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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?
But like any other commodity experience can be purchased.
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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.
Don't forget about the pentalobular lug nuts.
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.
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.
And the radio won't get any reception when you hold the steering wheel at the 9 & 3 o'clock positions.
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.
A lie???
I've owned a total of four cars. First a Chrysler, then a Ford, then a Subaru, and now I'm on a Mazda. I do take care of my stuff. All four were maintained exactly to the schedule in the manual. And the Subaru still outlasted my chrysler and my ford combined, twice over, and then some (Fourteen years). Plus, aside from a bit of body work after a fender-bender, it never required any maintenance that *wasn't* in the routine schedule, which can't be said of the american cars. Hell, I could probably have gotten a few more years out of it; but it was due for a new timing belt and the replacement would have come more than the value of the car. Now, I've never owned a GM, but given their "worse than ford, not as bad as chrysler" reputation, and given how awful the ford was, I don't see a good reason to take the chance.
Until I can afford a Tesla, or maybe an iCar or whatever they wind up calling it, I'll be sticking to my "the VIN has to start with the letter J" rule. Detroit burned me two times too many.
Imagine all the people...
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.
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.
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.
60grand? you mean more like 80-100grand. Remember the Apple tax can be as much as 3x normal car's. Other issue with Apple cars is service as no one will have expertise to take care of them outside the over priced Apple dealer. So probably be like owning a Bentley or Mercedes-Benz. Cost a fortune to maintain.
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."
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.
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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!
Apple has a history of telling you want you want, not asking you what you want. However, that process seems to work for them. Apple won't necessarily get things wrong. However, there is a lot they would have to get right. I wouldn't expect Apple to fail outright, but they will have to work hard and likely expect to operate at a loss before succeeding.
My God Man! You mean Apple are behind systemd??
In the free world the media isn't government run; the government is media run.
...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.
Hm. I bought a '91 Ford Escort new in August of '90; first one off the truck. In ten years we got 340,000 miles out of that thing; still didn't burn a drop of oil; automatic transmission was getting a bit soft when I sold it. Had a lot in common with the Mazda 323, (Mazda and Ford were partners at the time) built by Ford in Ohio. It was a joy to own and drive
Wonder where your Fiesta was built? Not in the USA; they don't build them here. Not that built in the US guarantees anything. But I've heard stories about Mexican built Escorts (a few years later than mine) that sound nothing like that wonderful car I had.
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.
With Apple in particular. Apple was overtly run as a giant cult of personality. Products weren't prepared for customers, they were prepared for Steve. I don't see how you can replace that.
There is a reason there have been virtually no new car companies then last 4 decades.
Kia and Hyundai have both been in the US for less then 4 decades, just off the top of my head.
Cheap storage VM.