GM exec calls Apple Car a ‘gigantic money pit’

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I like to think this is how Tim Cook starts his day.
Photo: Walt Disney Television Animation

Industry insiders are absolutely positive that Apple has no business entering the smartphone smartwatch car industry — with former GM Vice Chairman Bob Lutz telling CNBC that an Apple Car has the potential to be a, “gigantic money pit.”

Yep, we agree Lutz — an autonomous Apple Car has the potential to make loads of money for Apple.

Oh wait, you mean the bad kind of money pit?

“Apple has no experience,” Lutz said. “There’s no reason to assume Apple will do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai.”

The reason Lutz thinks Apple is going to struggle is due to the fact that the automotive industry is a low-margin business, compared to the markets Apple currently operates in.

“You can’t show me one company in the world that, to date, has made one nickel from electric cars,” he continued. “They are generally money-losers … There is absolutely no reason to assume that Apple is going to be financially successful in the electric car business.”

Lutz’s opinion might be reminiscent of the same comments suggesting that Apple could never build a good smartphone, but it’s far from a marginal view in the car industry.

Speaking at last week’s Frankfurt International Motor Show, Dieter Zetsche, chief executive of Daimler — the company which builds Mercedes vehicles — said that he had no plans for his company to “become the Foxconn of Apple” by helping Apple make vehicles.

Former GM CEO Dan Akerson has also said that, “If I were an Apple shareholder, I wouldn’t be very happy [at the prospect of an Apple Car.] I would be highly suspect of the long-term prospect of getting into a low-margin, heavy-manufacturing.”

On the more positive money pit front, Piper Jaffray analyst Gene Munster has claimed that even a “moderate success” for the Apple Car could add an extra $50 billion per year in Apple revenues — or 23 percent on top of what the company currently makes per year.

Source: Yahoo