Apple car's demise is good news, bad news

Hey, this is Vlad in Hong Kong. Apple’s long-running flirtation with becoming an automaker is over, giving the rest of the industry one less [View in browser]( [Bloomberg]( Hey, this is Vlad in Hong Kong. Apple’s long-running flirtation with becoming an automaker is over, giving the rest of the industry one less thing to worry about at a time when the contest for customers is slashing profit margins and raising questions. But first... Three things you need to know today: • Sony is laying off 900 and [shutting down PlayStation London]( • AI chatbots [aren’t ready for elections]( • Game maker DeNA’s shares shot up [thanks to a new Pokémon game]( Less competition, more doubt On Tuesday, Apple Inc. [informed staff]( that it’s abandoning its project to develop and design its own car. It was a decadelong affair with high-profile executives coming and going. At last count, the company had 2,000 employees working on the project, some of who are being reassigned to work on generative AI, a new priority at Apple. The automaking industry had been bracing itself for Apple’s entry like a planet observing an approaching meteoroid. Will it set a new standard in autonomous driving? Could it redefine car design the way the iPhone yanked us out of the physical-keyboard smartphone era? And how many screens, apps and other tech enhancements would it usher in? But in the years Apple took to work on this, the entire market changed. As I watch Tesla Inc. [cutting prices]( and stripping out detection hardware like radar, which many argue is essential to road safety, it seems to me Apple’s better off not diving into the choppy waters of electric vehicles. “Apple looked at the market in the last 18 months or so and saw margins are eroding fast,” said Jochen Siebert, managing director of JSC Automotive Consulting. “They are not joining a market that does not provide superior margins, because they know even if they go in, how would they differentiate themselves?" If the Apple car was going to strip out all the knobs and dials and replace them with a large touchscreen and apps, that’s been done by Elon Musk’s crew already. In 2018, Volvo Car AB showed off a [concept vehicle](, which was basically a luxury lounge on wheels. Two years earlier, the [Rolls-Royce Vision 100]( showed another version of our pampered future mobility with no steering wheel in sight. Apple wasn’t going to outdo the luxury players. Analysts like Siebert see a market where prices dictate purchases, and “you cannot have a car that is too expensive these days.” Whereas Apple is selling products like the $3,500 Vision Pro headset, insisting on meticulous standards that demand premium, sometimes exotic components. Tesla [lost the title]( of world’s most popular EV maker to China’s BYD Co. at the turn of the year. That suggests companies like budget-oriented Xiaomi Corp., with its $10 billion EV venture, might have better prospects than high-end players like Apple. Incumbent automakers might feel some vidication, if not reprieve, after telling us for years that Apple is underestimating the cost and complexity of their business. For Apple, its engineers can now focus on AI instead of figuring out problems like collision avoidance. Closing the gap on ChatGPT creator OpenAI is [the pressing matter of the day](. The decision “makes strategic sense given the potential product synergies and greater long-term profit potential in AI,” said Rob Lea of Bloomberg Intelligence. The company will need to buy a lot more of the brute force required to compete in AI. Consider the math that Meta Platforms Inc.’s Mark Zuckerberg presented us with recently, when he said he [expects to have 350,000]( of Nvidia Corp.’s H100 AI accelerators by the end of 2024. Those cost upward of $30,000 apiece. Odds are good that Apple technology will still be a major presence in future vehicles, even if they don’t wear the bitten logo on the front. I, for one, am much more excited to see what that looks like without the burden of building all the mechanical bits as well.—[Vlad Savov](mailto:vsavov5@bloomberg.net) The big story Google’s Gemini image generator earned a wave of criticism that’s grown into something of a [crisis for the company](, with CEO Sundar Pichai calling the misstep “completely unacceptable.” One to watch [Watch the interview with GitHub Chief Executive Officer Thomas Dohmke on Bloomberg Technology.]( Get fully charged Sonos’ highly anticipated foray into the headphone market has [hit a software snag.]( Brazil’s instant-payment system, which has over 160 million users since its launch by the central bank in late 2020, [is going global.]( GitHub is releasing a pricier paid version of its AI software development tool that can answer questions [based on a client’s code.]( Photo-sharing app Lapse, Instagram’s competitor, [raised $30 million from investors.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? 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