How Apple scaled back its titanic plan to take on Detroit

Apple has drastically scaled back its automotive ambitions, leading to hundreds of job cuts and a new direction that, for now, no longer includes building its own car, according to people familiar with the project.

Hundreds of members of the car team, which comprises about 1,000 people, have been reassigned, let go, or have left of their own volition in recent months, the people said, asking not to be identified because the moves aren't public.

New leadership of the initiative, known internally as Project Titan, has refocused on developing an autonomous driving system that gives Apple flexibility to either partner with existing carmakers, or return to designing its own vehicle in the future, the people also said. Apple has kept staff numbers in the team steady by hiring people to help with the new focus, according to another person.

Apple executives have given the car team a deadline of late next year to prove the feasibility of the self-driving system and decide on a final direction, two of the people said. Apple spokesman Tom Neumayr declined to comment.

The new shift and deadline come after months of strategy disagreements, leadership flux and supply chain challenges inside Apple's unmarked car labs in Sunnyvale, Calif., a short drive from its Cupertino headquarters.

Apple isn't the first to realize mastery of mobile gadgets and software updates is no guarantee of automotive success. Alphabet Inc.'s Google learned the challenges of building its own vehicles and has sought partners. Its car project has also suffered departures.

Tech investors are dubious too. They are used to fat profit margins, while carmakers survive on net margins well below 10 percent.

Apple started Titan in 2014 with grand ambitions to make a dent in an auto industry that consultant McKinsey & Co. estimates will be worth $6.7 trillion by 2030. The iPhone maker embarked upon an aggressive hiring spree, and an Apple-designed vehicle was targeted by the early 2020s. The hope was to revolutionize cars in the way the iPhone upended the mobile industry in 2007.

By the end of 2015, the project was blighted by internal strife. Managers battled about the project's direction, according to people with knowledge of the operations. "It was an incredible failure of leadership," one of the people said. In early 2016, project head Steve Zadesky, a former Ford Motor Co. engineer and early iPod designer, left Titan. Zadesky, who remains at Apple, declined to comment.

Zadesky handed the reins to his boss, Dan Riccio, adding to responsibilities that already included engineering annual iPhone, iPad, and Mac refreshes. Bob Mansfield, a highly regarded manager who helped develop the original iPad, returned in April from a part-time role at Apple to lead the team.

About a month later, Mansfield took the stage in a Silicon Valley auditorium packed with hundreds of Titan employees to announce the strategy shift, according to people who attended the meeting. Mansfield explained that he had examined the project and determined that Apple should move from building an outright competitor to Tesla Motors Inc. to an underlying self-driving platform.

In the following months, engineers started leaving. Some chose to quit amid doubts over job security and skepticism that an Apple car product would ever come to market. Others were cut. In August, a first wave of employees was let go, followed by a second round in September.

It's a far cry from early plans that excited Apple executives.