Apple chooses a more advantageous path to AI supremacy

The new tab vehicle initiative launched by Apple (AAPL.O) in New York has ran out of steam. Bloomberg revealed on Tuesday that the $2.8 trillion iPhone manufacturer has terminated its internal, ten-year electric car project, known Apple Project Titan. It gives up the opportunity to enter a sizable market. Automobile sales, however, are becoming a more ruthless industry, mostly used to harvest consumer information and interest. To travel to the same location, Apple has more efficient routes.

A compelling motivation for businesses such as Apple to attempt producing an electric vehicle over the past few years has been Tesla (TSLA.O), opens new tab. Investors have given Elon Musk’s company an extremely high valuation due to its rapid growth. According to LSEG, the price of Tesla shares in 2021 reached a height of more than 220 times their projected earnings for the following year. Musk intended to sell 20 million cars annually; at $50,000 each, that would have generated $1 trillion in sales, nearly double Apple’s own earnings for the previous year.

Since then, things have become worse in the business. Tesla’s gross profit margin decreased to about half as demand growth slowed. Additionally, Apple never completely entered the picture: according to Bloomberg, opens new tab, the business was investing $1 billion a year in Project Titan. Last year, Tesla invested $4 billion in research, while General Motors (GM.N), a major player in the car industry, opened new tabs totaling $10 billion. Cars would ultimately only be a means to an end for a business like Apple, which is to increase customer engagement with its other services. According to calculations by the American Automobile Association, people in the country drove 93 billion hours in 2022. Drivers in a self-driving car would be able to engage with Apple services while holding their hands free. In exchange, Apple would receive data that would be a valuable source of information for its artificial intelligence initiatives. This also applies to Tesla: Morgan Stanley analyst Adam Jonas attributes around one-third of Musk’s company’s worth to AI-unlocked services.

Yet Apple can map and predict user movements, preferences, and behaviors without having to build massive steel hunks. It already has the iPhone, of course, and the newly launched augmented reality headgear called Vision Pro. Both provide automobiles with higher profit margins without the weight of expensive manufacture and unsatisfied labor that real automakers face. Despite not having four wheels, Apple is nonetheless headed for AI wealth.

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