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By Tripp Mickle and Tim Higgins 

SAN FRANCISCO -- Apple Inc. on Friday secured a permit for autonomous-vehicle testing in California, the clearest sign to date of progress in the company's secretive efforts to develop self-driving car technology.

The permit, awarded by California's Department of Motor Vehicles, is Apple's first for autonomous cars and allows it to test drive vehicles on public roads in the largest U.S. state by population, adding it to a list of rivals that includes Google parent Alphabet Inc. and Tesla Inc. The move indicates Apple is going beyond testing on private tracks and in simulators as it works to improve artificial-intelligence systems that must learn to interact in the unpredictable world of human drivers.

The Apple permit covers three 2015 Lexus sport-utility vehicles, which would be retrofitted with hardware and software to be used in autonomous mode. It also covers six human operators who must sit behind the wheel to monitor the driving and take over when needed, according to the DMV.

Apple has been working for years on self-driving cars -- an effort dubbed Project Titan -- under a thick veil of secrecy. Its first public statements about its car effort came in a November letter to the National Highway Traffic Safety Administration offering input on planned regulations governing automated vehicles.

The revelation of Apple's interest in self-driving technology in 2015 sent shock waves through the auto industry, which had been working on various research efforts but generally saw autonomous vehicles as a far-off endeavor. The race has intensified since then, with Silicon Valley companies and traditional auto makers vying for position around technology that has the potential to reshape a bedrock in the U.S. economy. A study by Deloitte estimates there is some $2 trillion in annual revenue in the U.S. tied to the auto industry.

Silicon Valley's increasing interest has spurred traditional auto makers around the world to increase their efforts with many claiming they will have self-driving vehicles on the road in the next few years. General Motors Co. acquired self-driving-tech startup Cruise Automation last year in an effort to speed up its self-driving efforts, and the auto maker has said it is spending about $150 million per quarter on development. Ford Motor Co., targeting a self-driving vehicle for the market in 2021, is investing $1 billion into Argo AI to help its effort. BMW AG has teamed up with Intel Corp. to bring out a fully autonomous vehicle as well.

An Apple spokesman on Friday declined to comment on the permit and referred to a statement it issued in December, when the letter to regulators became public, that said the company is investing in machine learning and autonomous systems.

The letter -- which said Apple was making those investments for many purposes "including transportation" -- suggested Apple was focusing on software that would control a self-driving car. That aligned with other signs that Apple's car effort had shifted from building a car to designing an autonomous-driving system. Last summer, for instance, Apple eliminated some positions on Project Titan focused on car development and added software-focused staff.

Its new approach is a departure for Apple, which typically tries to control both the software and hardware of its products to deliver a uniform user experience, and maximize profits. It is alone among major smartphone developers, for example, in using its own operating-system software instead of Google's Android system -- a strategy widely credited with helping Apple garner more than 90% of profits in the global smartphone industry, according to Strategy Analytics.

Neil Cybart, who runs Above Avalon, a site dedicated to Apple analysis, said there could be similar value in controlling both the software and hardware of a car. "One aspect of the auto industry that needs to change is design and [the company is] well suited with their design philosophy, " he said.

California has been the major testing ground for autonomous-vehicle technology. Apple rivals have been testing their vehicles on the roads here for some time -- especially Waymo LLC, the Google sister company doing self-driving cars. Waymo has been working on autonomous vehicles since 2009 and has driven more than 2.5 million miles on public roads, including 635,868 last year in California, according to a report filed with the state.

"We're still in the first mile of the marathon of this race. At this point, it's still up in the air who can take the lead," said Dave Sullivan, an auto analyst with consultancy AutoPacific Inc.

Putting test vehicles on public roads opens Apple to more scrutiny than it is accustomed to when developing products. California requires companies with autonomous-car testing permits to file public reports about their efforts, including crash information and the number of times their human operators have to take over from the computer. Other companies testing self-driving technology in the state -- including Waymo, Uber Technologies Inc. and General Motors Co.'s Cruise Automation -- have put logos on their test vehicles, adding to the attention. It is unclear if Apple's Lexus vehicles will bear its logo.

With the scrutiny of public testing, any glitches can quickly draw unwanted attention. Last month, for instance, an Uber test vehicle crashed with a motorist in Tempe, Ariz., prompting Uber to suspend all such testing briefly even though police said the tech company wasn't at fault.

Uber had previously tried testing its cars in San Francisco without a permit, drawing the ire of California officials. The ride-hailing company pulled its vehicles from its hometown and began testing in Arizona, before deciding to go back and obtain a permit in California.

Other companies have expanded road testing from California to other states that offer different weather conditions and challenges -- an approach that Apple could follow as it tests its technology. Waymo is currently testing its cars in Kirkland, Wash., Mountain View, Calif., Austin, Texas, and Phoenix.

By 2030, about a quarter of all miles driven in the U.S. may be done through autonomous, electric vehicles, according to a recent study by the Boston Consulting Group.

Many of the developers that appear furthest along have said commercial fleets, whether it is robot taxis or delivery vehicles, are the most likely way the technology will first be deployed

Major questions remain about Apple's intentions.

"I'm not sure they know what their play will be, but they do sense there's an opportunity and they can bring value to it," said Ben Bajarin, an analyst with technology-research firm Creative Strategies. "The question is: How big is this commitment? And how much money are they throwing at this commitment? It's hard to know where this lands on their priority list."

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

April 14, 2017 20:04 ET (00:04 GMT)

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