Apple likely to launch Apple Watch on March 9

Trying to build an actual car would mark a dramatic shift for the maker of the iPhone and iPad. Apple often researches projects which are then discarded, but has so far mainly stuck to its core expertise in mobile and electronic devices.

The Wall Street Journal reported on Friday that Apple had set up a secret lab working on the creation of an Apple-branded electric car, citing people familiar with the matter. The lab was set up late last year, soon after Apple revealed its forthcoming smart watch and latest iPhones, the Financial Times said.

The Journal said that the Apple project, code-named "Titan", employed several hundred people working a few miles from Apple's headquarters in Cupertino.

Apple executives met with contract manufacturers including Magna Steyr in Austria, a unit of Magna International, the Journal said. A Magna spokeswoman declined to comment.

The path to self-driving cars

Autonomous driving is likely to emerge progressively as driver assistance systems become more sophisticated.

Already, carmakers such as Daimler, BMW and Volkswagen's Audi have revealed cars that can travel long distances without human intervention.

Analysts at Exane BNP Paribas have said they see a $25 billion market for automated driving technology by 2020, with vehicle intelligence becoming "the key differentiating factor". But the brokerage does not expect fully automated cars to hit the road until 2025 or 2030, in part due to regulatory hurdles.

Short of building entire cars, there is money to be made from the software to run a self-driving vehicle, as well as the services associated with autonomous driving, such as mapping, car-sharing and car recharging services, the auto source said.

"It's a software game. It's all about autonomous driving," the industry source said.

Apple may be pursuing mainly auto industry expertise rather than full-scale partnerships with established car companies.

With its soon-to-be-launched Apple Watch, the company had held limited discussions with Swiss watchmakers, but no broad-based alliance emerged from the talks.

Instead of partnerships, Apple pursued a go-it-alone strategy and turned to poaching talent from top watch brands.

Two different sources have told Reuters that Apple has tried to recruit auto industry experts in areas such as robotics.