Apple Bails on Electric Cars, Elon Musk Reacts

News of Apple’s decision to completely cancel its electric vehicle development plan has relieved competitors, including Tesla.

Bloomberg reported on the 27th (local time) that the U.S. auto industry, including Tesla, breathed a sigh of relief upon hearing the news of Apple’s cancellation of electric vehicle development.

According to Bloomberg, the electric vehicle industry had been quite wary of Apple’s electric vehicle development. With its $61 billion in cash, technological prowess, and brand power, Apple was expected to become a formidable competitor if it entered the electric vehicle market.

Moreover, the electric vehicle market is already saturated, with growth stalling. Tesla has lowered its prices due to sluggish demand, and General Motors (GM) and Ford have postponed electric vehicle production due to the challenging environment.

Mercedes-Benz, which declared in 2019 that it would break away from internal combustion engine models, also delayed its related plans. Initially, Mercedes aimed to increase the proportion of electric vehicle sales, including hybrids, to 50% of the total by 2025 but revised the target to 2030.

Mike Ramsey, an analyst at IT (Information Technology) market research firm Gartner, told Bloomberg, “The industry was on edge with the news of Apple’s entry into the electric vehicle market,” and “The industry would have been relieved by the news of Apple’s cancellation of its electric vehicle.”

Bloomberg pointed out, “The fact that Apple has left the electric vehicle market shows how tough the industry is,” and “From the perspective of most consumers, the price of electric vehicles is still too high, and there are too few charging stations.”

Furthermore, “Electric vehicle sales have grown by 65% over the past three years, but this year’s growth rate is expected to be only 9%,” indicating “the industry has to compete for less than 10% of new consumers.”

Jeff Schuster, Vice President of Automotive at consulting firm GlobalData, commented in an interview with Bloomberg on Apple’s decision to abandon electric vehicle development, “This is another example that proves it’s not easy to enter the automotive industry.”

He said, “Apple probably thought at first, ‘We make smartphones, and we have all the related technology. There’s nothing difficult. We can catch up.’ But when they stepped in, they realized that the automotive industry is more dynamic and difficult than they thought.”

Gartner’s Ramsey evaluated that Tesla gained the most from Apple’s decision to abandon the development of electric vehicles. This is because it can create the impression that Tesla is leading the treacherous electric vehicle market, which even Apple gave up on.

Elon Musk, CEO of Tesla, shared a post about Apple’s decision to abandon electric vehicle development on his X account, posting an emoticon of a hand saluting with a cigarette.

Brad Holden, founder of Holden Richardson, a consulting firm specializing in automotive talent acquisition, predicted that talented developers who worked in Apple’s electric vehicle development field would flood the market, leading to competition among companies to attract talent.