This Is How You Know It’s Time for Apple Car

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Hey look, it's another auto executive explaining to the world how absurd it is for Apple to make a car. It's hard, he said. It will be a money pit, he said. Apple doesn't know anything about cars, he said. And most of all, he said that the auto industry is a low margin business, making it a terrible market to enter.

The "he" in this scenario is former GM Vice Chairman Bob Lutz, and his cautionary words condemning Apple's rumored electric car are how you know this market is ripe for Apple disruption.

Here's his interview in full (via Fortune's Philip Elmer-Dewitt):

Let's take a peek at some of those comments up close.

If I were a shareholder, I'd be very upset. They are currently engaged in a very high margin business. The automobile business—at best—is a very low margin business. You can't show me one company in the world that to date has made a nickle on electric cars. They are generally money losers.

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's absolutely no reason to assume that Apple is going to be financially successful in the electric car business.

Actually, sir, if you were an Apple shareholder, you'd probably be pretty happy. I am, and I own an insignificant number of shares. To wit:

AAPL Chart Ten Years

Ten Year AAPL Chart
Source: Yahoo! Finance

But that's not the point. Mr. Lutz is hidebound in his insider perspective on the auto industry. He can't think differently about it because he knows everything about it. We've seen the same stuff said about every industry Apple entered or was rumored to enter, from music players, to music sales, to tablets, to ebooks, to TVs.

In each case, Apple has done OK, if you're into that sort of thing. Except for TVs. Apple apparently agreed with those who said the television set business sucks.

Now we're seeing it with cars. Dieter Zetsche, Chairman of Daimler AG and chief executive of Mercedes-Benz Cars, said many of the same things, though he did so with more class. His focus was the low margins that is a favorite bullet point for Apple doubters. Former General Motors CEO Dan Akerson was openly skeptical of Apple's long-term prospects in the market.

Mr. Lutz, however, is my new poster child for this attitude.

Next: Apple Has No Expertise in Batteries

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Lee Dronick

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.

Then why are more and more people buying them?

John C. Welch

The fact people don’t like what he’s saying doesn’t detract from his legitimate points. The comparisons to the comments from Palm are silly for a number of reasons, the biggest being that the difference between a cell phone and a laptop are, when you look at it, minor. Conceptually, and in terms of upgradeability and the rest, there’s a micron’s worth of difference between them.

A car is a different beast. He’s right when he points out that the auto industry margins suck. As well, the infrastructure costs of making a car stay pretty much constant. You can’t make 1500lbs of steel magically drop in cost, nor can you suddenly come up with a way of shaping that steel that costs a tenth of what the old ways did.

He’s also not wrong about electric cars. Tesla has, in its entire existence had one profitable quarter, and if you live outside of a few blessed areas, there’s zero infrastructure for the things. Look at the supercharger map at there’s a lot of massive holes in that thing. The profitability thing will change eventually, but right now, electric cars are not going to work for large swaths of the country. (and yes, people in Nebraska do in fact count.)

He goes off base in a few ways, the battery argument is an example, and apple has a lot of experience with metals and shaping that almost no other computer company (IBM would be the only current exception I can think of here) has.

The regulatory environment for cars is also verrrry different than what Apple is used to, and that can be surprisingly painful. Auto recalls involve numbers that are orders of magnitude above what computer recalls involve. Also, an error in the hardware/software of your phone, desktop, or laptop is probably not going to kill you. Errors in automobiles tend to cause bright fiery death. Apple has yet to build a product that can trivially kill people. That’s a different world.

None of this is to say they cannot do well in this market, but dismissing Lutz’s points is kind of dumb.

Lee Dronick

This guy has a vested interest in trash talking an Apple Car.




In mobile devices, Apple has led the way in power management. By controlling the software and the hardware, Apple is able to micromanage power consumption in a way that no competitor can touch. In this way, Apple is precisely an expert in batteries, or rather battery management, and this is absolutely something the company can bring to bear on an electric car.

Bryan, I think you just nailed it. What’s people’s biggest hesitation regarding electric cars? Range anxiety. So what’s the “killer app” of electric cars? One that eliminates range anxiety.

If Apple can somehow greatly extend the range their car can travel on a single charge, they will have solved the range anxiety problem and in an instant made their electric car more desirable than any other. That would also help alleviate problems with the lack of charging stations currently in existence.


Completely agree with Mr. Lutz.  The first thing done is to discredit a guy who’s been very successful in the biz for decades??
Nice. We’re not talking TOYS like phones here. You guys here in Jonestown can continue drinking the Kool Aid.  What has there been- 30+ auto start-ups that failed before Tesla?.... and even Tesla isn’t making a profit yet. Apple can’t take that heat and I don’t know many stockholders that will allow Apple to suck all the gains away over night to fund a very iffy venture. Still, Samsung and Renault have a successful car venture and if Apple were to join BMW in a project (rumor has it) then maybe that could work but as a stand-alone new car from ground up? Nope.


Margins: I was speaking to a dealer rep at Ford while looking at a new Mustang. (not to buy-just looking) Got to talking about the old days of undercoating (I’m from New England but in SoCal for 37 years) and other dealer installed stuff and he said well that’s the only way we could make money on a new car sale - by adding high profit margin add-ons like radios,AC, undercoating etc. but not so much nowadays.
He said they’d be lucky on this new Mustang if they cleared $900 on it. Then he pointed me to the used car lot and said: This is where we make money. Apple loves margins. I can’t see Apple messing with the Whole Widget in that case.

Lee Dronick

GM, like IBM before the PC Revolution, is running on momentum and that will only carry you so far before being overtaken by someone with a better design.


Yep. To me it seems no one has broached the POLITICS of this car or any new car technology that isn’t 100 year old pushrod-via-explosion-of-Big Oil product - kind of thing. Even the PC version of ancient ICE tech i.e. the diesel just virtually insured the death of diesel cars in this country because of the facts behind the cheat - see Motor Authority. But as you see GM improved the Volt very much and I dare say it LOOKS reasonable and since 9 out of 10 people don’t drive more than the electric range - I don’t know - 60 or so miles before the kicker Atkinson cycle motor kicks in….. And then the Bolt (horrible name) all electric for $30k with the 200 mile range is dropping soon; unlike my beloved but virtually dead (‘cept that Hellcat!!!!) Chrysler that has ZERO electric or hybrid cars (save FIAT 500e sold only in CA as compliance car), I hate to say GM has been angling for the future for quite some years now. Too bad about the cover-up - stupid humans again cost them billions for what?
  Tesla stock to me was a no brainer even though I thought I bought late at $25 but I’ll tell ya, if I hadn’t got a test drive in the Roadster 2.0 I NEVER would’ve been jacked on Tesla. So now their stock is high, but Apple is the opposite - APPL is ALREADY high - very high considering when China burped a couple weeks ago APPL fell like a rock it seems like iOS device new-markets and speculation are behind APPL more than kicking out a profit stream every year with a new iOS rig update. SO, now Apple invests billions in a factory, R & D, sourcing, sub-contracting, testing, legal on and on - to bring WHAT to the table? I will SELL my APPL if I get an inkling Apple would go into cars ground up. It’s not like Tesla at all - and Tesla is winning; Apple and APPL has nowhere to go but down in the car biz imo. Too many variables Apple has no control or expertise in imo. Re: Design - I miss the days you could tell a DeSoto from an Olds from a Plymouth from a Rambler from a Pontiac - all had distinctive brand looks that would change yearly yet be identifiable unlike today’s loaf of bread shapes with fugly headlight & tail light assemblies whoopeee we have LEDs now! Of course none of the brands I mentioned exist anymore but at least they weren’t cookie cutter cars. Sorry about the long Old Fart rant.

Lee Dronick

We need to understand that we are discussing something that has not yet, if ever, announced by Apple. I mentioned this because currently I am watching the movie 3 Worlds of Gulliver on Turner Classic Movies; in it two countries went to war over which end to open an egg.

I am optimistic about Apple and an Apple Car, but realistic enough to know that they could cancel the program, if it even exists. That being said it seems to me that Apple looks farther ahead than many businesses and maybe they think that Macs, iDevices, and such may not be such a moneymaker in the future.

Could Apple use their overseas money to build auto, or components, offshore and in effect launder it by importing the stuff?

Yes I too I miss the days when automobile models were very distinctive. These days it Imam thinking that they all buy the same wind tunnel studies. A few weeks ago I saw pink ‘59 Cadillac Convertible. If Apple does create an auto I hope that it looks like a Stutz Bearcat, Duesnberg or something from the ‘30s.


My wish for Apple would be revolutionary, not evolutionary - that’s why I’m so pissy about iDevices.
If Apple designed a lightweight aluminum or carbon chassis that contained an electric drive-train that could be modular-like updated as batteries and motors change; WITH an Apple designed Car OS - “OsCar” V.1 that also has updateable sensors and modules - all voice command (with redundant physical back-up) and very autonomous, and then say that chassis could be had with a BOATLOAD of external body styles that are anything from bespoke to off the shelf 3-D Apple printable files; you place your order and Apple prints you car panels, attaches them and Boom you got an OsCar or Dusen-Mac. That’s an Apple car and concept (3D printing of swap-able bodies) that I would like to see.

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