Cancellation of Apple’s car project boosts AI, headset bets
In abandoning plans for a self-driving car, Apple Inc. is giving up on billions in potential revenue and the dream of selling what one executive called “the ultimate mobile device.” The hope is that other big bets—including generative artificial intelligence (GenAI) and mixed reality headsets—can make up the difference.
Apple reached this crossroads on Tuesday, when it told employees it was winding down the car project and reassigned some of the staff to its AI efforts. The decision followed months of frenzied meetings between top executives and the company’s board over how to proceed. Chief operating officer Jeff Williams and project head Kevin Lynch broke the news to the roughly 2,000-member team during a meeting that lasted less than 15 minutes.
The upshot: Apple’s future isn’t going to hinge on selling $100,000 cars with self-driving features. Instead, it will focus on catching up with rivals in the GenAI industry, where chatbots from OpenAI and Google have captured the imagination of consumers and investors. The shift also lets Apple concentrate on turning the Vision Pro headset—still a fledgling product—into a mainstream hit.
But the decision also eliminates a future revenue source at a time when Apple has been struggling to maintain growth. Though the company managed to pull out of a sales slump last quarter, it warned that the current period will be sluggish again. The Vision Pro just launched this month and isn’t expected to be a major contributor to growth for years, if ever.
With a car, profit margins would have been slim but the revenue potential was massive. The idea was long touted as one of Apple’s famous “next big things” and could have more firmly locked consumers into the company’s ecosystem. Tesla Inc., which led the EV revolution in the US, generated nearly $100 billion in revenue last year. Furthermore, tech giants like Alphabet Inc. and Chinese rivals remain focused on cars.
Apple’s decade-long car effort, known as Project Titan, also was an AI challenge in itself. Apple attempted to build an AI system that was powerful and energy-efficient enough to make a car fully autonomous.