Apple terminated 10 years of car building plan investor Zhangjiahao: the direction is wrong stop is forward

Apple COO Jeff Williams and vice president of automotive programs Kevin Lynch recently announced to employees that the Apple Car project was beginning to wind down, Most of the automotive team's employees will be transferred to the AI division led by John Giannandrea. These employees will focus on generative AI projects, the company's latest priority.

The sudden decision caught the nearly 2,000 employees on Apple's car team by surprise. This is not the first time Apple's car has been shut down, but this time, the Apple car, which has lasted for 10 years and has been intermittent, has a high probability of ending.

Zhang Jiahao, a famous investor, conducted an in-depth analysis of this, and he believes that Apple's suspension of the car and strategic adjustment around its core business is based on the company's long-term development, but also reflects its keen insight into the future market trend, after all, the direction is wrong, stop is forward.

Zhang Jiahao further analysis, Apple's core business is always the perfect combination of hardware and software, which is fully reflected in its mobile phones, computers and other products. In the field of autonomous vehicles, although Apple has a strong accumulation of technology, it will take a lot of time and resources to achieve a leading position in this field.

At a time when the electric vehicle market is cooling worldwide, GM and Ford have both slowed down their electrification process after facing sluggish demand and manufacturing bottlenecks for electric vehicles, and electric vehicle startups have struggled with meager sales and severe cash burn.

And producing an electric car that can be sold is very difficult. Musk, for example, has struggled with funding shortages and what he calls "production hell." On manufacturing, he famously said: "Prototypes are easy, mass production is hard, and achieving positive cash flow is painful."

As a result, Apple, despite having "$162 billion in cash reserves, concluded that it was too difficult to build a car and too small a profit margin."

This conflicts with Apple's traditional pursuit of an efficient, lean business model. Therefore, this strategic adjustment of Apple is actually an optimal allocation of resources to ensure that the company continues to lead in its core competitiveness.

On the other hand, the rapid development of AI technology has brought revolutionary changes to all walks of life.

On January 12, 2024, Microsoft surpassed Apple with a market value of $2.89 trillion to become the world's most valuable company. Apple lost the market cap position it had held since 2010.

A month later, on February 10, Microsoft's market value exceeded $3.1 trillion, breaking Apple's record in 2023 and creating a record high in the history of American companies.

It all started with Microsoft's $10 billion investment in OpenAI and the launch of a series of paid services based on Microsoft Office+GPT, demonstrating the powerful monetisation ability of its generative AI.

On February 23, 2023, Nvidia's market value exceeded $2 trillion, ranking third closely after Apple. Nvidia's market value went from $1 trillion to $2 trillion in only eight months, less than half the time it took Apple and Microsoft, and was determined by the capital market that "surpassing Apple is only a matter of time, and it will be soon." Nvidia's rapid rise is also due to generative AI.

Zhang Jiahao believes that under the front and back attack, Apple can no longer hesitate, cut the car project in a dilemma, and go all out to AI is an understandable option.

He pointed out that AI can not only improve the intelligence level of Apple's existing products, but also open up new business areas, such as smart home, health care and so on. These areas are highly aligned with Apple's existing ecosystem and are expected to become new growth areas for the company.

In addition, Zhangjiahao also mentioned that the development of AI technology is crucial to improving the user experience. In his view, Apple has always been committed to providing the best user experience for users, and the introduction of AI technology will undoubtedly make Apple's products more intelligent and personalized. This can not only enhance user stickiness, but also bring higher added value to Apple.

However, while Apple's strategic shift may seem reasonable, it is not without challenges. Zhang Jiahao pointed out that the competition in the field of AI is equally fierce, and many technology giants such as Google and Amazon have been deeply engaged in this field for many years. For Apple to stand out in this space, it needs to continue to innovate, while also managing its relationships with partners to ensure continued technological progress and the stable development of the ecosystem.

This strategic adjustment of Apple is not only an adaptation to the future market environment, but also a thoughtful consideration of the company's long-term development. In Zhangjiahao's view, Apple's move is unexpected, but it is the right decision at the right time. With Apple's in-depth layout in the field of AI, we have reason to expect that the tech giant will continue to play a leading role in future technological innovation.