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Former GM and BMW Executive Warns Apple: Your Car Will Be a "Gigantic Money Pit"
An anonymous reader writes: With rumors that Apple is not only moving ahead on its electric car initiative, but trying to accelerate its development, a former GM and BMW exec is giving a few words of warning. Bob Lutz appeared on CNBC and expressed his doubts that Apple has a fighting chance to make any impact on the auto industry. "And when it comes to actually making cars," Lutz said, "there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai. So I think this is going to be a gigantic money pit, but then it doesn't matter. I mean Apple has an embarrassment of riches, they don't know where to put the cash anymore. So if they burn 30 or 40 billion dollars in the car business, no one's going to notice."
That's exactly what Moto, Microsoft, and Nokia said about the iPhone. Where are they now?
I know I'll be accused of being a Tesla fanboy, but it's interesting to me that Bob Lutz failed to mention both Tesla and Pontiac (and Saturn) in that list... like he's an expert on what works and what doesn't?
Which has more power: the hammer, or the anvil?
HAHA as if GM and Ford even belong on that list. They make cars. If you get 100k miles out of them, you're pretty fortunate. That's about all you can say.
Apple and BMW won't make it unless they know that there's a market to be milked complete with rounded corners. There are enough idiots out there who'll buy any product from any vendor, Apple and BMW just happen to have enough loyal fanbois to make this a marketable product.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
iTires, iOil and iGas/iElectricity. Walled garden again.
No thanks, I will stick to the actual car brands.
But like any other commodity experience can be purchased.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Apple has, repeatedly, entered a market with a better product than most or all of its competition. I don't know if they'll do it again with cars or not, but then again neither does Bob Lutz.
And frankly, I hope it's a flop - I don't like Apple, the way they treat customers, or their lock-you-in ecosystem. But their car won't fail just because I want it to, any more than it'll fail just because Bob Lutz holds a bunch of stock in GM and BMW.
Apple literally has almost $200 Billion in cash reserves. I might hate Apple, but they're entirely equipped to fight the long war.
BLING!
What else to do with 120B in cash but to SPEND IT like a fat man!
Apple's cash on hand figures are mind boggling. Over 200 Billion.
Yes. 0.2 Terabucks. More than most governments.
So they could probably fill a gigantic pit with money if they wanted to.
I can see the fnords!
No one is going to notice $20 Billion wasted? What is he smoking? I'm willing to bet that Apple could produce a car people would want to buy and could do a better job than the auto companies. It's not like Apple isn't going to hire experienced people to do the important stuff.
Apparently these jackasses think only auto company executives can run car companies. They might be surprised to find out they aren't as valuable as they think they are. I'm no Apple fanboi but making cars isn't as hard as he makes it out to be. There are plenty of people out there that can be hired and build this business from the ground up. And a car company that was actually interested in what people want in a car would be a welcome change.
Apple needs a money pit for its surplus of cash. Stock buybacks and dividends can only do so much for shareholder value. They might even discover a new automotive product category by pursuing this line of R&D, change the world (again) and make more money to sink into a money pit..
Getting into a new industry is always a big money pit. Especially industries with firmly entrenched players with interests to protect.
Doesn't mean it's impossible, though. Just hard. They just have to throw enough money into the pit to fill it, and do it quickly before the shareholders get cold feet.
hank's best werk in my opinion. how are most cars NOT a giant money pit?
It is what it is.
drip drip
1. "PC guys are not going to just figure this out. They're not going to just walk in." -- Palm CEO Ed Colligan, 2006, on Apple's prospects with their (at the time) rumored phone.
2. One of the guys in charge of GM during its recent bankruptcy is going to give financial advice to the most valuable private company in the world? I'm sure Tim Cook will give it all the consideration it deserves.
Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
Lutz has also said that the best designers at car companies are their greatest asset, and should be their highest paid employees. Good car design is what makes profits for companies. Apple had great work with design under Jobs; so there is at least even odds they can get it right, at least enough. Really no one understands the car industry better than Lutz right now. Maybe Apple should listen to what he says and address those issues he brings up? Of course they could do that and we might never know.
... Maximum Lutz!
.. pa-ra-bo-la, pa-ra-bo-la, 2 pi R, 2 pi R, where's your latus rectum, where's your latus rectum, 2 pi R
They just buy Tesla
Apple needs a money pit for its surplus of cash. Stock buybacks and dividends can only do so much for shareholder value. They might even discover a new automotive product category by pursuing this line of R&D, change the world (again) and make more money to sink into a money pit..
Actually, dividends are designed to pay earnings to shareholders. They can issue as much in the way of dividends as they want without it harming shareholder value. And that's what they *should* do if they have more capital than they can deploy intelligently, because otherwise that portion of the shareholder's value is just sitting there undeployed.
Apple buys VW/Audi and rebrands (since the brands will be taking a big hit very soon), and consumers forget about dieselgate. Apple gets the infrastructure to build cars, as well as an eager dealership network. They throw money at some new designers to oversee the existing engineers and make the vehicles they want to make.
Book it, done deal.
Lutz said the same thing about Musk and Tesla about twelve years ago.
He's forgetting a big game changer, Industrial 3d printing. I think its going to give just about anybody the capability to build an almost completely custom car that doesn't require major effort to find fabricators for all the small parts that drag costs down.
I see a future where you have a standard chassis type and everything other part is print extruded from a catalog selection by the user. Much like building your own computer. ...I could be daydreaming, but I actually think this will be a thing in the next 10-20 years.
They popped out of nowhere without prior experience, and last I checked people waxed lyrical about their cars.
... upgrading to a 64L fuel tank will cost $2000, and upgrading to 128L will cost $4000.
...oh, hold on.....Tesla didn't fail!
Former Palm CEO Ed Colligan, on Apple's prospects in the phone market: “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in."
Here's the fundamental mistake they're making by dismissing Apple: Apple didn't "just walk in" to the phone market - they worked on it for years before they shipped anything. A car that's "slated to ship in 2019" is not "just walking in" - that's 4 years away, it's already been in the works for a while now, and that 2019 date is "rumored." Which means it may just as easily be 2025, or 2030, before Apple decides that anything they're working on is ready to ship.
so to me it doesn't matter if Apple does make a car. features of a 2011 model with 2016 BMW prices will not fly.
How to sell a premium brand that makes everyone want to buy it. I love driving BMW, but the prices of the upper models that I lust after, the M3/ M5 / M6 I will never ever afford as it's impossible for me to. GM, well they can't sell cadillacs to people that are dripping with money, so GM has zero clue.
Apple on the other hand has figured out how to get poor people on FOOD STAMPS to buy their premium phones.
Plus knowing apple, they wont try and make a giant sedan to appease everyone. they will make a city car that is small and fits in some kind of legal limbo hole like the 3 wheeled cars and golf carts that are legal to drive on the road. And people will buy the shit out of them.
Do not look at laser with remaining good eye.
Bob Lutz also told Elon Musk he would never make it.
Of course it will be a money pit. It will be like 10% of Apple's cash on hand. No new business is profitable on day one, especially against entrenched troglodytes like GM.
Businesses that are consolidated and set in their ways like the car industry would benefit from some disruption, even if Apple ultimately fails.
To be honest, I'd trust a car from Apple more than I'd trust one from GM.
Apple knows how to do nigh impossible feats in product development, I'd trust they'd do a car right aswell.
However, I'm still wondering where these Apple car rumours are coming from. It seems way out there, imho. ... Why would they build a car? A professional camera or something is far more likely imho.
My 2 cents.
We suffer more in our imagination than in reality. - Seneca
Apple consistantly bets on itself too.
They purchased a huge percentage of the world's flash market to release the ipod nano.
They purchased a huge amount of the retina screens before releasing the iphone with retina.
They buy up a huge percentage of the just now becoming mainstream tech, and for 6 months or so do it for cheaper than anyone else can possibly.
They'll likely do similar with cars.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
I think in general Apple has one advantage and that is loads of money to throw at a car. I agree, its a tough road not only to develop a car but to sell it in large numbers which reduces costs. Tesla makes great cars but loses money on every one. That is not sustainable and while you can justify it for a while. Tesla's numbers don't really show big improvements in sales. Only so many people onboard with a electric vehicle and unless Apple develops a sort of hybrid which is a bit more mainstream. I think it becomes a niche vehicle for the wealthier Apple fan boys. When you look at what drives most people's car purchase is looks, power, and accessories. Apple won't buy a car company because it most likely does not see running a car company that viable to Apple's model. I would think if Apple does anything it will be a rather niche vehicle and most likely a urban all electric. A example would be like the Nissan Leaf, a rather affordable EV with urban focus.
The John Dvorak of the auto industry. Apple could not ask for a better endorsement.
"Win treats sysadmins better than users. Mac treats users better than sysadmins. Linux treats everyone like sysadmins."
But I'm looking forward to that. The car industry is so stuck in its ways that it just needs a healthy shock.
When Apple is planning for a few years still, they may do it right and come with an autonomous car and you won't buy it, you will just rent it when you need to get from A to B. The car itself then may be expensive but this way it may still be cheaper and more convenient (no parking, no caring for anything) than owning a cheaper car. Like a robot chauffeur you can summon to appear out of thin air when you need it. It may end up being not so much a money pit but a money mountain.
Or Apple may totally screw it up, but I have nothing against them trying to get it right.
Radio, why would anyone need that? It will just have a thunderbolt dock for "all" you iDevices to play music. Radio was dead long ago, didn't you hear?
Also the temperature control in cars has been too complex for a long time. Now instead of fan speed, heat setting, A/C, they have all been replaced by just setting the temperature and the car will manage the rest. Don't worry, there will only be one temperature number as having zones would not be simple enough. Also they have remove the sticks for drive, park, reverse and emergency break. Instead they have been replaced by a single button with is forward, or backwards. When you stop, it automatically engages park mode and when you turn off the car it puts on the emergency break.
And how much will all this cost? They have done extensive market research and found that most people buy a $20 000 car, so they are selling their low end car for $80 000 with all the simplicity added. Higher end models will keep the same type of 4x price point over equivalent models. The ultimate version of course being the solid gold iCar Pro Luxury.
Microsoft, Apple, Google, Amazon what's the difference? All steal money from devs and control with walled gardens.
I find Lutz's comments somewhat ironic, and way off the mark. In today's economy, where virtually all major automotive subsystems are manufactured by tier-1 suppliers (Bosch, ZF, Sachs, Hella, etc.), every manufacturer must seriously consider what their "DNA" truly is, and to make sure they're expressing and delivering that to their customers. It could be argued that GM's DNA is in doubt (hence the irony), BMW's, for example, isn't. Tesla were certainly able to synthesize a new DNA unencumbered, as it were, by internal combustion technology, proving the point that we're on the verge of a tectonic, generational, shift in personal transportation. Since future automotive platforms will be increasingly intelligent and interconnected, I think it less likely that a "traditional" manufacturer could move as easily into this domain as an Apple could move into theirs.
Apple has many fans that would buy the iCar, no matter how expensive or shitty it will be.
Lutz also led the development of the Pontiac Solstice and Saturn Sky sports cars, which looked great but were crap cars that also failed in the market.
You can pretty much ignore whatever he says.
I fully agree with you, Apple isn't going to spend as much as Tesla did to ramp up production.
At a significant expense, Tesla innovated many processes and designs for their electric cars. Elon Musk threw the patents into the public domain and asked other companies to leverage them. Apple will do that and then build on top of that with their own R & D investments.
$5 / month hosted VPS on linux = awesome!
Many people will make a living moving Apple's money from their Gigantic Money Vault to the Gigantic Money Pit.
That someone else comes in and actually forces GM to compete! This will end up like Tesla, with GM and their army of lobbyists convincing states to restrict sales.
Maybe Apple will fail. And maybe they won't fail. The important point is, they are a helluva lot more competent than idiotic corporations like GM. Apple is competing with Tesla, not some festival of scams and unions that defines a lot of the traditional auto manufacturers. But importantly, Apple is competing with Ferrari and Lambos and such- cars operating at a ludicrous price point where the trading is done on a brand name.
Importantly, they won't be bothered by having to come up with something actually universal or affordable at first. Or even ever.
"when it comes to actually making cars .. there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors"
Seeing as GM went out of its way to sabotage its own efforts, Apple can't do any worse.
Who Killed the Electric Car?
Do you really think Apple became the richest company on the globe selling their products exclusively to hipster millennials? That's actually quite a narrow demograph from which to have siphoned such immense wealth. Go check out an Apple store. It's filled with an entire spectrum of people buying their premium-priced products.
This is the same type of stereotyping of Apple's limited appeal is exactly what led to Steve Ballmer's obsolescence.
$5 / month hosted VPS on linux = awesome!
Didn't IBM do exactly this same thing to apple with their "fear uncertainty and doubt" approach? Where are IBM now?
If they want to "burn cash"... um.. bet you wont just sit back and watch = innovation is a fresh breath of life.
I don't particularly like Apple, but I'll be fucked hard as the worst Jobs fanboy if I'm going to deny that they're really good at what they do.
Which is take advantage of gullible people, much like shops that cater to audiophiles.
In the free world the media isn't government run; the government is media run.
Maybe it would be a gigantic money pit. Apple, conveniently, has a gigantic pile of money with which to fill the giant money pit. Their cash reserves ($203 billion) are larger than the value of every major US automaker combined ($157 billion if you include Tesla), and their cash reserves grew by $38 billion in the last year alone.
People can't seem to wrap their head around just how much money Apple is sitting on. Buying General Motors would be pocket change to them. They could build a Tesla Gigafactory with couch cushion money.
Right now, adaptive cruise and auto-park are only on the bigger more expensive cars. Making a great little city car with the bells and whistles would kill in sales.
I think they should go electric-hybrid-plug-in. Electric for 99% of use, and for longer trips, you get a 20 lb propane tank and hook it up. Refill the propane tank every 300 miles or so, and you'd have the range and capacity of a gasoline car in a little electric that rarely needs the propane-powered generator that fills the batteries. Propane is already universal, even if not popular everywhere, and slight work on the logistics, and you might even work out a plan to rent the generator and tank, so your daily drive doesn't have you hauling around an IC engine and fuel tank with fuel. And for a trip, you put in the rental generator and tank.
Propane swaps are common and easy, so "refill" your car faster than gasoline (the golden standard), by swapping an empty tank for a full one, rather than filling the empty one.
When you have a non-car company thinking up solutions, you'll get lots of solutions that the GM CEO would say "can't work", but that's code for "I'd have never thought of that", and isn't related to the viability.
Learn to love Alaska
...and that's a step up from most car companies.
5 or so years ago, when I was shopping for a car, I picked up a Consumer Reports car edition. My previous car had been an 87 Toyota Camry station wagon, and it got somewhere in the range of 23-27 MPG doing suburban driving. Looking at that Consumer Reports was depressing. The majority of cars had the same or LESS mpg, despite being 10 to 20 years newer.
Fuck this executive. If he had his way, cars would run 10 MPG.
When someone threatens you not to do something it is because that is exactly what scares them the most.
They fear that a company with enough cash to simply go out and buy most car companies, a brand that many people love and all have heard of, and a car market that is about to go into driverless and maybe electrical spasms will step in and push them clean out of the way.
All car companies know that it will be dangerous times as they will all make missteps with driverless, and will all make missteps with electric. They also know that in 1997 the idea of Apple entering the mobile phone market was a joke. The incumbants could list off reasons as to why apple would fail as long as your arm, no deals with telcos, our engineers have 20 year experience with this, haven't done this before, who wants a musical phone, stick to your knitting, way too expensive, etc.
I even read that when the major mobile manufactures saw the phone they laughed and thought it was an unworkable pile of junk. They thought there was no room for a battery and thus would have an hour or less of useful life. Then they got them and basically wept.
It sounds to me like he's scared and there's nothing he can do but bark. LOL!
Bob Lutz is not just being a curmudgeon.
Tesla is now 10 years old and not profitable.
The odds are not on Apples side.
It is hard to see apple really making money being a car maker.
Maximum Bob knows what he is talking about.
But as an OEM supplier.....
A much more interesting proposition would be Apple getting into the business of an integrated engine management/infotainment system, that is also tied into smart home systems.
Picture your car, appliances, lighting, security, HVAC etc.... all integrated with your IOS devices.
At the point when AI becomes viable for self driving cars, Apple will already be in place as an OEM supplier.
I personally find the idea creepy, but from a business perspective....
This would Apple playing to their strengths.
Starting from scratch with a big war chest is going to be a big advantage. They don't have retirees to pay, they don't have plants located in inefficient places for historical reasons. They can get good tax deals and subsidies by playing states and cities off against each other.
Beyond that, the executives at companies like Ford and GM are used to playing around in the margins of the gasoline and diesel world. Trying to eke out just a bit better gas mileage or horsepower than last year's model. I don't think, institutionally, they'll be willing to gamble on something that's very different than the cars they already produce because of supply chain ripple effects.
Comment removed based on user account deletion
â¦drives "Auto" types crazy AAPL first in foremost has no, none, nada, zip street-cred in rolling technology.
Like SteveJobs says " we were too stupid and didn't know we couldn't build a computer - or else we'd have never succeeded" also Bob Lutz " experts don't know anything" - Steve Jobs.
Solandri : "All Microsoft had to do was add native dialing and cellular chipset support to WinCE .. Apple knows a lot about computers. They didn't know phones"
.. had a 3.5-inch LCD screen at 320x480 and 163ppi, a quad-band 2G EDGE data radio, 802.11b.g Wi-Fi, Bluetooth 2.0 EDR, and a 2 megapixel camera" ref
"The original iPhone
Microsoft shows up late to the smartphone party
Henri Fisker's design needs a Lexus/Apple Hydrogen, all-electronic Zen makeover!
Perfect fit for Apple and design point that out competes with Traditional mfgr's with a Zen interior and Eco power train upgrade
If Apple has so much money that they can afford to burn $40 billion or so without consequence, they should just give it to me instead. I'll repatriate the assets and pay the taxes on it so that they don't have to. Then I'll do something with it that's better than making a car. We have enough of those already.
Last summer, I had dinner with a guy who was a VP at GM way back in the late 60s/early 70s. Being the new guy in upper management, the board of directors sent him to Australia to asses the potential threat of Toyota on their market share. Back then, Toyota barely registered on the American consumer's radar. After spending two weeks down under he learned the following: before Toyota showed up on their shores, the dominant car manufacturer had an 87% market share. After Toyota arrived, that same company wound up with a 3% market share. So, he went back and reported his findings to the GM board. Their collective response was, "That'll never happen here."
Safety and comforts add weight. Blame the Federal government and people who want to live through a car accident. I also hate to break it to you, but powered seats/windows/power steering/etc have weight.
That the fuel millage hasn't dropped despite having to add a 1,000+ lbs of reinforcement and gadgets is amazing.
"there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai.
I can probably think of a reason to assume Apple will suddenly do a better job than 2 or 3 out of those 5.
Additionally it will probably be a money pit for the user as well.
Interesting take on this a UK TV show called "Black Mirror".
Season 1 Episode 2, grab it off of Piratebay if you must but watch it.
"If any question why we died, Tell them because our fathers lied."
I want to point out the obvious: Tim Cook hasn't introduced a single, highly successful NEW product yet. The apple watch isn't exactly taking the world by storm and, besides, I am not sure it wasn't in the product pipeline for a number of years. Even Steve Jobs didn't hit a home-run every time but he hit enough of them to be legendary. Tim Cook is not Steve Jobs and we have no evidence yet that Tim Cook is able to do anything more than operate the Apple "machine" without running it off the road. Certainly no evidence that Tim Cook would know insanely great if it hit him between the eyes. I wouldn't bet on an Apple car. I certainly wouldn't bet on it out performing nor out wowing Tesla, nor Porche, nor even Toyota. In a contest between Tim Cook and Elon Musk, in terms of ability to 'manifest' insanely great...Elon Musk would be the clear winner. I know there is a school of thought that the leader isn't all that important; that it is the company as a whole which really matters. But the evidence really calls that into question.
Tesla and Apple has a likely chance of being competitors alive in the auto industry...
Apple's approach to design is antiseptic. They do everything they can to hide the machine, because the machine is not the part they make. This works fine for Lexus but...Lexus already exists. Apple doesn't do revolutionary hardware, they do revolutionary interfaces. But the interface for the car already works really well so I have to assume that they are eithe rgoing to try to convince us that it doesn't (not even Apple is that crazy) or focus on all the surrounding stuff. Allow people to manage the car from their phone...like a BMW i8...or develop a new way of interacting with all of the gadgets like every company has been doing since the dawn of internal combustion. But really, buttons are still the best way to interact with most things on a car. Because you don't need to look away from the road. I guess that's my point. Apple's identity is about making really good interfaces which you won't see because you're looking at the road. The only way this makes sense if they are just building a buisness to take advantage of the autonomous car which we will undoubtedly be menaced with in the near future. If that's the case they don't need to make a great car, just one that isn't embarassing. Oh, one last thing. People tend ot dismiss how much they pay for a phone. They do pay attention to the cost of a car. Good luck Apple.
Yep, I respect some of what Lutz has done but he's a dinosaur. Batteries get cheaper every year, by the time this is in production (won't be 2019) they'll be much more affordable. Electrics aren't the fad he thinks they are. The car business needs shaking up, glad Apple is taking a shot at it.
Never let a lack of data get in the way of a good rant.
If the car fails emissions test or a crash test, they will simply say, "you are not holding it right" and resolve the defect as "not a bug".
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The majority of cars had the same or LESS mpg, despite being 10 to 20 years newer.
But have significantly more power. Because that's what consumers want.
"First they came for the slanderers and i said nothing."
Tests for mpg ratings have changed significantly over the past 30 years. You are simply ignorant, because you blame the manufacturers who are bound to use new tests that result in lower mpg numbers (your '87 would also have poor numbers) rather than the idiots who created the ne regulation that changed the test without renaming the units.
Apple's ability to sell its stuff both to well-heeled Boomers and debt-encumbered Millennials is the envy of many companies. Only booze skips across generational borders quite so effortlessly and merrily.
But it is in the timing of entry into the car market more than on any particular innovation that I think Apple may neatly capitalize.
As millions of Boomers prepare to go gently into that good night, an orgy of spending should accompany their last two decades. Health care, obviously, will account for the bulk of it, but before the worst medical bills are seen there's still time to clean out the estate in grand fashion. Quite a lot of this will be vanity spending, as current trends show, including age-defying creams, injections and implants. And little says youthful as eloquently as driving in an Apple Electric iCar to your hip replacement surgery.
Watching jealously from the sidelines with Lana Del Rey droning on the turntable, Millennials will take consolation from the fact that the job market will generally improve for younger folk. Keen after the lean barista years to live large, the iCar will be just the canvas on which to splatter their new affluence to greater effect than was allowed by iPhones, Watches and Mac Minis. That shit was tiny; this shit will be big.
To both groups, Apple can sell an idea as well as a vehicle. That idea is Your Own Personal Halo. The wish to consume with less guilt -- not reducing consumption patterns, but dressing them up in an ersatz techno-idealism (electricity is free! driving improves the climate!) -- should have tremendous appeal to those raised on Woodstock and Transformers cartoons alike. As Steve Jobs himself might have said, "Here's to the Panglosses..."
LP can't go into tunnels. The first time someone drives an Apple-mobile into the Lincoln Tunnel in NYC it goes kablewey.
"Then maybe there wouldn't be as many face-palm electronic security holes like the Chrysler Jeep Cherokee vulnerability." And of course, Apple's security is second to none in the face-palming industry.
I totally forgot about them, which is kinda sad.
http://www.panynj.gov/bridges-... I see no restrictions that agree with your statement.
Learn to love Alaska
Look up the weight of your old car and your new car..
Cars have been around for 130 years. What exactly could Apple do that would make a car better? Apple is not getting into the car business simply because there is not enough turn over, people hold onto cars for 10 + years. These are the same reason why they're not going to make a tv, Apple has said so.
your paranoid fantasy won't hold true. the usa is still the dominating cultural force on the planet (disclaimer: i'm european), and "made in the usa" is still a good selling point, even in the middle east. unfortunately, lots of "made in the US" products don't live up to their reputation, quality-wise, so a lot of people get burned, but that doesn't mean that the brand is not working...
That's what people want. Modern cars have about twice the power (with substantially less emissions), and people are willing to accept 23-27 MPG for the performance they get.
Once a recession hits, people are whining about MPG and there's suddenly a glut of SUVs on the used car lots. When the economy recovers, people run to the dealers to buy the latest gas guzzlers again. Ask a typical American if they'd like to drive one of those 55 MPG town buggies like they have in Europe. The reaction will be, "That's cute, but it's not for me."
Sad as it is, it's all just supply and demand in the end. Such rationale explains the phenominally poor quality of domestic cars in the 70's, as well.
Bob Lutz - total ass-turd. If he says Apple is going to fail, it means they will be wildly successful. He's been wrong about everything (but quick to claim credit when someone else gets it right). Recommendation - buy Apple.
Where is your God now?
Car industry is stagnating. Cars all look about the same, as a turned upside down enameled pot, so boring.
Why should we pay hundreds or thousands to repair a slight scratch or dent? Why there is no sound alarm when one drives faster than allowed by a law of a land?
They should just buy Tesla. Instant start, applefy the fuck out of it.
Tesla's market cap makes that idea really dumb. Right now Tesla's stock is WAAAAYYY overvalued. Apple could buy them but they'd likely never earn their money back. If Tesla's market cap takes a dip I guess I could see it happening but right now it would be idiotic for anyone to try to buy Tesla - Apple or otherwise. Tesla's market cap (around $35B) is almost that of GM (around $45B) and there is NO way Tesla is legitimately worth anywhere close to that. Apple could buy their choice of either GM or Ford and they could do it with cash. They won't (because that would be dumb too) but they could.
One of the big three would probably go under in 5 years.
Umm, no. While Bob Lutz is a dope and a blowhard, he's not entirely wrong. (just mostly) The existing big auto companies are very hard to displace and Apple isn't going to knock them out of the market any time soon. Apple has NO experience, expertise or advantage (aside from a big bankroll) in that industry. There is a reason there have been virtually no new car companies then last 4 decades. Tesla is the first in a long time that seems to have a prayer of breaking through and even it's future isn't secure and it's barely breaking even right now. Apple is basically a software and design company. They outsource their manufacturing almost entirely. You think they are going to suddenly be amazing at heavy manufacturing? You think their shareholders are going to be happy going from 25% profit margins down to *maybe* 5-10%?
They bought Dr Dre's shitty headphones?
And they are likely making a killing selling them. Might not be the best product ever but hard to argue they aren't making money.
Any existing car company would really benefit from an Apple buy-out.
Maybe but Apple wouldn't. Apple is a victim of their own success here. They have 25% profit margins and even the most profitable auto makers earn at best 10% in good times. Furthermore running a big auto company with a completely different culture in an industry Apple has no experience in would be a HUGE distraction to say the least. Apple is basically a software company. (Those are Steve Jobs' words, not mine) They almost completely outsource their manufacturing. Now suddenly they are going all in on heavy manufacturing by buying a huge company with a completely different culture and far worse finances?
Apple could do it but I can't see how it would be a good idea for them.
As others have mentioned safety standards have grown which adds weight which decreases mpg.
But the big hit is emissions which is what VW is going through now. For a heat engine the hotter it runs the more efficient it will be.
Those 80's cars ran very hot to get their efficiency. But running hot creates NOx. New emissions standards put an end to these engines in the U.S. This is why you can't get the 70+ mpg turbo diesels they make in Europe in the U.S.
I love Jesus, except for his foreign policy.
A former worker from big car companies is so sure that Apple can't enter the car market, while he is trying hard to shoo Apple away.
Linux is for people who don't mind RTFM.
By what metric are they "losing" this competition?
Profits. All the competitors to the Model S are profitable whereas the Model S is basically break even at best. This is largely because the other companies are much larger and can break their overhead and fixed costs over many more units. Unless Tesla can bring more products to market successfully then they will eventually fold the company. The Model S is a great product but it won't be enough to "win" by itself. Outselling your competitors by selling at a loss is NOT a winning strategy.
Which is idiotic. With no disrespect to the company Tesla there is NO way they are worth anywhere close to an amount that could possibly justify that market cap. That is just idiot speculators who have bid up the price of the company well beyond any sane valuation. No company selling 60K vehicles a year without profits is worth even close to a company that sells over 2 million vehicles a year and makes profits in the billions. GM's market cap is reasonable. Anyone buying Tesla's stock at current prices is weapons grade stupid.
there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai.
Apple don't already have a large business invested in Oil, it's far easier to focus on pouring development on a new product rather than diverting development into a competing product at no clear and direct benefit to the business.
Tesla isn't an entirely fair example with all their injected cash, but they are the only really successfully electric car company - and they were born fresh without an oil backed business.
If a company lost that much on a bad project, every stock holder in apple will notice as stock prices will fall. I know many uneducated people think because they have x billions of dollars it is all owned by Apple. But stock owners is the real holder of some of those assets.
Even if it is bad and over expensive people will buy it in mass just because it is apple. Biggest mistake is making it electric, as not many would buy electric cars, let alone over priced apple car.
GM and BMW executives are almost certainly right. This will be a money pit for Apple.
Keep in mind Apple's business model. It designs almost every aspect of its products, but it does not build much. It contracts that out to others. That works with digital devices. It probably won't work with cars.
There is no one in the business of assembling cars designed by others. At most, some smaller automakers buy complex portions of their car such as the engines and transmissions from larger makers. That's because to control costs and ensure quality, you have to do the assembly yourself, watching those who build components like a hawk.
My hunch is that this will teach Apple a bit of humility, a lesson they need.
He said a lot of things in his time, but I don't recall that one.
Here you go straight from the horses mouth. Apple is a software company according to Steve Jobs and I think he is 100% correct. Their hardware is nice but not really much different than their competitors. It's so commoditized in fact that they have someone else make it for them. What Apple does do in house is their software. You can put Windows on a Macintosh and it would be nearly indistinguishable from a Dell if you can't see the badge. You can put Android on an iPhone and it wouldn't be much different than any other Android phone. What makes Apple products unique and what people pay a premium for is the software.
Right, and that's also also an option here. You can get Chinese car manufacturers to manufacture a car just as you can get Chinese electronic manufacturers to manufacture a phone.
No it isn't a viable option. There isn't enough margin in cars to outsource the manufacturing, not even in luxury cars. I'm in the auto industry myself and I'm both an industrial engineer and an accountant. The economics of it do not work. Even the most profitable manufacturers (Toyota and Porsche currently) eek out about a 10% net profit margin in a good year and that is with huge volume and they aren't sharing their manufacturing with anyone for the most part aside from a couple of minor joint ventures.
Yes it will be a giant money pit. For the consumers that purchase one. Apple won't care though because they own the pit.
Where does the iPhone get made?
The iPhone may be designed by Apple, but it is manufactured by Foxconn, in CHINA.
So, the obvious solution is to design the car here in the USA, by Apple, but manufacture it in China, using an existing car factory -- Geely, BMD, or some other Chinese car maker. This allows Apple their usual 50% markup, since the manufacture will be cheap, and make use of existing infrastructure.
If telephones are outlawed, then only outlaws will have telephones.
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I look around the office at the POS Windows laptops that people have and I say no, that's not so.
Boy that's some compelling logic you have there... Really refutes the fact that the hardware inside an Apple Macintosh is literally identical to the stuff sold in PCs. Same processor, same RAM, same chipsets, same hard drives. Wow they have a barely different BIOS and put it in a fancy case. How marvelously different...
The ONLY thing that really is different in a Mac or an iPhone is the software.
Then what you say is worth about as much as what Bob Lutz said.
And a hearty screw you to you as well. If you think people that work in the auto industry are idiots then why don't we see you showing us how brilliant you are? Come on smart guy, show us how it's done since you know so much more than the rest of us.
If you're in the industry, you see how things are currently done, and you come to believe that's the way it must be done. And that's the point when a newcomer rolls right over you.
I've been in lots of industries. I just happen to be in the auto industry because the company I run has customers that are auto companies but I deal in medical, industrial, aviation and others beside. But thanks for ignorantly painting me with a broad brush despite knowing nothing about me. The auto industry has seen plenty of newcomers over the years and they have almost all failed. The few newcomers that are still alive are small companies in tiny industry niches. While I hope Tesla really shakes things up, if you think the big auto makers aren't watching them closely you are deluded. GM could make a car very similar to the Tesla very quickly if they think there is a business case for it. Same with Toyota or Ford or VW or any other big maker. They've got huge resources, enormous engineering staffs, and global footprints. They're not stupid - they know that electric vehicles aren't profitable yet and that there are technology issues to work out first. You think it would be hard to make a Chevy Volt electric only?
Yes. Americans are strange. Always trying to compete with everyone. Even if it's by buying a bigger but lower quality car then their neighbour.
It may seem like the iPhone has been around since 1997, but it's only been since 2007.
Kia and Hyundai have both been in the US for less then 4 decades, just off the top of my head.
They've been in the US for less time but they've been making vehicles for longer than that. There have been plenty of attempts at new car companies in the last 40 years but they rarely last or they are tiny niche manufacturers. Not to say it couldn't be done but it's a VERY hard industry to break into at any sort of scale. Huge capital requirements, huge engineering requirements, immense logistics and supply chains, etc. Very challenging.
Safety and comforts add weight. Blame the Federal government...
Bullshit. The Federal government is the only reason cars aren't getting only 10 MPG.
Toyota and hyundai did just that to America car makers Time for an American to shut that down being Ford GM cant.
Go Apple go.
From TFS:
""there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai. "
And there is even more HISTORY to belie that statement (and they know it!).
Why not? I doubt China would mind. Cars are already built in Germany, Italy, Mexico, Korea, Japan, et al. Why not China. In fact cars *are* built in China right now, just not normally for the US market....
Particularly if they initially go for a small niche market, like say electric cars?
Or do you think all the buy "American Made" cars motto is really holding up with the public? How much will that complete with a shiny Apple logo?
Were you looking at comparable cars, or trying to buy something more expensive due to increased income? The luxury sedans from Lexus/BMW/etc have garbage gas mileage because they are tanks with massive sacrifices in efficiency. A Camry 5 years ago was like 25 city 35 highway, and likely weighed more while having cleaner emissions than your older car. If you wanted something efficient, you could even go for an EconoBox like the Focus and get some ridiculous MPG.
is this guy serious? The car industry is largely a huge steaming pile when it comes to customer service. When you buy a car you have to go to some third party shyster (otherwise known as the local car dealership). Once there they will quote you something they call the "Manufacturers Suggested Retail Price", which nobody in their right mind is going to pay. You are then required to chip away at this price until you get to something reasonable. Each of which requires a trip to "the manager" for approval. Meanwhile you sit and stew and generally waste your time. In the interim they will try every dirty trick in the book to get you to pay more than you should. Eventually, maybe, you reach a deal.
Contrast that to the buying process with just about anything else you can think of. This is why the car companies hate Tesla. Tesla has turned the whole process on its collective ear. Apple is capable of doing the same thing. Apple - love them or hate them - understands their customers and provides outstanding service to them.
This Lutz clown is from the same company (GM) that is responsible for 124 deaths due to faulty ignition switches in some of their vehicles. Faults that the executives of the company (Lutz is a former GM executive by the way) knew full well and tried to cover it up rather than recall the vehicles and get the damn thing fixed. Yeah - great fucking customer service.
I, for one, am cheering for Tesla or Apple or anyone else that will drag this dinosaur of an industry into the 20th century.
My typo. And yes it is hard to imagine a time when I couldn't just pull it out to see the weather etc. I can somehow envision myself with my VIC-20 circa 1984 and an iPhone in my pocket. The iPhone minus 7.
I see you live in Boston. They have the only tunnels that banned my propane car. NYC doesn't care. Nor does Pittsburgh. Virginia didn't care either.
When you know anything about LP, you'd understand why nobody but idiot Bostonites (and a couple of other not too smart locales) ban it from tunnels. It sinks, just like gasoline. What is hilarious is the dummies in Boston permit NG, which floats. You know, into those shitty light fixtures that keep falling off...
Did I mention it's harder to blow up a DOT tank than a gas tank? Not just by a little bit, but by far. Heck, the fuel itself is harder to ignite than gas (Higher flashpoint, tighter stoichiometry).
Well, either you're from Boston or you're an RVer, in which case I can forgive you, because the reason is less obvious. Typically RVs are requested to shut off their tanks. This is because RV appliances typically operate with naked flames (Fridges, HWH, stove). As you can imagine, they're not excited with someone driving with the equivalent of a lit match throughout the tunnel. A combustion engine is supposed to be sealed (yeah, yeah, backfiring, etc... SUPPOSED TO BE, not always in practice!). Because some RVers are not so diligent, some tunnels just say no to propane if it's not feeding an engine.
However, the poster before you is an idiot. Is is unsafe to use a standard 20 lb propane tank to fuel your car. It will work, but it is illegal and a bad idea. Propane tanks used to power car engines are built to a MUCH higher standard. And they are filled much like a gas car is filled. You go to a propane pump, screw the ACME connector on, flip the pump on, wait a while, and with modern systems, the pump can't pump more than 80% in (or you watch your fuel gauge). That's also for safety. :) You also need WAY more than 20 lbs to go 300 miles. WAY more. I really doubt even if it were powering a generator a car company could get a vehicle approved to use BBQ tanks. Sure, you could DIY it, and it would be great until you need to claim on insurance when it all blows up. Not to mention that BBQ tanks emit vapour, not liquid, which kind of sucks for winter use and sucks if you want to get enough gas out of the can to power a good size motor (once the tank starts to freeze, you'll see why).
Bob Lutz may be an icon of the automotive industry, but he is also a protector of the Detroit old guard automotive types.
So when Bob says, "And when it comes to actually making cars," Lutz said, "there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai. So I think this is going to be a gigantic money pit, but then it doesn't matter. I mean Apple has an embarrassment of riches, they don't know where to put the cash anymore. So if they burn 30 or 40 billion dollars in the car business, no one's going to notice.",
I hear: "Apple may force the old guard automotive types to once again step up to the plate and innovate and compete with this newcomer called Apple." And they hate to change unless forced to. Change costs money they hate to spend.
-Eric
I have to wonder why they want all this power. Quite frequently, I'm held up by slowcoaches driving high priced sports cars. Where I live we have the most amazing roads for motorcycling and driving sports cars: no speed limit outside of the towns, and fun, twisty roads with little traffic. But the overwhelming majority of sports cars are doing about 45 mph, being a rolling roadblock.
I can't understand why these people - if they want a flash car - why don't they buy a luxury car instead? It'll be a hell of a lot more comfortable and nicer for that style of driving. But instead they are trickling along at low speed with rock hard suspension. They could do that with a car with just 20hp - I just don't get what the 450hp or so is supposed to be getting them other than high fuel bills.
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Where I live we have the most amazing roads for motorcycling and driving sports cars: no speed limit outside of the towns, and fun, twisty roads with little traffic. But the overwhelming majority of sports cars are doing about 45 mph, being a rolling roadblock.
Twisty roads at 45 can still be fun in a Ferrari, but I don't know what those people are doing. Maybe they're afraid of going over 45 in their fancy car?
The only thing I can figure from talking to people (people who say, "my new [low end] Buick has nice power!) is that it really sucks trying to get on a freeway on-ramp in a lower-powered car. Going up the ramp in Chevy Spark, "OMG I floored it and it won't go over 55!!" Not a fun experience.
When I was in college, someone bragged to me that his used car could go up a hill accelerating completely loaded with people. I guess that's another use case.
"First they came for the slanderers and i said nothing."
ISTR Lutz saying much the same thing about Tesla.
Shitless.......GM.....
Lutz is a relic of a FAILED USA industry. Pay no attention. Detroit is destitute, silicone valley is the fifth largest economy in the world.......electric cars obviously are the future.