Apple Shelves Electric Car Project, Shifts Focus to AI Amid Market Realities

Apple Inc. (AAPL.O) has reportedly halted development on its electric car initiative, a source familiar with the matter revealed to Reuters on Tuesday, signaling a significant shift in the tech giant's automotive ambitions a decade after the project's inception.

The news sparked a modest uptick in Apple's stock, with shares climbing 0.7% during afternoon trading, bouncing back from earlier losses. Bloomberg News reported that employees previously engaged in the electric car project will now transition to Apple's artificial intelligence (AI) division, signaling a strategic pivot for the company.

Ben Bajarin, CEO of consulting firm Creative Strategies, commented on the move, suggesting that a renewed focus on AI, particularly GenAI, could bolster investor confidence in Apple's competitive edge and its ability to excel in the AI arena.

The decision to reallocate resources comes amid a backdrop of changing market dynamics, with Apple opting to channel efforts into AI technology rather than pursuing electric vehicle (EV) production. Unlike tech rivals such as Alphabet (GOOGL.O) and Microsoft (MSFT.O), which have aggressively embraced AI, Apple has maintained a more cautious approach in the field.

Market conditions have also influenced the strategic shift, with high interest rates dampening consumer sentiment and slowing demand for electric vehicles, forcing industry players to reassess their priorities. Notably, Tesla (TSLA.O), the EV market leader, has scaled back investments, redirecting focus towards hybrid models amidst uncertain market trends.

Dubbed Project Titan internally, Apple's foray into the automotive sector commenced a decade ago amid growing enthusiasm for self-driving vehicles in Silicon Valley. Initial reports suggested Apple's potential entry into the market by 2024 or 2025. However, progress faced setbacks, including workforce layoffs in 2019 and design alterations shifting from a futuristic autonomous vehicle to one with advanced driver-assistance features.

As Apple recalibrates its automotive strategy, attention now turns to its AI endeavors, signaling a strategic realignment reflecting evolving market dynamics and technological trends.