Apple reportedly scaling back its drive for autonomous vehicle

Vehicle History Expert Cartell.ie is looking again at the issue of autonomous vehicles. Readers will know Cartell.ie Director Jeff Aherne recently appeared on RTÉ Prime Time commenting on the market for self-driving cars and what we can expect in the future. One of the big players long-expected to enter the autonomous vehicle market is tech-giant Apple. Now, however, recent reports suggest there are doubts about the project. Bloomberg report that Apple has “drastically scaled back its automotive ambitions” amid  hundreds of job cuts on the team ear-marked to produce their first car – project Titan. The market analyst reports that Apple has given the team a deadline of late-2017 to prove the feasibility of a self-drive initiative.

Business man hand working with select new car concept

Interesting are some of the reasons for the possible demise of the project: the high cost of parts and the low expected margins. On the first point it’s reported the difficulty is that Apple is not able to wield the same influence over parts suppliers as it can in the smartphone market:

In smartphones, Apple wields extensive influence and often secures exclusive rights to certain parts from suppliers. For cars, the heavy investment required to make automotive parts means suppliers are less willing to commit their products to a vehicle like Apple’s which may have initially shipped in small quantities.”

On the second point the report notes that car manufacturers are accustomed to operating in a market where they can expect net margins well below 10% – where margin means revenue minus cost. Investors in technology companies are more used to “fat profit margins” according to the report but it is still expected Apple could control a healthy margin if they release a quality Apple product. The difficulty is that there could be no compromise on quality as – “that could hurt the perception of its other products.”

The news that Apple is finding the going tougher than expected will be met with a mixed response. While Apple is obviously seen as a rival for long-standing car companies its entry is also heralded as a means to introduce the iphone generation to the motor sector. For that reason news that Apple is scaling back is certainly newsworthy.

, ,

Comments are closed.