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The Apple Car’s rough start

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New York (CNN Business)For such a secretive company, Apple’s car efforts have been in plain sight for years.

The headlines have been steady: prominent auto industry poaches, one approved car patent after another, sightings of mysterious self-driving cars around its Cupertino, California, headquarters, and most recently, widely reported talks of a multi-billion dollar partnership to build an autonomous electric car with Hyundai and Kia. But this month, just as the rumor mill was reaching a fever pitch over the partnership reports, Apple (AAPL) appeared to pump the brakes on the deal after Hyundai prematurely revealed discussions were underway, according to Bloomberg. As an internal saying goes, the fastest way to not work with Apple is to talk about working with Apple. (Hyundai and Kia said this week they are not in talks with Apple to develop self-driving cars.)

    Who could make the iCar? Apple is running short of optionsEven by Apple’s standards of long-rumored products, the Apple Car has been longer rumored than most. Alongside the hype are apparent setbacks: In 2016, it “scaled back” its ambitions followed by more layoffs a few years later; meanwhile automakers and tech rivals continue to move forward with their projects.

      And now, with its latest potential partnership appearing to unravel, there are new questions about which carmakers are left for Apple to work with on the effort, if it still plans to move forward. Japan’s Nissan, (NSANY) one of a handful of possible partners touted by analysts, said Monday it was not in talks with Apple after the Financial Times reported that the companies had held brief discussions in recent months about a tie-up.Read MoreAll of it has contributed to the feeling that the Apple Car is always arriving but never quite here.”A few years ago an article came out that said the project was over,” said Reilly Brennan, general partner at Trucks VC, which invests in transportation companies. “I laughed at the time because I knew at least a dozen people who were working on stuff at Apple in this sphere.” “It’s been a constant pot on a low boil on the back of your stove that has continued to sit at that same level,” Brennan added. “Maybe there will be an announcement coming, but I don’t know. It’s been the same for years.”It’s not hard to understand why Apple would want to break into a trillion-dollar industry. But at the same time, auto development is complex. Tesla has demonstrated the appeal of a software-focused car, but it’s taken years for Elon Musk’s company to become profitable — and the money it does make isn’t from car sales. The question has always been how Apple will try to crack this space: by building a car itself, partnering with an automaker, creating car software or something else entirely?Sam Abuelsamid, a car industry analyst with consulting firm Guidehouse Insights, believes Apple may be more interested in mobility services, including a robo-taxi division, as it has shifted its focus in recent years to paid services to boost revenue amid a saturated smartphone market. Apple is already an investor in Chinese ridesharing giant Didi. And in 2019, Apple acquired, a self-driving startup that had worked with Lyft on a robotaxi pilot project.

      Volkswagen CEO: I'm not scared of AppleIt’d be a move somewhat reminiscent of the Apple TV when people previously speculated the company was working on a television set, but Apple instead released a small streaming box that sits alongside existing TVs. “They opted not to do a TV set because margins were too low, and they couldn’t create something better than what was already out there,” said Abuelsamid.When Apple approached about a possible acquisition, the tech giant was “serious about their efforts, though they were extremely tight lipped and didn’t want us to discuss or confirm anything publicly,” said a former board member, who spoke to CNN Business on condition of anonymity. The former board member added that “most of the employees that I know that are there are still working on special projects and still on the car project.”Apple didn’t respond to a request for comment on this story.Whichever path it pursues in the auto sector, Apple must increasingly compete not just with automakers but tech companies and startups for talent and traction. Some companies like Zoox, a self-driving car startup acquired by Amazon, have reportedly poached auto-centric talent from Apple. Apple, for its part, has poached employees from companies like Porsche, Google’s Waymo and Tesla, including the executive who once oversaw development of its Model 3 car. If and when Apple does finalize its car plans, industry watchers expect the company will try to stay true to its secretive approach with other products and announce it at the last possible moment, just before it’s ready to go on sale. “It’d be unusual if they started acting like an automaker and teased something that’s coming out in 5 years,” Brennan said.But despite years of rumors, big hires and research and development, it’s entirely possible an Apple car project might never become a reality.

        “I’ve always been skeptical that Apple would actually pull the trigger on getting into the car business,” Abuelsamid said. “Apple has shifted direction multiple times in the past few years around car tech, trying to figure out what and if there’s anything they want to do. It spends a lot of time researching a lot of products, many of which never actually come to market.”— Michelle Toh contributed reporting.


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