In September of this year, investors were led to believe Apple Inc. (NASDAQ:AAPL) was backing off on its plans to build a self-driving car from the ground up. The company laid off a few dozen employees who had been working on the project, nicknamed Titan, just a few months after naming Apple veteran Bob Mansfield as chief of the Apple car project. The sudden (and mostly unexpected) changes suggested to current and would-be owners of AAPL stock that things were not going swimmingly on the autonomous vehicle front.
As it turns out, the market may have read a little too much into the restructuring.
Though Apple may well be backing off on its plans to develop its own car, as a letter recently submitted to the National Highway Traffic Safety Administration (NHTSA) suggests the company has put the pedal to the metal with its plans to build an artificial intelligence system that can drive a car.
Apple “Investing Heavily In Machine Learning”
In a letter written by Apple’s VP of Product Integrity, Steve Kenner, to the NHSTA on Nov. 22, Apple noted:
“Executed properly under NHTSA’s guidance, automated vehicles have the potential to greatly enhance the human experience — to prevent millions of car crashes and thousands of fatalities each year … It is vital that those developing and deploying automated vehicles follow rigorous safety principles in design and production. Such principles should not, however, inhibit companies from making consequential progress; there is no need to compromise safety or innovation.
Apple affirms that, in order to best protect the traveling public and keep up with the pace of innovation, NHSTA should expedite requests for exemption and interpretation and petitions for rulemaking. NHTSA and Congress should also continue to explore new tools and authorities like those outlines in Section IV of the Policy — including expanded exemption authority — with the goal of fostering innovation, improving regulatory flexibility, and encouraging the development of life-saving technology.”
Translation: Apple is very much behind the eight-ball in terms of developing self-driving systems, and unless the National Highway Traffic Safety Administration helps the company out in a big way, AAPL shareholders are going to be severely disappointed that Apple didn’t capitalize on the opportunity when it could have done so several years ago.
Rivals already working on machine-learning for the purpose of autonomous cars are, of course, Tesla Motors Inc (NASDAQ:TSLA), General Motors Company (NYSE:GM) and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG), just to name a few. GM already has a fleet of about 30 autonomous vehicles in testing, and the technology now comes standard on all Teslas. Alphabet — Google — has already put 2 million miles on its fleet of autonomous cars.
It’s not clear where the development of the self-driving Apple car technology is. It is clear, though, it’s not nearly as far along as the platform created by others in the space. It has got a lot of catching up to do. The letter to the NHTSA was meant to be a means of keeping that door open.
Bottom Line for AAPL Stock
Apple spokesman Tom Neumayr added to the discussion on Friday of last week:
“We’ve provided comments to NHTSA because Apple is investing heavily in machine learning and autonomous systems. … There are many potential applications for these technologies, including the future of transportation, so we want to work with NHTSA to help define the best practices for the industry.”
It’s Neumayr’s thoughts that really add some much-needed color to the matter … that, and the notion that “established manufacturers and new entrants should be treated equally.”
In short, Apple knows it’s behind its competition, but after spending an untold amount of money on the development of self-driving automobile technology, it can’t walk away empty-handed now.
Perhaps the most noteworthy thing owners of AAPL stock may want to digest is that Kenner’s letter was neither solicited nor required. The NHTSA is simply open to hearing suggestions about how it can most effectively shape its guidelines for the advent of autonomous cars. Apple’s suggestions just so happen to be favorable to Apple’s present situation on the R&D front; the agency isn’t required to take them.
In a bigger sense, the fact that a five-page plea was submitted at all at this stage of the game could be an indirect sign that Apple is simply too far behind in this race to ever meaningfully catch up.
That’s OK. Such a platform was never entirely in the company’s wheelhouse anyway. Unless its work-to-date is close to being a finished project though — something Apple could plug into a car in the very near future with little additional cost — AAPL shareholders may find the autonomous car project is a little too fruitless to continue supporting.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
