Inside Apple’s failed car program

Mark Gurman has been covering Apple since 2009. His reporting career is full of scoops about new products or strategic decisions from inside the company. 

His latest scoop in February: Apple is finally shutting down its efforts to build an autonomous electric car.

Apple first started exploring an electric car in 2014. At that point, cars had already become computers on wheels, Tesla was scaling mass-market production, and vehicle autonomy was the hottest thing in the tech industry.

“It made sense that Apple, which has a massive prowess in manufacturing, an incredible design ethos and a high standard for safety…would try to take a crack at that market,” said Gurman, a chief correspondent at Bloomberg.

But after a decade of internal disputes, redesigns, and leadership changes, Apple is officially moving on from cars.

“This was a clear admission of failure and admission of a need to disperse some of the resources from that program to other projects at the company,” explained Gurman.

In March, Gurman co-authored a piece detailing exactly what happened over the last 10 years of secretive work. This week, we talk with him about the vision, the technological challenges, and ask: what if Apple had just acquired Tesla from the start?

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Transcript

Stephen Lacey: Mark Gurman has been covering Apple since 2009, and he is a very well-sourced reporter. His career is full of scoops about new products or strategic decisions from inside the company.

Mark Gurman: I covered the development of the Apple Watch, the development of basically every major iPhone, some iPods, the Vision Pro has been a big coverage area, their AI initiative, certainly. So the whole gamut.

Stephen Lacey: So when news broke about Apple killing its electric car program, there was one obvious person to turn to, the guy who broke the story, Mark Gurman, who's now a chief correspondent at Bloomberg. Do you remember the first time you caught wind that Apple was planning an electric vehicle?

Mark Gurman: The first time that I caught wind that Apple was developing was an electric vehicle, was probably about eight or nine years ago when I had found out that they have started to hire people from the automotive industry and from the AI industry related to autonomous driving.

Speaker 1: Four years from now, the streets of California could have iPhones in people's pockets, watches on people's wrists, and cars on the road.

Speaker 2: On one extreme, does this mean you may be able to summon an Apple Car, an Apple self-driving car, using your DD app at some point in the future?

Mark Gurman: Yeah, initially it felt pretty ambitious. It felt outlandish. But then the more you thought about it, it became quite obvious as to why Apple would be doing this.

Stephen Lacey: It was 2014 when Apple first started exploring an electric car in earnest. At that point, cars had already become computers on wheels. Tesla was just starting to scale mass market production and making electric vehicles attractive and vehicle autonomy was the hottest thing in the tech industry.

Mark Gurman: You saw the underpinnings of Waymo. You saw a lot of discussion about Uber getting into autonomous control of their fleets. So certainly this was becoming a hot topic. So it made sense that Apple, which has a massive prowess in manufacturing, in hardware and software and services, an incredible design ethos and a high standard for safety, it made sense that they would try to take a crack at that market.

Stephen Lacey: In 2017, Apple CEO Tim Cook outlined some of these trends in an interview with Bloomberg News. Now, he didn't outright admit that Apple was developing its own autonomous electric car, but he came pretty close.

Speaker 2: You've said cars are an area ripe for disruption. How important is it that Apple not miss out?

Tim Cook: There is a major disruption looming there. What we've talked about focusing on publicly is we're focusing on autonomous systems, and clearly one purpose of autonomous systems is self-driving cars. There are others. And we sort of see it as the mother of all AI projects.

Stephen Lacey: It sounded like the perfect combination, a tech giant with manufacturing skill and a mastery at building desirable tech entering an auto industry primed for disruption. But the mother of all AI projects, fully autonomous electric cars, turned out to be much more difficult than inventing a new phone or tablet.

Speaker 3: After 10 years and billions of dollars, Apple has abandoned its plan to create an electric car. Project Titan was intended to rival Tesla's EVs. But after a decade of work, the project never got off the ground, leaving many in the tech industry wondering what happened.

Stephen Lacey: Mark broke the story that Apple was ending its car program called Project Titan. And a couple weeks later, he co-authored a piece detailing exactly what happened over the last 10 years of secretive work. The beginning of the end started about nine months ago according to his reporting. That was when Apple had a reckoning over autonomy.

Mark Gurman: And Apple had come to essentially a full realization that full Level 5 autonomy would be something unreachable in the foreseeable future. They didn't know if it would be five years, 10 years, 15 years, or so forth. And so the decision was made to delay their plan release date a couple years to 2028-2029 timeframe, so about five, six years from now, and re-architect the car around a Level 2, 2+design.

Stephen Lacey: But that, says Mark, meant Apple wouldn't be developing a category making product. It would be entering a very crowded and competitive electric car market.

Mark Gurman: At that point, Apple was asking itself, why are we getting into this low margin business, this business that will add a lot of revenue, but require a lot more spend when we're not really going to bring something to market that will be a differentiator?

Stephen Lacey: So at the end of February, Apple executives called a meeting within the Special Projects Group, the division working on the car, and they explained that Project Titan was winding down immediately.

Mark Gurman: And this was clear admission of failure and admission of a need to disperse some of the resources from that program to other projects that the company, such as the work going on in generative artificial intelligence.

Stephen Lacey: After a decade of internal disputes, redesigns, and leadership changes, Apple is officially moving on from cars. So why did it fail?

Mark Gurman: If they didn't start looking for the pie in the sky idea and decided to start a little slower and to start a little bit more basic and then built up over time, I think they could have probably brought something to market, but they got way too far down the road on something that would never come to fruition.

Stephen Lacey: This is The Carbon Copy. I'm Stephen Lacey. This week, a conversation with Bloomberg's chief correspondent Mark Gurman about the 10-year saga behind Apple's autonomous electric car. We'll explore the vision, the technological challenges and ask, what if Apple had just acquired Tesla from the start? So let's start at the beginning, like the way, way beginning. Steve Jobs actually proposed the idea that Apple could build a car in the 2000s. Apple even thought about acquiring General Motors in the wake of the financial crisis. Why was a car attractive to Apple even in the early days?

Mark Gurman: The car was attractive to Apple because of the idea that a lot of people spend a lot of their time and a lot of their days driving. They felt like there was something they can contribute to that portion of people's lives. They wanted to own the on the go. Obviously the iPod and the iPhone was an on the go device. They wanted to own the living room. They wanted to own home and work and business, and the car is a big part of the on the go experience.

So that was something they took a brief look at when Steve Jobs was around, and then that project kicked into gear, so to speak, 2013-2014 timeframe. Initially, the first part of the car project was examining what it would take to acquire Tesla, integrate Tesla, and take Tesla to a new level under Apple ownership. And so they spent a lot of time exploring the possibility of acquiring Tesla. Apple's head of mergers and acquisitions had met with Tesla's Elon Musk and J. B. Straubel multiple times, and Tim Cook, Luca Maestri, the company's CFO, decided not to move forward with such an acquisition.

And so that was a big moment. Instead, Apple allocated budget, resources, et cetera, to going ahead and engineering and developing its own car. So Dan Riccio, the head of hardware engineering at that moment, started hiring people from within the company, program managers, software managers, hardware managers, people with expertise in sensors and AI and algorithms and design and operations to come together to develop this Apple car team. It became known as the SPG or the Special Projects Group.

They flew throughout the world to meet with different car manufacturers. They held discussions with Mercedes, Volkswagen, BMW, McLaren, self-driving company called Canoo. If you can name the company, they thought about working with them in some fashion. And so they were looking at every possible angle to get into the car space. But ultimately, they really felt doing an Apple-like product that integrates in-house hardware, software and services would be the way to enter it. But clearly that all fell apart.

Stephen Lacey: This moment in 2014 is such an interesting one because it makes one speculate about what could have been. What do you think would've happened if Apple had actually acquired Tesla, which at the time was worth 1/20th of what it is today?

Mark Gurman: I think if Apple ultimately acquired Tesla, it probably would've been, and this is just my opinion, a good thing for the company, I think they would've made it far more operationally efficient. They would've made it leaner. It would run an Apple designed operating system. They would get some semblance of autonomy. And I quite frankly don't think Elon Musk would've lasted long at Apple with Tesla. I think Elon Musk would've wanted control. I think Elon Musk would've wanted to run probably the whole company, obviously a very ambitious guy.

And certainly I don't think that would've worked out. I think they would've clashed. I don't think his culture, the way he handles himself, no judgment in either direction, really meshes with how Apple as an entity operates. And so I think they would've taken a lot of the learnings that Tesla had, a lot of the underlying technology. Now, Tesla has some great tech from batteries to manufacturing to powertrains and electric car engines and such. That could have all been very useful for Apple, and I think they would've taken Tesla as a basis and built on top of that.

What Apple does is they buy an entire company or some sort of algorithm and use that as the basis for a feature. Apple bought Beats Music. It's the origin of Apple Music. They bought a company called Siri to build, well, Siri. They bought a company called Lala to build the iTunes Match, which was their music locker service. And so certainly buying Tesla would've been the basis of their own car project. I don't think it would've operated necessarily as its own subsidiary. I think it would've been the beginnings of an Apple vehicle.

Stephen Lacey: As you say in one of your stories, Apple saw this as the ultimate mobile device. But as you reported, there were disagreements from the start. What were team leaders disagreeing about from the beginning?

Mark Gurman: The big disagreement that Apple was facing from the get-go of the project was the level of autonomy to work through, right? Would it be something close to no autonomy? Would it be something like Level 2 like you see in a Tesla? Would it be Level 5 autonomy like Apple ultimately landed upon as its ambition, right? And so that was a big area of disagreement. Some people wanted to start with something like Level 2 or even Level 0 or 1 and build upon that over time.

And so I think that core fundamental technology is where the disagreements really began. There were also disagreements about who the car should be for. Should it be more like a traditional car? Should it be for people who love their cars, or should it be for people who don't love their cars and people who just want to sit in a microbus and have it act like a private jet or an airplane cabin or a living room on wheels, so to speak? And so you had differing opinions, you also had different opinions from the finance people at Apple.

Do we really want to enter a market that is so incredibly competitive and so incredibly low margin? So anything you could really think of where there was room for disagreement or difference of opinion, there was disagreement or difference of opinion.

Stephen Lacey: Definitely a lot of disagreement over the design. I'm curious, what were some of the design changes over the years?

Mark Gurman: So the overall car design was pretty much the same from start to finish with major changes, I would say. Design one to the final design was all an evolution. And I think that the very core of the car looked something like the Volkswagen ID. Buzz, which is their new generation concept re-imagining of the 1950s, 1960s microbus. If you've seen Scooby-Doo, sort of something like the bus that they drive around in.

And the idea was to have reclining seats, seats that can turn into places to put your feet up, couch-like living room seating, gigantic TV in the middle of the car cabin, a high-tech cockpit with chairs that can swivel, doors. One incarnation had sliding doors, another had doors like in the Tesla Model X, the gullwing type doors, all sorts of crazy ideas. They had ideas about not having windows that can open. And so instead of that, they put microphones outside the car with a high-tech spatial audio system inside the car that could present the user with the feeling that they have open windows.

They had a high-tech air conditioning system where the air flow would flow through the sides and top and bottom of the car, sort of like what you see on some of the newer, I think, Airbuses or Boeing airplanes. Speaking of Boeing, on the Boeing Dreamliner, the windows can tint pretty aggressively digitally with button controls. There was talk about having auto tinting windows on the sides. There were other strange ideas such as not having windows on the front of the back of the car.

And the idea being that the front and back look identical so the car could drive in either direction and it's always driving forward. So you can go into a parking space. But when you go out of the parking space, you're still driving forward. You're not necessarily doing what we normally would think of as head in and then heading to reverse out. That was non-existent with that type of autonomous vehicle. Other interesting things were the work being done to mitigate autonomy issues.

There was talk of having a game controller like interface in the car to be able to drive the car because the big idea was having no pedal or steering wheels, of course. The other idea was being able to call into a 24/7 Apple command center and have them drive the car for you with a traditional steering wheel and pedals from their offices. Another big idea was having an iPhone app that can serve as a virtual steering wheel to mitigate any issues with the autonomy.

So certainly they were thinking and putting an incredible amount of time into fallback options for the autonomy because they were until about two years ago very much all in on the lack of pedals or steering wheels. Obviously a very controversial idea at the time.

Stephen Lacey: You quote an Apple executive who was involved in the car saying, "The big arc was poor leadership that let the program linger while everyone else in Apple was cringing." When asked what went wrong with the effort, a senior manager involved in the vehicle's interior design replied what went right. At what point did it turn from a very expensive skunkworks project that could help Apple create its biggest product yet into something that was a little embarrassing?

Mark Gurman: Well, certainly the first embarrassment started to come out around 2016-2017 when they had to do the first major pivot of the project, which was refocusing around that autonomous driving system, pairing back some engineering and operations related to the development of physical car hardware, and focusing all your attention or some of your attention or a greater degree of your attention on the autonomous system, hoping to nail that down, and then eventually pivoting back to building the whole car.

And that was a big embarrassment. They had to, unfortunately, lay off hundreds of people at that point. A bright spot of the project was when Doug Field returned to Apple. This was in the tail end of '18 and he, prior to that, was running the Model 3 car hardware engineering at Tesla, which had just got through the Model 3 issues and was onto the great success that it has seen in recent years. So Doug Field returns to Apple. Before going to Tesla, he was a Mac hardware executive.

He comes back and everyone thought this is now the time when the Apple car is going to go full throttle towards development. And that was certainly the goal. He implemented a lot of the fail safes for the backup to the autonomy, but he ran into issue after issue related to disagreement in decision from top Apple executives, including Tim Cook. And really a desire to bring something to market while having this inherent feeling that Apple's never going to bring this type of car to market, he ended up leaving I believe around the end point of 2021.

He went to Ford and now has been a top executive at Ford over the last few years working on their EVs, working on their in-car operating system and in services. And he was replaced by Kevin Lynch. Kevin Lynch has an interesting story at Apple. He joined Apple in 2013. Prior to that, he was at Adobe. He ran many programs at Adobe and ultimately was the CTO of Adobe. He was publicly poked fun at by Apple over Flash. There was a time Steve Jobs was adamant about Flash never coming to Apple hardware in terms of their new devices, the iPhone, the iPad.

And Steve Jobs really set out for this HTML5 revolution. Now, most of the web is built upon HTML5 versus Flash, which obviously was an Adobe product. And anyways, Kevin Lynch ultimately is recruited to Apple. He becomes VP of technology. That was a mysterious title. In reality, his project was to run software engineering for Apple's health efforts and the operating system that would run on the Apple Watch. He was successfully able to bring the Apple Watch to market.

He was known as a very astute, smart guy who can make difficult decisions and understand technology. And he made the decision ultimately to recommend that Apple winds down this car program. He thought it couldn't be done. He didn't know when they'd be able to pull off autonomy. So him alongside Williams ultimately wound down the Titan Project, the car project, and now a bunch of the engineers working on the autonomous systems and the AI portions of the car project are now working at Apple's AI division on generative AI and other related machine learning initiatives.

Stephen Lacey: This question about autonomy level is a really interesting one, and so much of the failure of this program had to do with their decision to push on Level 5 autonomy. And like a decade ago when investors and consumers and a lot of big companies thought that Level 5 autonomy was achievable in the near future, maybe it made sense. But as we've seen over the last decade, it's extremely hard to achieve in the real world and there still needs to be a lot more training.

And then not to mention regulations need to change and consumer confidence to change, and suddenly this last decade of history shows us that it's almost a little ridiculous that they hung on to Level 5 autonomy for this long. Why did it take so long for them to make this decision when it was clear that there were a lot of struggles in the market?

Mark Gurman: Well, it felt like they had come to some solution, which is to build more of a Tesla me too product, which is to build something that would require less advanced autonomy, something in the Level 2+, 3 range. And they definitely were working on that. They had pivoted back to installing a steering wheel and pedals, but the problem is is that you weren't really going to add much to the marketplace.

Maybe you had a cool Apple design and user interface, but it certainly wasn't going to light the earth on fire. And I don't think they wanted to ultimately release something that was a me too product to Tesla. And so they ultimately made the decision to wind down the program. I think ultimately, to be honest with you, the biggest factor was probably the lack of profitability and the lack of strong margins that they saw coming from the car project.

On average, Apple's corporate gross margins are above 40%. There are car makers like Lucid and Rivian that are losing tens of thousands of dollars on every car unit shipped, and certainly that's probably not something Apple wanted to deal with on the bottom line. And if they were able to create a car without losing money, something that was profitable, they would probably have to overcharge for the car. So in many respects, it was a lose-lose for the company's business and consumers.

Stephen Lacey: The car business is really hard and a lot of car companies have really struggled. I mean, it was a miracle that Tesla pulled it off. As they were going through production hell with the Model 3, everyone thought or a lot of people thought that the company might fail. There were many, many years when it was not clear whether Tesla would actually make it, and there are a lot of big questions for some of the new market entrants.

So it's a very logistically complicated business making cars and competing with existing automakers, but building consumer electronics isn't exactly an easy business either. So what is the case for Apple actually being able to pull this off logistically if they actually got a model that worked?

Mark Gurman: I mean, me personally, I think they could have gotten it right if they didn't get so far down the road on Level 5 autonomy, building its operations around Level 5, building its autonomous system around Level 5, spending 10 years building different car designs and infrastructure and testing facilities around Level 5. And by the time they reached that tipping point, that teetering moment, it was kind of too late to turn back and it was really either keep going forward or pulling the plug on this thing, I think personally, which is a bad position to be in.

So it was poor decision making and indecision that got us to this point. If Tim Cook had made the decision earlier on in the development process to move to a Level 2 system or start with the Level 2 system and build up from there, perhaps there would be an Apple car on the road today.

Stephen Lacey: You have this unique window into the saga that unfolded. I mean, what do you make of this decade long quest? Do you or the people you talked with within Apple think that Apple could have gotten it right? And if so, how?

Mark Gurman: I think Apple sees the Vision Pro as potentially a long-term replacement for multiple different product categories. I think they see it as something that has potential to replace the iPad as a consumption device, potential to replace the Mac as a productivity device, and certainly something when you're shifting to augmented reality has the potential to be an iPhone replacement.

Obviously the Vision Pro would have to come down significantly in size, weight, and cost to be an iPhone replacement, but there is so much potential in the head worn wearable space and a lot of potential in the operating system they built there, a lot of potential in the application ecosystem that they've been building up there with ARKit for so many years and the applications you're already seeing on Vision OS.

So I certainly think that's a critical category for them. I think generative AI is going to be at the very core of a lot of what Apple is building for both today and tomorrow. So I think you have some of the smartest engineers in the world working on the fundamental problems of autonomy at Apple on this canceled car project.

And so placing those people in very important areas like generative AI, which is at the very core of what you're seeing from Nvidia and Meta and Google and Microsoft, OpenAI, Anthropic, you name it, I think that was an astute decision to recognize that those resources could be easily pinnable to other important areas of the company for growth.

Stephen Lacey: So there are a lot of folks on the Special Projects Team that are going to move to generative AI work to work on the Vision Pro. How important are those products to Apple's future?

Mark Gurman: I think Apple sees the Vision Pro as potentially a long-term replacement for multiple different product categories. I think they see it as something that has potential to replace the iPad as a consumption device, potential to replace the Mac as a productivity device, and certainly something when you're shifting to augmented reality has the potential to be an iPhone replacement.

Obviously the Vision Pro would have to come down significantly in size, weight, and cost to be an iPhone replacement, but there is so much potential in the head worn wearable space and a lot of potential in the operating system they built there, a lot of potential in the application ecosystem that they've been building up there with ARKit for so many years and the applications you're already seeing on Vision OS. So I certainly think that's a critical category for them. I think generative AI is going to be at the very core of a lot of what Apple is building for both today and tomorrow.

So I think you have some of the smartest engineers in the world working on the fundamental problems of autonomy at Apple on this canceled car project. And so placing those people in very important areas like generative AI, which is at the very core of what you're seeing from Nvidia and Meta and Google and Microsoft, OpenAI, Anthropic, you name it, I think that was an astute decision to recognize that those resources could be easily pinnable to other important areas of the company for growth.

Stephen Lacey: So instead of building an electric vehicle, at least they can maybe help consumers pretend like they're in an Apple car by strapping a Vision Pro to their face.

Mark Gurman: They could potentially do that. Maybe they'll add a vehicle environment where you could feel like you're in a backseat of an Apple car and you have your feet up on recliners, and you're on this virtual leather couch all in white with stainless steel appliances. I'll tell you, I think the Apple car would've been just so tremendous. From everything I've heard, it was really a feat of engineering and it was really a shame that indecision, cost concerns and a lack of advancement in autonomy technology really in the end I think combined killed the thing.

Stephen Lacey: Yeah, so what's the moral of the story here?

Mark Gurman: It's hard to really set a moral here because when you're a technology company with as much money and resources as Apple has, the thing you want to do is explore things, is build, to try to keep pulling that string, as Tim Cook says, to see if you finally find something. And they pulled and pulled and pulled for 10 years. They found they weren't able to move forward and they closed up shop. But I don't know if there's really a moral here.

Maybe you can say that this exploration process needs to have a combination of really in-depth exploration and keen interest and development. But at some point, decision-making about what to do with those explorations needs to come into play. And I think you've seen it play out over and over again with Apple in recent years. The Apple Watch they brought to market after two, three years of development time, but the Vision Pro was another one of those products where they really waited a long time to come to market.

The Vision Pro went on sale in February 2024, so a little bit earlier this year, but development of that project kicked off around the same time as the Apple car project. And you can argue the Vision Pro was an eight, nine year, 10, program as well. So a lot of indecision, a lot of disagreement went into that project too, but they ultimately were able to ship.

Stephen Lacey: Mark Gurman is a chief correspondent at Bloomberg covering all things Apple, tech, and devices. Fantastic reporting, Mark. I have been so curious about how this played out within Apple. It's red meat for someone like me in our audience. So thanks so much.

Mark Gurman: Thank you. It was such a pleasure to be on here with you. I hope to be on here with you again soon on another important topic.

Stephen Lacey: That marks the end of the show. The Carbon Copy is a production of Latitude Media. It's produced and written by me, and Sean Marquand is our technical director. He mixes the show and he wrote our theme song. You can get all of our stories, our show notes, and our transcripts at latitudemedia.com. Make sure to check out Mark's reporting. We'll send some links in the show notes to his big feature on what happened inside Apple and on the news breaking the end of the electric car program.

Latitude Media is supported by Prelude Ventures. Prelude backs visionaries accelerating climate innovation that will reshape the global economy. Learn more about their portfolio and investment strategy at preludeventures.com. And spread the word about this show. Wherever you are active on these issues, we love to hear from our listeners. And you can also send some ideas for what to cover here at editorial@latitudemedia.com. And we'll catch you next week. I'm Stephen Lacey. This is The Carbon Copy.

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