Root Cause Analysis: Apple cancels EV Project Titan after spending billions.

Introduction

Apple Inc. stands as a towering beacon of progress, creativity, and unprecedented success. Founded in 1976, Apple has grown from a garage startup into a global juggernaut, synonymous with quality, design, and disruption. The company’s journey through the realms of personal computers, smartphones, wearable technology, and digital services is marked by a relentless pursuit of excellence and a deep commitment to customer satisfaction. Apple’s health technology initiatives, focusing on heart health, mobility, and fitness, demonstrate a broader vision that transcends traditional consumer electronics, aiming to embed its products and services into the very fabric of everyday life.

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Value proposition

Apple’s value proposition centers on a blend of premium quality, seamless ecosystem integration, cutting-edge innovation, and a superior user experience. This multifaceted approach distinguishes Apple in a crowded marketplace, providing consumers with compelling reasons to choose Apple products and services over competitors’.

Problem Statement: Apple cancels Project Titan, the Apple Car project, after spending billions.

Actual Root Cause: A cooldown in the EV market.

For approaching the problem I would like to use the below mentioned framework:

(Note: Assumptions are made accordingly)

• Strategic Reassessment
• Supply Chain and Manufacturing Complexities
• Financial Considerations
• Market Conditions and Competition

Research and assumptions made for the root cause are mentioned below:

1. The project struggled nearly from the start, with Apple changing the team’s leadership and strategy several times.
2. Apple was still years away from producing a car and contemplated many different designs.
3. Sales growth lost steam in recent months after high prices and a lack of charging infrastructure discouraged mainstream buyers from shifting to all-electric vehicles.
4. Possible reasons, as outlined in the flow diagram, are as follows:

FLOW FOR PROBABLE FACTORS TO BE TAKEN INTO ACCOUNT

Focusing on Strategic Reassessment:

• Did this project align with company’s long-term strategic goals?
• What were the potential risks and uncertainties associated with this project?
• How does this initiative contribute to enhancing company’s brand value and customer loyalty?

Looking into Supply Chain and Manufacturing Complexities:

• Were there weaknesses in Apple’s logistics network that could lead to inefficiencies or delivery delays?
• What measures were in place to ensure ethical sourcing and sustainability in company’s supply chain?
• What contingency plans were in place to respond to unforeseen disruptions or shortages?

Financial Considerations:

• Did Apple address concerns about potential overinvestment or excessive spending in R&D projects?
• Are there concerns about declining profit margins or rising costs that could affect Apple’s profitability?
• Were there concerns about Apple’s ability to maintain its competitive edge and market share amidst increasing innovation?

Market Conditions and Competition:

• How does Apple respond to market disruptions or economic downturns that could impact consumer spending and purchasing behavior?
• Are there concerns about Apple’s ability to innovate and differentiate itself amidst intensifying competition from rivals?
• Are there concerns about Apple’s ability to maintain pricing power and premium positioning amidst competitive pricing pressures?

On the basis of research, below are the solutions to the above framework:

— The potential risks and uncertainties associated with this project include competition from EV giants like Tesla, who have already majorly acquired the targeted customer base.

— Apple has spent $113 billion on total research and development over the past five years, with an average annual growth rate of about 16%. So, overspending could be associated.

— The company’s board was concerned about continuing to spend hundreds of millions of dollars a year on a project that may never see the light of day.

— Executives were also concerned about the vehicle being able to provide the profit margins that Apple typically enjoys on its products.

— Even Tesla, the pioneer of the EV revolution in the US, has warned its rate of expansion will be “notably lower” this year.

Keeping in mind all the above points, I can say Apple’s decision to shut down their EV project stemmed from several key factors. Intense competition from established giants like Tesla, who had already captured a significant portion of the target customer base, presented formidable challenges. Despite substantial investment in research and development — totaling $113 billion over five years with a 16% annual growth rate — concerns arose about overspending. Moreover, market conditions, exemplified by Tesla’s own cautionary stance on expansion, signaled a challenging landscape. Consequently, Apple made the strategic decision to halt the project, redirecting resources to ventures with more promising outlooks and maintaining profitability.

NOTE: Above described is one of the ways to approach a root cause identification as a Product Manager.