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The obvious problem with Apple’s new self-driving car plan

Daniel Howley
·Technology Editor

It looks like Apple’s long-rumored self-driving car is headed to an early grave. The iPhone maker, according to Bloomberg, appears to be cutting its losses on the vehicle, codenamed “Project Titan,” and is instead shifting toward building a self-driving system that automakers can install in their own cars and trucks.

The change of direction from full-scale vehicle development to autonomous system creation appears to have been spearheaded by Apple’s Bob Mansfield. But that move still might not be the wisest.

The allure of an Apple car

That’s because killing the Apple (AAPL) car and turning it into a piece of software eliminates the most compelling aspect of the project: the fact that it would have been an Apple vehicle. Think about it. Consumers would certainly be far more interested in driving a car built by Apple instead of one built by Honda (HMC) or Ford (F) that happens to use some form of Apple technology.

What’s more, Apple is far from the only company working on an autonomous vehicle system. Every major automaker is currently experimenting with or testing such technologies. So if Apple is going to sell its own self-driving software it will have to prove that it’s either more cost effective for automakers to purchase a third-party autonomous solution or that Apple’s is so much further along that it’s absolutely worth purchasing.

The Bloomberg report points out that hundreds of the estimated 1,000 Apple employees hired to work on the vehicle have either been moved off the project, or left the company entirely. The car was supposed to expand Apple’s product range outside of the increasingly saturated consumer electronics market.

But it seems that a series of managerial switches and the sheer difficulty of building a manufacturing pipeline for a mass-market vehicle proved far too much for Apple to handle.

Project Titan

Rumors of an Apple car have been circulating for years, with many publications claiming that the vehicle would run on electric propulsion and be smart enough to drive itself. That alone is a difficult undertaking. Just look at Tesla, which has been able to create a small stable of electric vehicles and is actively working on autonomous driving capabilities, but has struggled to bring its business to scale.

Apple’s decision to move into the automotive market also seemed to make little sense from a business perspective. That’s because cars and trucks, unlike smartphones and laptops have provided a comparatively low return on investment. Bloomberg pegs the average vehicle’s profit margin at south of 10%.

According to the report, the new trajectory for Project Titan calls for the autonomous vehicle software team to have something ready for Apple executives to look at by 2017. At that point, the company will evaluate whether to continue moving forward or not.

The Apple car rumor mill

Interestingly, rumors that Apple was still set on building a car continued swirling as recently as September, when a report by the Financial Times indicated that the tech giant was in talks with supercar maker McLaren to join forces in building a vehicle. McLaren, however, denied the report.

Before that, Apple was said to have been testing Project Titan at a massive proving ground facility in California called GoMentum Station. The company was also said to have been constructing the car in a secret lab outside of its Cupertino, Calif., campus, while simultaneously working out of a lab in Berlin, Germany.

All of that is to say, there has been a good amount of speculation and rumor about the vehicle. It’s clear that Apple was working on a vehicle, considering it spoke with officials from the California DMV about autonomous vehicle testing and went on a hiring spree for various auto industry experts, engineers and designers, but it’s unknown how far along Apple actually was in its testing.

As it stands, it seems more likely that Apple will eventually have to cut its losses on its quest to break into the automotive market. Then again, the company is full of surprises. Either way, we’ll find out what the iPhone maker has up its sleeves in the coming months.

via: Bloomberg

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Email Daniel at dhowley@yahoo-inc.com; follow him on Twitter at @DanielHowley.