More reports on: Automotive, Cars

Is it end of the road for Apple's self-driving car project?

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19 October 2016

Apple's secretive self-driving car programme, Project Titan, is widely believed to be close to a dead end. Last month, The New York Times reported that Apple had laid off dozens of employees following a decision to abandon plans to build its own car, and instead develop self-driving technology that could be partnered with an existing automaker. Now, even that scaled-back vision may be in jeopardy.

Bloomberg reports that hundreds of Project Titan employees have been let go or have had their jobs reassigned, and the company has set a late 2017 deadline for the car programme - which employs about 1,000 people - to either prove its feasibility or move on.

''It was an incredible failure of leadership,'' one source told Bloomberg. Another said Apple struggled with tackling ''complex automotive supply chains''. Project Titan was described as directionless, with leaders disagreeing over whether to focus on self-driving car software or on hardware.

Infighting led Apple to bring in Bob Mansfield, who helped develop the iPad, to manage the team and decide on a direction. About a month after taking over in April, Bloomberg reports, Mansfield announced that Titan should focus on a self-driving platform, rather than building its own car. Engineers began leaving the company shortly thereafter, followed by a wave of layoffs in August, and another in September. (Apple has so far declined to comment on the Bloomberg story.)

While Apple has never publicly acknowledged its self-driving car project, and chief executive Tim Cook has spoken in only the vaguest terms about creating its own vehicle, Apple executives have long hinted that a car could be the next iPhone. ''There will be a massive change in the industry,'' Cook said onstage last October at the WSJDLive conference.

''The car is the ultimate mobile device, isn't it?'' chief operating officer Jeff Williams said in 2015, Bloomberg notes.

Still, Cook has always downplayed expectations for an Apple Car. ''Do you remember when you were a kid, and Christmas Eve, it was so exciting, you weren't sure what was going to be downstairs?'' Cook told investors during Apple's annual shareholder meeting in February. ''Well, it's going to be Christmas Eve for a while.''

Last summer, The Information reported that Apple had already pushed back its tentative car launch date from 2020 to 2021- even before any concrete plans were underway.

It is a rare humbling moment for the world's most valuable company. Like Google, Apple has found itself stymied by the complicated mechanics and punishing economics of the automobile industry. The car business is notoriously low-margin, which is hardly an attractive value proposition for Silicon Valley companies. Nor is it one that would likely please investors.

''If I were a shareholder I'd be very upset because they're currently engaged in a very high-margin business and the automobile business, at best, is a very low-margin business,'' former GM and BMW executive Bob Lutz pointed out on CNBC last year. ''There is absolutely no reason to assume that Apple is going to be financially successful in the electric car business.''

Of course, many people thought there were good reasons for tech giants like Google and Apple to tackle the still-new arena of self-driving vehicles: they had the resources, the big-name allure, and the market capitalisations to compete. But in reality, both companies have fallen behind smaller, more nimble companies like Tesla, Lyft, and Uber - all of which are moving ahead with aggressive plans to put self-driving or partially autonomous vehicles on roads within the next few years.

Google's self-driving car programme, now several years in, has lost both leadership and its early lead to be first to market. Apple, meanwhile, seems to be coming to terms with the fact that the Apple Car is unlikely to make sense as a new flagship product to succeed the iPhone. While cars are becoming more like smartphones, the logistics and economics involved in manufacturing the two products remain, for now, worlds apart.





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