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Apple (AAPL) CEO Says Self-Driving Car AI Project Underway

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Confirming longstanding rumors, Apple Inc’s (AAPL - Free Report) CEO Tim Cook, while talking to Bloomberg TV last week, stated that the company was indeed working on a self-driving car technology AI (artificial intelligence) project. As a matter of fact, he referred the project as “mother of all AI projects.”

On being asked about whether Apple would eventually make its own car, Cook said “We'll see where it takes us. We're not really saying from a product point of view what we will do."

Talking about self-driving technology, electric vehicles and ride-hailing, Tim Cook stated that “You’ve got kind of three vectors of change happening generally in the same time frame.” He further added “there is a major disruption looming there.” He was also upbeat about electric cars. “It’s a marvelous experience not to stop at the filling station or the gas station,” he was quoted saying.

Apple’s Project Titan: Story So Far

For a while now, there has been tremendous speculation about Apple’s autonomous car-technology development efforts, which is apparently codenamed Project Titan. As usual, Apple had refrained from commenting on the matter so far as it loves to maintain secrecy regarding projects it’s working on. 

Project Titan has been in the news since 2014–2015. Initially, it was reported that Apple was working on an “iCar.” There were numerous reports of the company making sound talent acquisitions as well as collaborating with the likes of BMW for the car design. VP of Product Design, Steve Zadesky was permitted to set up a 1,000-strong workforce for the project.

Later on, the “iCar” rumors lost steam as the project was reportedly marred by conflicts and management troubles. Following this, Apple decided to prune some of the workforce assigned to the project. In Jan 2016, with the resignation of Zadesky, things became more blurred. However, Bob Mansfield was reportedly brought on board at this point. 

It was speculated then that Apple may not be designing a full-fledged car but an autonomous self-driving car technology platform.

In Nov 2016, Apple's director of product integrity, Steve Kenner wrote a letter to NHTSA saying “The company is investing heavily in the study of machine learning and automation, and is excited about the potential of automated systems in many areas, including transportation." 

In April this year, per the Department of Motor Vehicles (DMW) in the state of California, Apple had secured a permit to test self-driving vehicles. The permit is for test-driving three vehicles (2015 Lexus RX450h models) with two drivers each, added DMW.

 Later on, Reuters reported that Apple’s 41-page application submitted to DMV, CA, comprises a 10-page training plan that includes a document called "Automated System: Development Platform Specific Training Overview." The objective of the document is "to train safety drivers in various automated driving conditions,” Reuters added further.

Why Self Driving Cars?

Apple’s fortunes remain tied to iPhone. With iPhone 7 and 7 Plus performing relatively well and the excitement building up for iPhone 8 (dubbed as a super cycle), Apple can breathe easy for now.

However, increasing competition, especially from cheaper Chinese handsets like Oppo, Vivo and Xiaomi, is emerging as a big concern. Apple is under great pressure to introduce new products. Apple Pay, Apple Watch and Apple Music are some of the new ventures undertaken by the company. Also, revenues from App Store are growing.

Apple is working on developing technologies such as AI and augmented reality/ virtual reality (AR/VR), which are fast emerging as lucrative business opportunities. The company’s interest in the autonomous car project is understandable as this is now being labeled as a big business opportunity.

According to Boston Consulting Group estimates, the autonomous car market will be worth $42 billion by 2025 and $77 billion by 2035. Per Statista, the market for fully autonomous vehicles will grow to almost $6 billion while partially autonomous vehicles market will reach $36 billion by 2025.However, analysts are skeptical about self-driving cars being feasible before 2020, at least.

Self-driving technology has gained immense importance in the past few years. Tech and auto behemoths like Apple, Alphabet (GOOGL - Free Report) , Ford (F - Free Report) , Tesla Inc (TSLA - Free Report) , Volkswagen AG, Daimler AG, Uber and Lyft are directing resources to develop this technology.

Apple’s arch rival (in the smartphone space) and also a major supplier, Samsung Electronics had scooped up Harman International for $8 billion, last year. Harman is a leading name in the automotive space. 

Zacks Rank and Stock Price Movement

Currently, Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past year, shares of Apple have registered growth of 50.42% compared with the Zacks categorized Computer Mini industry’s gain of 49.19%.

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