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Apple's AV test run suggests it should shutter its self-driving efforts (AAPL, GOOG, GOOGL)

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Earlier this week theCalifornia Department of Motor Vehicles (DMV) released its annual report on autonomous vehicle (AV) testing in the state.

This year's report covers the year ending on November 30, 2018, and includes both total miles driven and the number of disengagements the number times a human operator had to take control of the car.

While disengagement rates aren't perfect they don't account for the difficulty of the roads AVs are tested on, for example they remain the best metric to judge AV companies' progress.

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Alphabet's Waymo posted the best disengagement rate by far, and Apple came in dead last, painting a striking picture of tech giants' efforts in the AV space thus far.

  • Waymo cut its disengagement rate in half from last year and tripled the number of miles its cars drove at the same time.The company's vehicles, on average, needed a human operator to take over once every11,017 miles, a massive improvement from 2017 when its cars needed to be taken over once every5,127 miles they drove. And Waymo's more advanced disengagement rate in 2018 comes off of a significantly larger sample size its AVs logged 1.2 million test miles last year, compared with only 352,545 in 2017.
  • Apple's AV project nicknamed Project Titan has done well to ramp up testing, but its AVs can barely travel a mile without needing a human to take over.Apple's AVs logged79,745 miles in California over the period,the third-most of any company and up significantly from the838 miles its AVs drove in California in 2017. However, the iPhone maker's cars disengaged 69,510 times last year, or once every1.15 miles on average an abysmal effort compared with Waymo's disengagement rates in the past two years. 2018 was only the second year that Apple was registered to test AVs in California, but even startups posted superior disengagement rates during their second year of testing. Drive.ai, which has only a fraction of the cash-rich Apple's resources, saw its AVs taken back over by a human once every 43 miles in 2017, for example.

Apple's early testing performance suggests it should abandon its efforts to develop self-driving tech.Although the iPhone maker has said in the past that Project Titan is a broad artificial intelligence (AI) project, Apple's expanded testing footprint shows the firm still believes strongly in the potential of its AV tech.

But Apple's early testing can't be construed as anything but a failure. Even with a more inspiring performance in terms of disengagements, it would still take the company years to make up ground on Waymo, or even other competitors like Cruise, for that matter.

Apple would be wise to go after the AV market from the angle of in-car services and experiences, a better fit with its strengths and planned 'Services' push.The company's increased focus on its Services segment which comprised 13% of its revenue last quarter, up from 10% the same quarter a year ago could provide a good avenue.

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In particular, Apple has an in-car infotainment offering in CarPlay it could build future iterations of into an in-vehicle AV interface. Within such a future offering, Apple could house the news subscription, video streaming , and even the augmented reality products and services its working on.

Via its massive iPhone user base, Apple has access to treasure troves of consumer data it can leverage to create a highly personalized in-car experience for consumers, a potential competitive differentiator and perhaps an AI project that's more within its wheelhouse.

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