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."

Comments

That's what Nokia, Moto, and Microsoft said

[mveloso]

That's exactly what Moto, Microsoft, and Nokia said about the iPhone. Where are they now?

Re:That's what Nokia, Moto, and Microsoft said

[UnknownSoldier]

Agreed!

I also don't buy that argument -- otherwise how the hell did Tesla jump start into an already saturated market? If Apple was smart they would just buy Tesla to save them years of experience. :-)

Just because a company is_currently_ not in an existing market doesn't imply that they won't be hiring people who can lay the foundation.

Impossible? No. Hard? Yes.

Re:That's what Nokia, Moto, and Microsoft said

[gweilo8888]

Tesla's impact on the market, thus far, is squat. Volkswagen brands alone sold 10.14 million vehicles in 2014. Even if you ignore Tesla's fiddling of the numbers (with nonsensical claims about sales being low because customers "were on vacation"), they sold a grand total of 35,000 cars in 2014. VW's marques managed that many in 30 hours, 15 minutes.

I know it's the done thing around these parts to fellate Mr. Musk at every opportunity, but the fact is that in the automotive world, he's a flea. He's completely insignificant and his toys for rich kids -- subsidized by yours and my taxpayer dollars, natch -- have not changed the market even one iota. Of the nearly 90-million cars and commercial vehicles sold in 2014, Elon captured a spectacular 0.04 percent of the market at best.

Re:That's what Nokia, Moto, and Microsoft said

[Yunzil]

Apple knows how to make computers. An iPhone is just a small computer that happens to be able to make phone calls. A car is an entirely different kettle of fish.

Re:That's what Nokia, Moto, and Microsoft said

[TomGreenhaw]

For what ts worth, speculative investors don't agree that Tesla is insignificant. Tesla's Market Cap is in the neighborhood of $33.8 billion whereas GM is $47.5 billion.

Re:That's what Nokia, Moto, and Microsoft said

[MightyYar]

My mom, dad, and step-mom have iPhones. They are generally called "boomers". I don't think your worldview is correct. I'd be surprise if iPhones were counter-culture enough for a hipster. A Blackberry (with keyboard) or Razr seems more appropriate, or even a full-on 80s brick phone.

Re:That's what Nokia, Moto, and Microsoft said

[Anonymous Coward]

Apple thrives on selling cheap hardware

Cheap hardware? Pretty much every time someone tries to match another company's hardware with the build quality/specs of Apple hardware ("because PCs are cheaper" mythology), the other company's hardware ends up AT LEAST as expensive as the Apple hardware.

I know I'm _sort_ of conflating purchase price and build price, but not completely, since if it really were cheap, then some other company could/should be able to build it cheaper.

Wishful thinking

[Anonymous Coward]

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.

Re:Car only compatible with iStuff

[eth1]

And the radio won't get any reception when you hold the steering wheel at the 9 & 3 o'clock positions.

Lack of foresight

[Anonymous Coward]

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.

Bob Lutz.

[jpellino]

The John Dvorak of the auto industry. Apple could not ask for a better endorsement.

leveraging existing state of the tech

[SethJohnson]

If Apple throws as much money at a car as Tesla did, perhaps they can, but they aren't likely to do that.

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.

Nobody ever called my mother-in-law a hipster

[SethJohnson]

....and sell like hotcakes to a certain demographic.

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.