Apple R&D Spending on Track to Top Record $10 Billion Amid Electric Vehicle Rumors
May 12, 2016 9:12 am PDT by Joe Rossignol
While much attention has been placed on Apple's first quarterly revenue decline in thirteen years, with some suggesting that the iPhone maker may push deeper into services to combat the slowdown, there is evidence to suggest that Tim Cook and company have bigger plans in store.

Apple analyst Neil Cybart of Above Avalon notes that Apple is now on track to spend a record $10 billion on research and development this year, up nearly 30 percent from 2015 and significantly more than the little over $3 billion per year it was spending on R&D just four years ago.


Cybart believes that the most likely explanation for Apple's increased R&D spending is that the company is looking to make a long-term pivot beyond the iPhone, which currently accounts for nearly two-thirds of the company's revenue. His predicted product of the future: the widely rumored Apple Car.

"Apple is not spending $10 billion on R&D just to come up with new Watch bands, larger iPads, or a video streaming service," he wrote. "Instead, Apple is planning on something much bigger: a pivot into the automobile industry."

Apple's R&D spending has experienced a significant uptick since mid-2014, which Cybart attributes to Apple Car development over the past few years. There were similar quarter-over-quarter spikes in spending leading up to the release of the iPhone, iPad, and Apple Watch, as illustrated in the chart below.


The analyst added that Apple has likely already spent upwards of a few billion dollars on Project Titan, the alleged internal codename for the Apple Car, with R&D spending likely to hit at least $14 billion per year by 2017 or 2018. He predicts the odds of Apple releasing an electric vehicle are at least 80 percent.
There is one very simple reason for my high degree of confidence: Project Titan is a long-term pivot. I don't consider Titan to be just another project that Apple has been tinkering around with in the lab for years like an Apple television set or Apple Pencil. Instead, Project Titan is much more about building a foundation for Apple that will literally represent the company's future.
Apple is widely rumored to be working on an electric vehicle that could launch by 2020. The bulk of research and development may be centered in the Santa Clara Valley area, near Apple's existing Cupertino headquarters, led by a team that includes former Tesla, Ford, and GM employees and other automotive experts.

Related Article: Apple R&D Reveals a Pivot Is Coming — Above Avalon

Related Roundup: Apple Car

Top Rated Comments

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37 months ago
This company has lost focus. Cars? Come on.
Rating: 45 Votes
37 months ago

This company has lost it's focus. Cars? Come on.


"Stick with computers Apple"

That's what they said about the iPod, iPhone, iPad.
Rating: 37 Votes
37 months ago
Surprised they are not investing in a clothing line. Shirts $299. Pants in rose gold for $499.
I miss the old Apple.
Rating: 27 Votes
37 months ago
Maybe Apple could invest a little money to BUILD BETTER COMPUTERS.
Rating: 20 Votes
37 months ago
yeah i really don't get the draw to doing cars... they made their name in consumer electronics and software services. this to me is like asking a bakery to to make jet engines because everyone loves their donuts.
Rating: 18 Votes
37 months ago
10B in R&D.

I'm still waiting for a new Macbook Pro.
Rating: 14 Votes
37 months ago

"Stick with computers Apple"

That's what they said about the iPod, iPhone, iPad.


an iPod, iPhone, iPad IS a computer, just with a different form.
A car? No.
Rating: 14 Votes
37 months ago

This company has focus. Cars! Come to papa.


I believe it is Ford that makes the Focus.
Rating: 9 Votes
37 months ago

10B in R&D......

Only Apple lol.


Not really - They were number 18 last year on total R&D spend
http://www.strategyand.pwc.com/global/home/what-we-think/innovation1000/top-innovators-spenders
Rating: 8 Votes
37 months ago
I suspect much of that money is being wasted. Its a perfect example of Apple running out of ideas or lacking vision. Microsoft liked to brag about the billions they were spending every year on R&D at their developer conferences. Look how that turned out, Longhorn, failure in smartphone and tablets.

Those billions are being siphoned off by a bunch of PHDs in Apple labs around the world ordering pizza and Netflix subscription and probably taking long vacation/sabbaticals. If it was Steve Jobs, the RD budget would be less than $150 million dollars and actual innovation. It cost $150 million to make the iPhone, that was in 2003 to 2007 period. With how advance the technology has become now, Apple should not be spending so much on anything, whether its wearables or automotive.

Steve would have gotten it done for less, that is for sure. Sometimes I wish I could go back in time and tell Steve Jobs to just do the surgery because you are going to regret it come 2011.
Rating: 7 Votes

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