The article below is sourced from Bloomberg Wire Service. The views and opinions expressed in this story are those of the Bloomberg Wire Service and do not necessarily reflect the official policy or position of NADA.
The sudden demise of Apple Inc.’s car program is a bleak sign for the electric-vehicle market. It’s also a welcome boon for automakers.
Tesla Inc. and Detroit can breathe a sigh of relief after the electronics giant scrapped its car program, eliminating a potential threat in an EV market that’s slowing and freeing up a pool of talented engineers who may be out of a job.
In the past year, Elon Musk’s company has slashed prices and warned of decelerating demand, while established carmakers including General Motors Co. and Ford Motor Co. have delayed investment and pulled back production plans. Now they have one fewer competitor to worry about in a crowded and uncertain arena — in particular, a tech company with $61 billion in cash to throw around.
“They’re probably relieved,” said Gartner Inc. analyst Mike Ramsey. “Apple getting in the market scared people early on.”
Apple exiting the EV market before it really revved up underscores just how tough the business has become. Electric cars are still too expensive for most consumers, and charging is patchy in the US. EV sales are expected to rise just 9% this year, after growing at a compounded annual rate of 65% over the past three years, according to Bloomberg Intelligence.
EV startups already are struggling with meager sales and heavy cash burn. Last week, Rivian Automotive Inc. forecast production will be flat this year and announced another round off layoffs, sending its shares on their biggest-ever decline. Lucid Group Inc. said it will only make 9,000 vehicles this year and will need to do another capital raise.
Hertz Global Holdings Inc. last month revealed plans to sell 20,000 plug-in vehicles — a third of its US electric-vehicle fleet — due to weak demand, rapid depreciation and high repair costs. This marked a sharp reversal from its earlier embrace of EVs from Tesla and other automakers.
While GM is having a hard time building EVs due to production problems, Ford has seen demand fall and has reined in investment plans. Germany’s Mercedes-Benz also has called off a target for half its sales to be EVs by 2025.
Market Disruption
Apple’s pullback is another example of the tech sector underestimating how difficult it is to disrupt the car sector, said Jeff Schuster, global vice president of automotive research at consultant GlobalData.
“Everybody from that world just looks at it and thinks, ‘Oh, these dinosaurs, we can come in, this is easy, what could be so difficult? We manufacture phones and we have all this technology, we can take it over,’” Schuster said in an interview. “Nine times out of 10, most find it a little more challenging and certainly more dynamic and complex than they expect.”
Other market watchers had a slightly different take. It’s a bit of a double-edged sword for automakers, said Jochen Siebert at JSC Automotive, a car consulting firm in Singapore.
“One the one hand, Apple isn’t a direct threat,” he said. “But on the other, if Apple kind of says, ‘The automotive industry isn’t interesting,’ that has a backlash effect on everybody else.”
Others believe Tesla may benefit the most from Apple’s about-face. The last thing Musk wanted after cutting prices on his vehicles by 25% or more was a Silicon Valley rival with the same kind of high-tech appeal, Gartner’s Ramsey said.
“They certainly had the most downside,” he said. “Tesla benefits big time from being a status vehicle, and an Apple EV definitely would be a status vehicle.”
Seemingly celebrating the move, Musk posted a saluting emoji and a cigarette on X.
Li Xiang, the CEO of Chinese carmaker Li Auto Inc., also took to social media after the news, posting on his Weibo account that “giving up carmaking and focusing on artificial intelligence is an absolute strategic decision at the right time.” He also wrote that AI will be a prerequisite for making a great car.
Automakers now will be looking to snap up members of Apple’s car team, said Brad Holden, a founder of the executive search firm Holden Richardson.
“There will be great talent on the street,” Holden said. “It will be picked up.”
For more stories like this, bookmark www.NADAheadlines.org as a favorite in the browser of your choice and subscribe to our newsletter here:
