In a decision that stunned both employees and industry observers, Apple Inc. announced the termination of its decade-long pursuit to develop an electric car, a project dubbed Project Titan, signaling the end of one of the company’s most ambitious endeavors to date.
The internal disclosure, made on Tuesday, came as a shock to the nearly 2,000 employees dedicated to the project, Bloomberg reports, citing sources familiar with the matter who requested anonymity.
Chief Operating Officer Jeff Williams and Kevin Lynch, a vice president overseeing the project, delivered the news to the team, indicating a shift in focus from automotive ventures to artificial intelligence, according to Bloomberg.
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The Special Projects Group (SPG), tasked with the electric car initiative, will now begin the process of winding down, with many employees expected to transition to the artificial intelligence division led by executive John Giannandrea. The transition will see employees pivot towards generative AI projects, aligning with Apple’s strategic priorities in this area.
While the precise impact on the workforce remains unclear, with the potential for layoffs looming, Apple declined to provide further details or comment on the matter when approached. The company, headquartered in Cupertino, California, has traditionally maintained a secretive approach to its projects, and this unexpected shift is no exception.
Investors, however, responded positively to the news, with Apple’s shares climbing approximately 1% to $182.63 by the end of trading in New York, following the Bloomberg report.
The decision to discontinue the electric car project marks a significant departure from Apple’s ambitious foray into the automotive industry, which aimed to revolutionize personal transportation with a fully autonomous electric vehicle.
Project Titan, initiated around 2014, faced numerous challenges from the outset, including leadership changes and shifting strategic directions. Lynch and Williams took the reins of the project following the departure of Doug Field, who subsequently joined Ford Motor Co. Despite years of investment and research, Apple struggled to overcome hurdles, particularly in the realm of self-driving technology, which proved to be a formidable obstacle.
The decision to halt the project reflects broader challenges facing the electric vehicle market, where sluggish sales growth and infrastructure limitations have hindered widespread adoption. Even industry leader Tesla Inc. has encountered headwinds, signaling a slowdown in expansion amid changing market dynamics. According to a forecast by UBS AG, the growth rate of domestic electric vehicle (EV) sales is expected to decelerate to 11% this year, down from an estimated growth rate of 47% in 2023.
Elon Musk, CEO of Tesla Inc., celebrated the news on the X social media platform with a saluting emoji and a cigarette emoji.
— Elon Musk (@elonmusk) February 27, 2024
In recent weeks, Apple’s senior executives deliberated over the fate of Project Titan, with discussions revolving around potential delays in the car’s release and adjustments to self-driving specifications.
Ultimately, the company opted to pivot its resources towards areas of greater potential, particularly artificial intelligence, which promises long-term profitability and strategic value.
“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,” Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a note.
While the demise of the electric car project represents a setback for Apple’s automotive ambitions, the company remains committed to innovation in other domains. With substantial investments in research and development, where the company has spent $113 billion over the past five years, Apple continues to explore new opportunities for growth and expansion, including the recent launch of the Vision Pro headset.
Despite the challenges encountered along the way, Apple’s strategic shift to AI underscores its adaptability and resilience in navigating the ever-evolving landscape of technology and consumer preferences. By refocusing efforts on areas of strength and strategic importance, Apple aims to maintain its position as a leader in innovation and technology.