Apple, spurned by BMW and Mercedes, signs deal with Volkswagen for driverless cars

Tim Cook, CEO of Apple Inc.
Adam Jeffery | CNBC
Tim Cook, CEO of Apple Inc.

Apple had already curtailed its grand vision for disrupting the automotive industry by building its own self-driving car. Now the tech giant has narrowed its auto aspirations even further.

For the past several years, Apple sought partnerships with the luxury carmakers BMW and Mercedes-Benz to develop an all-electric self-driving car, according to five people familiar with the negotiations who asked not to be identified because they weren't authorized to discuss the matter publicly. But on-again, off-again talks with those companies have ended after each rebuffed Apple's requirements to hand over control of the data and design, some of the people said.

Instead, Apple has signed a deal with Volkswagen to turn some of the carmaker's new T6 Transporter vans into Apple's self-driving shuttles for employees — a project that is behind schedule and consuming nearly all of the Apple car team's attention, said three people familiar with the project.

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Apple's deal with Volkswagen, which hasn't been previously reported, and the failure of its talks with other automakers reflect the continuing travails and diminished scope of the company's four-year-old car program.

The project has suffered from repeated changes in direction that have hurt morale and led to hundreds of departures from its peak of more than 1,000 members two years ago, five former Apple employees said. They added that the team was now mostly consumed with developing the self-driving shuttle but the project lacks a clear plan beyond the vans.

The fits and starts have most likely put Apple further behind in the race toward the self-driving future. Waymo, the self-driving business spun out of Google, as well as start-ups and some carmakers have been testing various autonomous vehicles on public roads for years. While some of the programs have hit hurdles — Uber on Wednesday said it was shutting down its self-driving operations in Arizona and laying off about 300 employees in the area — many have already gathered data on autonomous driving patterns to improve their technology.

Apple declined to comment.

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