What Killed the Apple Car?

This is not the Apple car, because officially it never existed, and now it never will. Ten years after starting work on a car, Apple has given up. The company had some wild ideas about the future of the car, as we're about to tell you.

The vehicle was supposed to be as revolutionary as the iPhone. Carmakers were running scared. The iPhone had eviscerated massive businesses like Nokia and Motorola.

What if Apple did the same to the car industry? They really felt this strong confidence They could take out General Motors. They could make a better Tesla.

And they had this ambition to do something that really had not been done before. It was never going to work. This is a tale of grandiose plans to invent a new kind of car.

Undone by strategic mistakes. The rise, fall, rise And then death of what was codenamed Project Titan Apple is incredibly secretive. The company doesn't talk about new products until they're ready.

So never publicly admitted to working on a car. In fact, the closest that Apple CEO Tim Cook ever got to doing so was in this interview with me in 2017. There is a major disruption looming.

He proceeded to lay out three innovations that he predicted would upturn the car industry. The first was electric vehicles. If you've driven an all electric car, it's actually a marvelous experience.

Plus, you have ride sharing on top of this. So services like Uber and Lyft and finally self-driving cars. We’re focusing on autonomous systems.

Clearly, one purpose of autonomous systems is self-driving cars. we sort of see it as the mother of all A. I.

projects. Each of those technologies seem to present an opportunity to disrupt the $2 trillion car industry. Initially for the rationale behind the car was what Apple does, delivering a piece of hardware.

And the car is that piece of hardware. And then built on top of that hardware, that becomes a platform to deliver services and experiences. So in that respect, the car followed the Apple strategy.

Let's scroll back to 2014, when it all started, three years before my interview with Cook. The beginning of the Apple car project was actually the company exploring if it should buy Tesla. They ended up not doing that and instead decided to start exploring what it would take to build their own car on their own.

They put some of the brightest minds at the company on this. The hardware division was granted billions of dollars in funding to hire anyone it needed inside Apple or outside Apple. They hired people from Porsche, Lamborghini, Audi, you name it, to come over there and build a car.

Jony Ive, Apple's design chief at the time, had this idea to recreate the old school Volkswagen bus from the 1950s and the 1960s, But the idea was not to build a car for people who love cars today, but build the future of the car. All sorts of ideas are thrown around. They consider only selling the car in white.

There'd be no steering wheel or front facing seats. And passengers would control everything with touchscreens and Siri. For all the big ideas and blue sky thinking however, the project soon starts to hit problems and there's confusion over whether the priority should be to compete with Tesla in electric cars or Google, which was making big leaps in self-driving vehicles.

By 2016 there was a ton of disagreement on the Apple executive team. There were difficulties, figuring out a way to actually produce the vehicle. There were concerns over profits.

Enter Bob Mansfield, a semi-retired executive who had developed products such as the MacBook Air. It's the first of many leadership and direction changes to hit the project, and it'll entail laying off hundreds of engineers. Mansfield tells them that rather than building a car, Apple will focus on developing the most advanced driverless technology.

Level five Autonomy. By building the self-driving brain they really gave themselves options. On one hand, they were able to partner.

They talked partnerships with Tesla, with Mercedes Benz, with BMW, but it also gave them opportunity to later go back to build their own car and have this apple like experience. Apple also invests in Didi, the Chinese equivalent of Uber. So it might one day put its self-driving technology into Didi's ride sharing service.

The company plows ahead with testing and reports start coming in of Lexus test cards kitted out with Apple's driverless technology appearing on the roads of California in 2017, Fast forward two years to 2019. Uber goes public and it's a big disappointment that shows ridesharing isn't a great business with no prospect of Apple like profits. So one of Cook's three pillars starts to look a little bit less revolutionary.

At the same time. Tesla goes from a $50 billion valuation to a trillion dollar company in less than two years. Electric vehicles suddenly seem more appealing.

I think the early success of Tesla led people believe that maybe there was opportunity in the car industry to work with bigger margins. That helps give Apple the confidence to make another pivot. Around that time, Doug Field, the Tesla executive who developed the Model 3 and took over the Apple car project in 2017, calls a meeting to show off what his team has been able to pull together.

Apple has this secretive several hundred acre test facility in the heart of the Arizona desert outside of Phenix. they gathered a bunch of senior people in the Apple car team alongside Tim Cook, and others. Cook is impressed by what he sees, according to people who were present, and says he'll finally throw his full weight behind the project.

Apple will build an electric car that has full driverless technology. But even that decision doesn't last long. Field leaves to join Ford in 2021 and is replaced by Kevin Lynch, a longtime Apple manager who worked on the watch.

What's your plan, car? It's becoming clear that autonomous cars are a long way away, maybe even a decade or more. So there's another flip flop away from self-driving tech.

It's the least ambitious version of the project yet. Make an electric car that competes directly with Tesla. But by 2023, the outside world is changing.

Artificial intelligence starts consuming the tech industry. And after Tesla's early successes, electric vehicles are facing a reality check. November 2022 saw the release of chat GPT.

As the world goes A. I. crazy Google has its own big A.

I. division and Microsoft is the biggest investor in Open AI, the developer of chat GPT. And while there's plenty of AI innovation under the hood of Apple's products, it's still unclear what Tim Cook's big generative AI play will be.

Where Apple needs to catch up is in that interface between the consumer and the generative A. I. engine that has a name like Copilot or Gemini.

And the electric vehicle market is starting to lose its luster with sales growth slowing for three reasons. EVs are expensive and high interest rates mean they're even harder to afford. The first generation of EVs are now hitting the second hand market and they're not holding their value as well as combustion engine cars.

Established carmakers are starting to release their EV models, meaning competition is tougher and profits are lower. One specific part of Apple's success is that on the hardware side, they have by and large between 25 and 30% margin. That is impossible on a car.

All of this provokes another final rethink at Apple. The three megatrends that Cook highlighted in 2017 have all lost their appeal. Self-driving isn't happening anytime soon.

Ridesharing isn't a great business, and electric vehicles probably can't deliver the kinds of profits that Apple shareholders expect. They have some of the world's best minds on Artificial Intelligence working on this system that may never come to light because it is so difficult. On the other hand, they have this separate AI team trying to catch up to Open AI and Microsoft and Google on generative A.

I. So Tim Cook makes a big decision. On February 26th, after most people have left work, the car team gets an email announcing an all hands meeting the next day.

And people started to realize something is up. Then 10 a. m.

the next morning, they all gathered into conference rooms and around their desks and they tuned in to a video announcement. It was a 12 minute presentation. They were pretty succinct.

Thank you for all your efforts. We're immediately winding down Project Titan. The Apple car is dead.

Those working on self-driving technology will join Apple's main A. I. group.

The rest have to find new jobs inside or outside the company. Repurposing the people that were working on Project Titan to A. I.

makes sense given the opportunity in A. I. It solves a lot of problems for Apple.

It gets a bunch of top A. I. minds working on its main A.

I. goals, and it can reallocate the billions of dollars a year it's spending on the car towards developing A. I.

That tech could be essential to the future success of the iPhone, the device that still accounts for the majority of Apple's revenue. Look at this chart. After years of massive growth, Apple is struggling to grow revenue.

Without the car, investors are wondering where the next leg of growth will come from. Some think that could be the Vision Pro. The problem is that if that device achieves everything Apple wants over the next few years, it could end up replacing the iPhone.

You may not own both. It's something that has the real potential in the next half decade to replace your iPhone, to be the future of that product. But Apple needs supplementary revenue.

They need wholly new product categories that don't take away from others. And as carmakers start to question just how profitable the electric vehicle market can be, the fact that Apple has given up is hardly a vote of confidence. fast that the company has a huge influence over opening AI.

This column has found that all three Siri makes it easy to get a lot more done on your iPhone with just your voice. Using a simple command, you can quickly send a text message while you're driving or set a 30 minute timer during your workout. No hands are needed, but serious capable of so much more than you might know.

For example, did you know you can restart your iPhone with just your voice? And that's just the start. You probably already know you can save your usernames and passwords across all of your Apple devices.

But did you know you can access them quicker with Siri? You can also turn off an annoying alarm. Just tell Siri, turn off my alarm to silence it.

Need to find that family or friend using that. Find my feature. Just ask Siri where it is.

And then the contact name and a small find my window will appear at the top of the screen showing you exactly where that person is. You that? Yeah.

Yeah. Look, I have. Apple is going to reinvent the phone.

most advanced phones are called smart phones. iPhone in the incredible that it puts into people's hands has changed the way we there is a major disruption looming there, if you've driven an all electric car. It's actually a marvelous experience plus you have ride sharing on top of this we're focusing on autonomous systems.

clearly, one purpose of autonomous systems is self-driving cars. There are others, outside. Which was quite close.

to produce. So Now that you're a registered D driver partner. You can either pick up your welcome pack from your that.