On February 28, it was reported that Apple has decided to cancel the electric vehicle project that has been going on for more than ten years, and it is reported that many employees in the car manufacturing project team will be transferred to the machine learning and AI department led by John Giannandrea to switch to generative artificial intelligence projects, as for the hundreds of hardware and automotive engineers in the team, they have the opportunity to apply for work in other project teams, but there is also the possibility of being laid off.
As soon as the news came out, there was an uproar in the market, after all, it is embarrassing that Apple's project that has been researching and developing for ten years has been withdrawn so much, but what is even more questionable is whether Apple's "strong man broke his wrist" can lock in the victory? After all, peers in the mobile phone industry have taken the lead, and Apple's pace in AI has lagged behind. Industry experts pointed out that whether it is car manufacturing or AI research and development, Apple is burdened with huge sunk costs, and in the current fierce competition, there is not much room for trial and error for Apple.
The car project passed "bad news".
In the face of the withdrawal of potential competitors, Tesla CEO Elon Musk immediately issued a pleasant expression of "salute" and "light a cigarette" on the X he acquired, which is intriguing. Some industry insiders expressed support for Apple's decision, and Zhou Hongyi, founder of 360, said that Apple will focus on AI, which is more in line with its own actual situation, and said that AI will be a new round of industrial revolution, and companies that do not embrace AI will be killed in the future.
As early as 2013, the new energy vehicle track was still in the pioneering period of the road, and Apple was already preparing for entering the game and released the extremely critical car machine system CarPlay. At the 2022 WWDC conference, Apple said that 98% of vehicles in the United States support CarPlay, and 79% of consumers will only buy cars that support CarPlay.
In 2014, approved by Cook, Apple launched the Titan plan, poached people from Google, Mercedes-Benz, Tesla and other companies, and formed a team with Silicon Valley plus automotive industry genes, originally planned to launch its first car in 2025, and by the end of 2022, the project seems to be in trouble, Apple will postpone the launch of the car for a year, that is, in 2026, until September 2023, Tianfeng International analyst Ming-Chi Kuo, who has accurately predicted Apple's "fate", said, If Apple wants to achieve mass production as planned, it needs to acquire existing car companies, otherwise Apple's car-making plan is likely to disappear.
Commenting on Apple's abandonment of the EV project, EV analyst Sawyer Merrett: "Apple spent a decade trying to build an EV and has $162 billion in cash reserves, but ultimately came to the conclusion that it was too difficult and too profitable, even if the model launched was priced at $100,000." ”
A reporter from Beijing Business Daily interviewed Apple for confirmation on the abandonment of car manufacturing, but did not receive a reply as of press time.
What is the future of AI plus.
After Apple gave up making cars, it is uncertain whether the energy saved can ensure the success of AI, after all, from the current market structure, Apple has lagged behind, and a number of domestic brand mobile phones have been equipped with AI large models, Samsung also released the first AI mobile phone at the beginning of this year, and Apple has not been able to take action.
In fact, Apple has spent a lot of money on AI, starting with the acquisition of Siri in 2010, Apple has acquired as many as 30 AI startups in ten years, including Shazam, Primesense, Turi, etc., since 2017, Apple has acquired 21 more artificial intelligence startups, almost twice the number of acquisitions by Microsoft and Meta, since 2021, the pace of Apple's acquisitions has slowed down, but it still won CuriousAI, Start-ups such as aimusic.
In July 2023, Apple built its own large language model AJAX and launched an internal chatbot codenamed "Apple GPT" to test the functionality of AJAX, it is reported that Apple spends more than $1 billion a year on generative AI projects, and even so, Apple will not be able to carry AI on iOS 18 at the earliest.
Apple is not the only one that wants to get rid of the involution in the field of mobile phones, but in the opinion of industry experts, even if Apple changes its course and saves the resources originally planned for car manufacturing to develop AI, it may not be able to lock in the victory.
Liang Zhenpeng, a senior observer of the industrial economy, told the Beijing Business Daily reporter that after each manufacturer has launched its own AI mobile phone, some consumers are disappointed, and the current AI function of the mobile phone is mainly focused on editing, marking, intelligent retouching, text translation and transcription, capture and editing, etc., although the use experience has been improved, but the scope of application is still narrow, and has not ushered in the expected subversive innovation, and the existence of third-party applications has also weakened the aura of built-in AI on the mobile phone.
Even if iOS 18 is equipped with AI, its application scope is likely to be limited to the above items, Bernstein analysts pointed out that Apple's use of AI, in addition to being on par with peers on the market, in terms of uniqueness, Apple may also be able to achieve enhanced message support and Siri, and will be more close, seamless integration of internal programs to improve the convenience of the iOS system.
The industry believes that if this is the case, it may be difficult for the iPhone to be significantly ahead of its peers in the AI era, and homogenization will be further intensified.
There's not much room for trial and error.
Regardless of Apple's decision to retreat or face the difficulties, it is certain that Apple has paid huge sunk costs in car building and AI, although Apple has always been "wealthy", but judging from the recent business situation, how many resources Apple still has for trial and error is also a problem that cannot be ignored.
Industry observer Major General Ding told the Beijing Business Daily reporter that in recent years, Apple has been working hard to achieve diversified transformation, but unfortunately from the perspective of business data, it is still iPhone alone, pad, MAC continues to decline, although iPhone 15 sales have recorded growth, but its decline in Greater China needs to be more vigilant, China is undoubtedly the most competitive place in the world's major mobile phone markets, Apple's performance here is not satisfactory, which means that its fist products will be further caught up by peers, Its ecological roots are not as solid as they used to be.
Judging from the data, Apple's revenue in the fourth quarter of 2023 is 1195$7.5 billion, up from $1171 a year earlier$5.4 billion, up 2%; Operating profit was 403$7.3 billion, up from $360 a year earlier$1.6 billion, an increase of 121%；But the revenue from Greater China was 208$1.9 billion, up from $23.9 billion in the year-ago quarter**129%。As for the reason for the decline, Apple's chief financial officer bluntly said that "China is the most competitive market in the world". At the same time, the iPhone contributed 56% of the revenue, highlighting Apple's increasing dependence on the iPhone.
Experts point out that what Apple needs to consider now is how to make the investment in early research and development pay off, and trial and error regardless of cost is no longer sustainable. Major General Ding analyzed that whether it is a car or AI, it is a test of Apple's financial strength, but there is no doubt that AI's return cycle is shorter than that of a car, because AI can be more easily combined with mobile phones, so that Apple's AI technology can land, and the newly released Vision Pro will also open up a new space for its AI technology, on the other hand, in the automotive field, Apple has not yet come out with a physical product in line with the principle of all self-research, not to mention the landing of AI on the car, and the hope of making a car for Apple to return to its original cost is far away.
But experts also said that although Apple has stopped making cars, its accumulation in carplay can still be combined with existing car brands and products, and its investment in cars will not be wasted, of course, in this process, Apple will also lose part of its right to speak, Apple has always been arrogant, perhaps Apple in a dilemma needs to step through its own hurdle first.
Beijing Business Daily reporter Tao Feng Wang Zhuli.