On February 28, Beijing time, according to Bloomberg, Apple internally announced that it would abandon a decade-long electric vehicle research and development plan. The decision came from Apple's chief operating officer, Jeff Williams, and Kevin Lynch, vice president in charge of the electric vehicle program.
The two executives told the nearly 2,000 employees working on the project that the project will be phased out and that some of the employees in the automotive team, known as the Special Projects Group (SPG), will move to the artificial intelligence department led by John Giannandrea. The remaining hundreds of hardware engineers and automotive designers are unclear and may be reassigned to other teams or laid off.
When you keep putting in and put a lot of effort into running something, even if you gradually feel that there is no future, you still don't want to give up easily. This is a central concept in economics – "sunk costs".
The existence of sunk costs makes giving up the most difficult option. For Apple, which has invested in the car project for ten years, it is not easy to give up, after all, just last month, there was news that Apple would postpone its car construction plan until 2028.
The outside world seems to be waiting for the day when Apple will give up building cars. As soon as the news from Bloomberg came out, Apple's stock price turned from falling to rising, **081% to 182$63.
Since Apple announced the construction of the car, it has been regarded as a "distant threat" by the car circle. Phil Abram, a former GM executive who led the company's infotainment division until his retirement in 2017, has said: "Apple has the aura of being able to create truly innovative, easy-to-use products that will be very difficult to compete with if it does launch a car." ”
After Apple gave up building cars, Tesla was the biggest beneficiary. After all, Tesla is also in a "trough period", and Musk does not want to see another competitor with the same high-tech strength in Silicon Valley.
So after the news of Apple's abandonment of car manufacturing came out, Musk posted two emojis of "tribute" and "cigarette lighting" on social **x, which was quite "gloating".
Tesla investor Sawyer Merritt posted that Apple spent 10 years trying to build electric cars and had $162 billion in cash reserves, but ultimately came to the conclusion that it was too difficult and too profitable. He also analyzed the reasons why Apple gave up making cars, and said that there are only two car companies in the United States that have never gone bankrupt, one is Ford and the other is Tesla. Musk commented on this, saying, "Bankruptcy is the norm for a car company. ”
The news that Apple has given up building cars has also aroused discussion among the "top leaders" of China's new power car circle.
Li Xiang, CEO of Li Auto, said that Apple's decision to give up building cars and focus on artificial intelligence is an absolutely correct strategic choice, and the timing is also appropriate. He also analyzed that artificial intelligence will become the top-level entrance to all devices, services, applications, and transactions, and it is Apple's battle. Artificial intelligence remains a sine qua non for the success of automobiles. The electrification of cars is the first half, and artificial intelligence is the final.
He Xiaopeng, CEO of Xpeng Motors, was quite surprised, he said, "Last year, it was also discussed that all new entrants in the automotive industry will be released in 2024, but except for Apple." The decade after 2024 will lead to the playoffs and All-Star breaks. But I didn't expect Apple to come out with such a card in 2024. ”
Xiaomi, who has just entered the car, does not forget to "cheer up" for itself again, Lei Jun, chairman and CEO of Xiaomi Group, said: I was shocked to see this news! Xiaomi's strategy is "the whole ecology of people, cars and homes", we are well aware of the difficulty of building cars, and we still made an extremely firm strategic choice 3 years ago, and seriously built a good car for rice noodles!
Apple's choice to abandon car manufacturing is also a reflection of the current "pessimistic" portrayal of the global electric vehicle market. As consumer enthusiasm for BEVs wanes, sales growth loses momentum. Morgan Stanley analyst Adam Jonas noted in a recent report: "The global momentum for electric vehicles is waning, and the market** has outpaced demand. ”
Traditional automakers such as General Motors, Ford, and Mercedes-Benz have all slowed down their transition to electrification after facing sluggish demand for pure electric vehicles and production bottlenecks. The industry as a whole is slashing its EV targets, production targets and profit forecasts.
Although the Apple car did not make the world, Apple's products also had a profound impact on the automotive business. For years, automakers have struggled to perfect multi-system systems and other in-vehicle technologies in an attempt to give their touchscreens the look and functionality of an iPad.
In the end, car companies still chose to have Apple's CarPlay take over the vehicle dashboard. They incorporate carplay into the product, allowing users to project onto the car's display. According to research firm Wards Intelligence, more than 90% of the 2023 models currently sold in the U.S. have CarPlay installed.
Analysts at Bloomberg say that Apple's focus on artificial intelligence may be a better option. "Apple's decision to abandon electric vehicles and shift resources to generative AI is a good strategic move, given the long-term earning potential of AI revenue streams relative to cars. ”