou Hongyi, founder and chairman of 360 Group, stated that artificial intelligence is a fundamental application of Apple. If the AI business is ignored due to the development of smart cars, its foundation will be shaken. Therefore, after considering various factors such as market conditions, technological difficulties, and economic pressures, Apple has decided to abandon its car manufacturing project and instead focus on other areas with greater potential and competitiveness.
Intending to collect an "artificial intelligence tax"?
The outside world seems to have had a premonition about Apple giving up on car manufacturing. For many years, the Titan project has been shrouded in mystery and has not been able to land on schedule. Frequently reported in the media are news of delays in Apple's car manufacturing project, setbacks in research and development, and personnel unrest. Apple's dream of making cars seems to have been stuck in the PPT, failing to truly translate into reality.
With the development of intelligence and electrification in the automotive industry, the future business model is undergoing profound changes. Several industry insiders have expressed their views on Apple's decision to abandon car manufacturing. Among them, automotive professionals have stated that cars are no longer just one-time hardware purchases, but are being transformed into continuous software subscriptions and service upgrades. Faced with high investment in autonomous driving technology research and fierce market competition, giving up on car manufacturing may be a wise choice for Apple.
Xiaomi founder Lei Jun stated that they are well aware of the difficulty of making cars, but still chose this path. Lei Jun sighed: "I was shocked to see this news! I really want to build a good car for Rice noodles!" Li Xiang, CEO of Ideal Auto, believed that Apple's decision to give up building cars and focus on AI was an absolutely correct strategic choice. Li Xiang pointed out that "the necessary condition for the great success of automobiles is still artificial intelligence. The electrification of automobiles is the first half, and artificial intelligence is the final." Xiaopeng Motors CEO He Xiaopeng also expressed his opinion on this matter, believing that Apple's abandonment of its car making plan in 2024 was unexpected.
"Apple's abandonment of car manufacturing projects may help enhance its competitiveness in the automotive industry, as the CarPlay platform is its core advantage." Economist Pan and Lin said that abandoning car manufacturing can eliminate concerns among car companies and promote cooperation. Last year, 90% of new cars in the United States supported CarPlay, and 80% of consumers preferred car models that supported CarPlay. The new version of CarPlay will deepen the integration of iPhone and automotive hardware, enhance the cabin experience, and make car manufacturers a hardware supplier for Apple cars, driving software and service revenue.
Industry analyst Zhong believes that Tesla must compete by lowering prices in order to expand production, sales, and market share, which leads to lower profits per unit and has a negative impact on stock prices and market capitalization. Therefore, it is best for Apple to switch tracks and increase investment in AI development in a timely manner. In the future, with the trend of automotive intelligence evolving towards AI, Apple may still enter the automotive industry again after making breakthroughs in the field of AI, charging an "artificial intelligence tax".