Apple yesterday leaked that it was hoping to save its bacon with a move to car making on the sound basis that an electric car is just a big smartphone with wheels and an engine. Apple has been desperate to find something to replace its fast shrinking smartphone and tablets and its move into smartwatches failed to pay off.
Former GM and BMW executive Bob Lutz appeared on CNBC and completely dismantled the notion that Apple has even a fighting chance to make even the tiniest dent in the auto industry.
He said that shareholders in Apple should be furious that the company is moving from a high margin toy making operation to a low margin automobile business/
“You can’t show me one company in the world that, to date, has made a nickel on electric cars. They are generally money losers and the only reason that everyone is producing them is because they are necessary to meet European fuel economy regulations and U.S. fuel economy regulations. There is absolutely no reason to assume that Apple is going to be financially successful in the electric car business,” he said.
Lutz bluntly said that Apple getting into the car business would be nothing more than a huge waste of money.
Part of the problem is that Apple has no expertise in batteries. They don’t make batteries. The specialised electrochemical companies make batteries and Apple is going to buy batteries like everyone 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.
The Tame Apple Press of course is furious that Lutz would dare to say that Apple would make anything low margin and that it would be less than perfect at anything.
“ Apple, a notoriously stingy company, is likely the last company that would simply throw tens of billions of dollars down the drain so casually,” sniffed BGR. In other words -“Don’t they know that Apple is perfect and makes no mistakes.”
Lutz said that Apple could get Hyundai, Kia or a Chinese manufacturer to manufacture the cars for them and then they would put all of their software and interconnectivity in it afterwards.
“I don’t see the advantage to that… But to say that [Apple] is going to do it with an electric car which is, from a cost standpoint, [that’s] the toughest way to go. And by the way, the electric car market is still miniscule. That just doesn’t make sense… If I were a board member of Apple, I’d ask some serious questions about this thing.”
His comments follow those of former GM CEO Dan Akerson who all but said that Apple has no idea what it’s doing when it comes to cars. And Mercedes-Benz chief Dieter Zetsche has said that he sees no rationale behind Apple entering an industry with a relatively low return on investment.