Bloomberg reported that Apple is canceling its decade-long EV-making effort. CEOs of EV makers including Xpeng, Li Auto, Xiaomi, and Jiyue have expressed their views.
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Many executives at Chinese electric vehicle (EV) companies see Apple as one of their biggest potential threats in the future, considering its huge success in the consumer electronics space.
Now, the iPhone maker is reportedly scrapping its car-making business, which could come as a relief to China's EV players.
Apple is scrapping its decade-long EV manufacturing effort, abandoning one of the most ambitious projects in the company's history, Bloomberg said in a February 28 report, citing people familiar with the matter.
Apple made the disclosure internally Tuesday, surprising the nearly 2,000 employees involved in the project, according to the report.
The project will begin to wind down, and many of the employees on the car team will be moved to the artificial intelligence (AI) division under executive John Giannandrea, the report said, adding that the employees will focus on generative AI projects, which are becoming increasingly important to the company.
The Apple car team also has hundreds of hardware engineers and vehicle designers. It is possible that they will be able to apply for jobs on other Apple teams. There will be layoffs, but the exact number is unclear, according to the report.
The report quickly sparked widespread discussion in the Chinese community, with CEOs of several EV makers voicing their opinions, expressing being shocked, but more likely relieved.
"Last year we discussed that new entrants in the auto industry would all have their cards on the table by 2024, but with the exception of Apple," He Xiaopeng, chairman and CEO of Xpeng (NYSE: XPEV), said on Weibo.
"(The EV industry) will be in a knockout and all-star game in the decade after 2024. But I didn't expect Apple to play such a card in 2024," he said.
Li Xiang, founder, chairman, and CEO of Li Auto (NASDAQ: LI), said in a Weibo post today that Apple's abandonment of car building and choice to focus on AI is absolutely the right strategic choice and the timing is right.
If Apple succeeds in its effort to bring AI to the average consumer, it could become a $10 trillion company, Li said, adding that if it loses in that endeavor, Apple would become a $1 trillion company.
Apple's current market capitalization is $2.82 trillion, CnEVPost's latest check shows.
AI will be the topmost entry point to all devices, services, apps, and transactions, and is a must-have for Apple, Li said.
If Apple succeeds big in the car business, it will add $2 trillion to its market capitalization, but the sine qua non remains success in AI, he said. Electrification of cars is the first half of the game, AI is the final, Li added.
Li Auto's vision is to be the world's leading AI company by 2030, Li said in a January 28, 2023, employee letter.
William Li, founder, chairman, and CEO of Nio (NYSE: NIO), has not yet commented on the report about Apple, and he is not active on social media. However, Li has made several references to Apple over the past few years and sees the iPhone maker as a serious potential rival.
Nio's ultimate rival is Apple, as both companies are pursuing a direction that combines technology and humanity, Li said at a January 2021 event.
Nio launched its first smartphone in September 2023, a high-end Android phone. The move was made to provide Nio owners with a better experience of connecting their phones to their vehicles and is also one of the ways it is responding to the threat Apple could pose.
"Think about it, if by 2025 an Apple model is released and 60 percent or more of Nio's users use Apple phones, Nio has no defense at all," Li said in March 2022. " If Nio doesn't do something today to prepare, it's not going to be fun at that point," he said.
Lei Jun, founder, chairman and CEO of smartphone giant Xiaomi (HKG: 1810, OTCMKTS: XIACY), said in a Weibo post today that he was shocked to see the report about Apple abandoning its efforts to build a car.
"We know how difficult it is to build a car, but we still made an unbelievably firm strategic choice 3 years ago and will seriously build a great car for Xiaomi fans!" Lei said.
Xiaomi officially announced its entry into car building on March 30, 2021, and on December 28, 2023, it let its first model, the SU7, make its debut. The model's price has not yet been announced and the official release date is yet to be set.
Xiaomi Group president Lu Weibing said earlier this week that the official launch of the Xiaomi SU7 would be "very soon," and indicated that domestic deliveries could start as soon as the second quarter, according to a February 26 CNBC report.
Joe Xia, CEO of Baidu-backed EV maker Jiyue, said on Weibo that focusing on AI is the right choice for Apple.
"AI is the decisive battle in the endgame of the tech world! But assuming (Steve) Jobs was still at the helm, wouldn't Apple have handled it differently? For example, Apple + Ford, a top-notch AI + advanced manufacturing partnership might be the optimal solution for AI to be used!" Xia wrote.
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