Apple (NASDAQ:AAPL) investors who are looking beyond the iPhone to autonomous cars as the company’s next big thing may be a little worried today. Reports surfaced yesterday — and were later confirmed by Apple — that the company has cut over 200 staff from Project Titan, the company’s secretive autonomous car project.
The trick is in trying to determine AAPL’s motive behind the job cuts and what clues they might offer about Project Titan. That’s especially important given the expectation (or hope) that autonomous cars could replace iPhones as a future driver of Apple stock.
Project Titan Job Cuts Confirmed By Apple
Yesterday, CNBC reported that earlier in the week, AAPL dismissed more than 200 employees from its Project Titan autonomous car team. Normally Apple doesn’t comment on rumors about its products or operations, but this time the company did. AAPL confirmed the job cuts, but positioned them as a restructuring rather than a layoff. An Apple spokesperson told CNBC:
“We have an incredibly talented team working on autonomous systems and associated technologies at Apple. As the team focuses their work on several key areas for 2019, some groups are being moved to projects in other parts of the company, where they will support machine learning and other initiatives, across all of Apple … We continue to believe there is a huge opportunity with autonomous systems, that Apple has unique capabilities to contribute, and that this is the most ambitious machine learning project ever.”
Based on the statement, Apple is still bullish on autonomous cars, so why the cuts?
Restructuring Under New Management
Last year, the Washington Post reported that roughly 5,000 AAPL employees were either directly working on Project Titan or knowledgable about the secret project, with 2,700 of those considered “core employees.” Cutting 200 or so of those positions, with at least some of the employees being moved to other projects, definitely sounds more like internal restructuring rather than the potential winding down of the project.
In 2016, Project Titan was “rebooted” with new leadership under Bob Mansfield. Layoffs at that time reportedly turned into hundreds of departures over the next two years.
AAPL hired dozens of Tesla (NASDAQ:TSLA) employees last year, including two senior engineers. Doug Field, one of those engineers, was tapped to join Mansfield in heading up Project Titan. The second key engineer, who had helped to design Tesla’s Model 3, joined Apple in December.
Given the timing of those key hires and the size of the team, it seems likely that the latest Project Titan job cuts are related to the new management settling in and making changes.
An Actual Apple Car, or Software?
The big question remaining about Project Titan is what Apple is actually up to. Is the company working on an Apple Car, or is it working on software for autonomous cars?
There has been a lot of speculation since Project Titan was first uncovered in 2014, and no-one seems to know for certain. Originally, an Apple car was envisioned. Probably electric and probably self-driving. However, the 2016 “reboot” was seen as a pivot from producing its own car to focusing on providing autonomous car software that could be sold to automakers. Muddying the waters has been the increasing presence of Apple self-driving test vehicles on public streets. At one point last year, AAPL had more autonomous test vehicles on the road in California than either Uber or Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo. Has this fleet been testing hardware, software or both?
The hiring of the Tesla employees in 2018, especially the two senior engineers who had been involved in car design, has fuelled speculation that Apple is once again planning to release its own car. Noted AAPL analyst Ming-Chi Kuo is one of those who believe Apple is still working on a car, and he has even predicted a launch date between 2023 and 2025.
Whatever the case may be — Apple car, or Apple autonomous vehicle software — Project Titan continues. The latest round of job cuts come after a recent round of hires and additions to the project’s management team, so they shouldn’t be seen as a sign that Apple is stumbling, or winding things down. The odds are still good that one way or another, automobiles will become an important revenue stream for AAPL, and another reason to invest in Apple stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.