(Yicai) Feb. 28 -- Lei Jun, the founder of smartphone maker Xiaomi Corp., and the founders of other Chinese tech startups expressed their surprise and disappointment that US smartphone giant Apple has reportedly aborted its foray into smart cars to focus on artificial intelligence.

“I’m shocked,” Lei, whose firm’s first electric cars are expected to start deliveries next month, said on Weibo today. Xiaomi committed itself three years ago to making smart autos for its customer base even though it knew how hard it would be.

“Apple is canceling a decade-long effort to build an electric car,” Bloomberg reported yesterday, citing people familiar with the matter. Apple made the disclosure internally yesterday, surprising the nearly 2,000 employees working on the project.

Apple had no comment to make on the report. Elon Musk, founder and chief executive of electric car startup Tesla, re-tweeted the news on X with saluting and smoking emojis.

“Even Apple has given up!” said Xiao Jianxiong, founder and chairman of autonomous driving firm AutoX. “Level Four autonomous driving, in which the vehicle can perform most functions on its own but still needs human intervention, is hard to achieve and even Apple can fail.”

“It is a great pity that Apple has given up as we were so looking forward to seeing what it could achieve in the auto sector,” said Liu Jiansen, an analyst at market research firm Canalys. “We hope that Beijing-based Xiaomi can keep manufacturing autos because EVs are increasingly becoming a technological product.”

It is the right time for Apple to quit making vehicles and to focus on AI, as AI will become the top-level access point to all devices, services, applications and transactions, founder of Li Auto Li Xiang said. Apple will become a USD10 trillion company if it succeeds in to-consumer AI, he added.

AI is needed to make intelligent cars, but electrification is just the first half of the game and AI is the final, he added.

Most innovations are done by small firms that specialize in a certain field, and then these firms gradually grow into big ones, Xiao said, adding that OpenAI is a small company that invented ChatGPT.

Apple has acquired many AI companies, but the market has not seen significant changes in generative AI since the Cupertino-based firm entered the field, so Apple needs to do more, Liu said.

“EV demand outside of China is not certain at this point in time, so sales volume is not guaranteed,” said Stephen Dyer, head of AliPartner’s Asia Automotive and Industrial consulting practice. “Many legacy and startup automakers continue to struggle to find a viable financial equation to make profitable electric vehicles. Around 400,000 vehicles need to be sold each year in order to break even.”

“Although services like autonomous driving can provide additional revenue streams and network effect value to compensate for losing money on the vehicle itself, if the overall business does not make sense at current vehicle volume and costs, then many companies must make tough decisions about where to allocate their capital,” Dyer added.

Editor: Kim Taylor