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Apple Cancels Plans for Apple Car, Will Focus on Software Instead

Wednesday, October 19, 2016 3:33
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(Before It's News)

Apple logoFrom Irina Slav: Apple Inc. (NASDAQ:AAPL) has all but thrown in the towel on its self-driving car endeavors. Its project Titan, which was supposed to release a fully autonomous vehicle in the early years of the next decade, has been scaled back substantially and will from now on focus on developing just the self-driving software used in autonomous cars.

In an extensive report on project Titan, Bloomberg notes that since its inception two years ago, it has been plagued by a variety of problems, from disagreements among leaders about the direction the project should take, to supply chain challenges, and the consequent outflow of managers and employees alike.

It seems one of the world’s leaders in consumer electronics plunged headfirst into the deep waters of the nascent autonomous car market without first learning how to swim. Only now, after two years of strategy, have rows among the leadership, an absence of a clear concept as to how to approach the whole thing, and growing competition made the company realize that it may have made a mistake.

Let’s look at the competition: all the big carmakers are spending heavily on autonomous and self-driving cars, from Tesla to Volvo, from BMW to Daimler. Here’s a roundup of 19 automakers that have more or less detailed plans to release a self-driving vehicle. Some of them have joined forces with other companies – GM and Lyft, for example, and Volvo and Uber – while others are going it alone. What they all have in common are plans to launch a driverless car or at least a semi-autonomous car within the next four years. All this while Apple’s Titan is still deciding which direction it should head with its own self-driving idea.

As disappointing as it may be for loyal Apple fans, the company was a bit slow and a bit unclear about its new surroundings when it decided to reach for a piece of a market that has been estimated by McKinsey to reach $6.7 trillion by 2030. So slow and unclear, in fact, that it now might be better for it to cut its losses and shutter Titan entirely. As Yahoo Finance tech editor Daniel Howley notes, an Apple self-driving software system is nowhere near as attractive for iPhone devotees as an Apple self-driving car. Plus, Howley adds, those other companies that are working on their own driving cars are naturally developing their own software systems as well, so Apple must be able to come up with something far superior in quality and cost efficiency to all of those systems in order to survive in this line of work.

The Titan project’s leaders have about a year to prove the commercial viability of Apple self-driving software. If successful, the company would be able to choose between offering it to third parties or—and it’s a longshot—building its own self-driving car, provided the tide turns and most of those 19 carmakers working on their own self-driving cars fail spectacularly.

The likelihood that most will fail, however, is remote. Nissan alone is scheduled to launch not one but 10 self-driving vehicles in four years. In three years, according to BI Intelligence, 2,487 fully autonomous cars will hit the roads, rising to 5,494 the next year. This will be just the start.

The regulatory waters around self-driving cars are still pretty murky, and there’s a long way for carmakers and regulators to go until autonomous vehicles become an ordinary part of morning traffic. Still, there seems to be a general agreement that it is a market with a lucrative growth potential, which is why everyone in the car-making business is racing to get in on the self-driving action. It’s difficult enough for even an experienced automaker to build a reliable car that will drive itself; for a consumer electronics company, even one as colossal as Apple, it seems to be a bit too far out of their wheelhouse.

Apple shares were mostly flat in premarket trading Wednesday at $117.43. Year-to-date, the world’s largest company by market cap has gained 11.6%.


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