Simulators could use virtual reality to test self-driving software without taking the system on the public roads, Bloomberg's Mark Gurman and Gerrit De Vynck reported. The car operating system would be built at least partially in Canada, Bloomberg reported.
Apple has not said openly that it is working on either a virtual reality (VR) headset or a car. But widespread reports and comments from executives have indicated that automobiles and augmented reality are of interest to the company.
Shares of electric vehicle company Tesla were slightly lower after news broke of the self-driving software.
Bloomberg had previously reported that Apple was scaling back its plans to build a car, focusing instead on software for self-driving vehicles.
Being the first company to get large swaths of driving data, like 3-D maps or braking behavior, is key to bringing a successful self-driving car to market, technology investor Michael Dempsey told CNBC earlier this year. Apple has invested in Didi Chuxing, which could potentially give Apple access to the world's largest data set to use in simulations, though it's unclear if that is the case.
Dempsey said there are few known substitutes to having actual sensors in a car, though experimental technologies do exist to simulate real driving. Real driving has been thought to be best to teach cars about those "one in a million" situations drivers face on the road, Dempsey said.