On CNBC’s “Closing Bell,” on Monday, former GM Vice Chairman Bob Lutz discusses why Apple shareholders shouldn’t be excited about the company’s development of an electric car.
CNBC: Is Apple doing he right thing here entering this market?
Lutz: Uh, no, I don’t think so. If I were a shareholder, I’d be very upset because they are currently engaged in a very high-margin business. The automobile business, at best, is a very low margin business and you can’t show me one company in th world that, to date. has made a nickel on electric cars. They are generally money losers and the only reason that everybody is producing them is because they are necessary to meet European fuel economy regulations and US fuel economy regulations. But there is absolutely no reason to assume that Apple is going to be financially successful in the electric car business.
CNBC: Do you think [Apple] will be able to bring some sort of approach to it, given their experience in batteries and consumer devices that’s at all going to change the economics of this in the next couple of years?
Lutz: No, no, abso… First of all, Apple has no expertise in batteries. They don’t make batteries. The specialized electrochemical companies make batteries. And Apple’s going to buy batteries, like everybody else. And 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, 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 in the car business, nobody’s going to notice.
CNBC: Would it be feasible for Apple to have another company manufacture vehicles for them?
Lutz: Well, yeah, they could. They could get Hyundai-Kia or a Japanese or a Chinese manufacturer to manufacture cars for them and then they would put all of their software and their interconnectivity in it afterwards. But, I don’t see the… I don’t see the advantage to that… An electric car is, from a cost standpoint, the toughest way to go and, by the way, the electric car market is still miniscule. That just doesn’t make sense… One of the thing they probably hope to do with their electric vehicle is to sell the electric vehicle credits to other manufacturers who need them. And currently for Tesla, that is the only large sustainable source of revenue that Tesla has. I mean, they’re losing a ton of money on the cars. So maybe that’s the calculation, but, I’ll tell you what, if I were a board member of Apple, I would ask some serious questions about this whole thing.
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Direct link to video here.
MacDailyNews Take: The man worked for General Motors. He has sclerosis of the brain. (It’s a condition of employment at GM). This guy’s thinking is so in-the-box, his head ought to be gift wrapped with a bow on it.
We transcribed this interview with a dinosaur because we wanted it for posterity and because it reminded us so much of this:
We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in. – Palm CEO Ed Colligan, commenting on then-rumored Apple iPhone, Nov. 16, 2006
And this:
I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake. – David Goldstein, Channel Marketing Corp. President, commenting on Apple’s opening of retail stores, May 21, 2001
Lutz: “I don’t see…” That much is certainly true.
Lutz’s asserts that “Apple has no expertise in batteries,” however:
To make all-day batter life possible, we have developed new battery technologies. We actually changed the construction and internal chemistry of the cells which are now manufactured in discrete sheets. These sheets are stacked in a terraced structure developed along with the external enclosure. The design allow for 35% greater battery capacity. – Jony Ive, Apple’s Chief Design Officer, March 9, 2015
Lutz’s “idea” that Apple would simply shove their software into cars afterwards is a pure ignorance, or at least a fundamental misunderstanding, or how Apple works and what makes the company a success. Hardly surprising coming from a dinosaur who worked at shit-box maker GM. Apple is a design-first, design-centric company. Everything is focused on making the designer’s vision happen. The designers run Apple. They don’t sit around waiting to stick chrome moulding all over badly-made shit-boxes twenty years after it’s become passé.
Lastly, who said Apple is going to make an “electric car” as people like Lutz think of them today?
As we wrote back in March: When Apple enters markets, it’s because they can bring something(s) so unique to the table that significant disruption is inevitable.
Don’t just think “electric car,” when there’s so much more possible than what’s out there today. Think hydrogen fuel cells.
Apple doesn’t enter markets simply to compete with the rest of the existing dreck. Apple only enters markets when they can disrupt them. See: Palm, BlackBerry, Nokia, etc. In other words, it’s never too soon to start praying for more government bailouts, GM et al.
When Apple looks at what categories to enter, we ask these kinds of questions: What are the primary technologies behind this? What do we bring? Can we make a significant contribution to society with this? If we can’t, and if we can’t own the key technologies, we don’t do it. That philosophy comes directly from [Steve Jobs] and it still very much permeates the place. I hope that it always will. – Apple CEO Tim Cook, March 18, 2015
SEE ALSO:
Apple speeds up electric-car efforts, aims for 2019 ‘ship date’ – September 21, 2015
Apple meets California DMV officials to discuss ‘autonomous vehicle’ – September 18, 2015
Documents confirm Apple is building self-driving car, Project Titan further along than many suspect – August 14, 2015
Apple Car development proceeds apace – July 27, 2015
Apple hires veteran Fiat Chrysler auto industry executive – July 20, 2015
What’s up with Carl Icahn’s sudden obsession with the Apple Car? – May 18, 2015
Survey: 77% of hybrid or electric vehicle owners would likely buy an Apple Car – May 13, 2015
Apple’s ‘Project Titan’ could reshape the auto world – February 22, 2015
Apple Car: Forget ‘electric,’ think hydrogen fuel cells – February 20, 2015
Meet Steve Zadesky, the reported leader of Apple’s ‘Project Titan’ – February 17, 2015
Forget the rumor: Apple will never build cars – February 17, 2015
The real battle Apple is waging in autos – February 17, 2015
O’Leary: Yes, give me the Apple car – February 17, 2015
Will Apple become a car maker or a platform/content aggregator? – February 17, 2015
An Apple Car is exactly what investors want – February 17, 2015
Apple’s electric car dreams may bring auto industry nightmares – February 17, 2015
Jean-Louis Gassée: The fantastic Apple Car is a fantasy – February 16, 2015
Apple is already positioned to be a car company in many ways – February 16, 2015
Why Tim Cook would want to build an Apple Car – February 14, 2015
Apple working on self-driving electric car, source says – February 14, 2015
Apple’s project ‘Titan’ gears up to challenge Tesla in electric cars – February 13, 2015
Apple’s next big thing: The Apple Car? – February 13, 2015
Apple hiring auto engineers and designers – February 13, 2015
Apple working with Intelligent Energy on fuel cell technology for mobile devices, sources say – July 14, 2014
North Carolina regulators approve Apple’s 4.8-megawatt fuel cell facility at Maiden data center – May 23, 2012
New aerial images of Apple’s planned NC fuel cell, solar farms published – April 7, 2012
Apple’s massive fuel cell energy project to be largest in the U.S. – April 4, 2012
Apple patent application reveals next-gen fuel cell powered Macs and iOS devices – December 22, 2011
Apple patent app details highly-advanced hydrogen fuel cells to power portable devices – October 20, 2011
