Ex-GM CEO Says Apple Would Be Crazy To Make Cars

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I have to agree with this guy. I honestly can't see Apple getting into a market where margins are so low and the competition is so high.

“I think somebody is kind of trying to cough up a hairball here,” Akerson said in a telephone interview. “If I were an Apple shareholder, I wouldn’t be very happy. I would be highly suspect of the long-term prospect of getting into a low-margin, heavy-manufacturing” business.
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With $90 Billion in cash. Why not? It's called a proof of concept then license the software to companies like GM.
 
key difference: low margin

Pay a kid to live on campus a few dollars a day vs 10-60$/hr for american labor. Then automate alot of the production where cheap labor cannot be utilized = profit.

Also make it a white car for white people and they will buy it.
 
I'm sure Apple is just going to build an in-car entertainment system to sell on to car manufacturers. There is no way they'd ever manage to get the type of profit margin they want on automobiles, not even Ferrari and Lamborghini have that.
 
Quix said:
I'm sure Apple is just going to build an in-car entertainment system to sell on to car manufacturers. There is no way they'd ever manage to get the type of profit margin they want on automobiles, not even Ferrari and Lamborghini have that.
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Yup, they are going to make cool dashboards for cars that connect to all their services.
 
Never underestimate the hipster wannabe sheeple. If that fails, just deck it out in enough gold and diamonds to even make Liberachie blush and every monarch in the middle east will line up to buy one.
 
Spire3660 said:
If i was a shareholder, would i listen to the company with a 700 billion dollar valuation or an ex employee of a failed automaker? Tough choice....
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This.

Its amazing so many people hate on Apple, yet they're one of the most profitable companies in the WORLD.

That is why I love the patent threads.
 
Right now as an original Apple stockholder I'm ecstatic about Apple's value. It is on an upward slope to become the worlds first trillion dollar company. This guy is a fool and as an ex-GM'er is a testament to why the auto industry is a sheisty business and always has been. Competition is good you fool. Tesla, Apple, any number of kit car makers. This is a good thing called choice.
 
I look forward to the day that I cannot change the oil or replace the battery myself on my Apple car. God forbid the alternator goes out, or the windshield gets cracked by an errant rock coming off a truck. That car will be so sealed shut that a trade-in will be required.

:p
 
wgm3446 said:
Sorry last report: $178 Billion in cash.
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I don't know. For $1B for the plant alone, labor, etc, I think that could shrink very quickly.

Hell, for a small tablet (MS' Surface) they had to take a $900M write down last year in a quarter alone. To build out the in-house expertise, both manufacturing and otherwise...

Not that I'm not interested to see what they could come up with. Would be nice for "American engineering" to surpass the German automakers, although I'm not sure if I will like the things Apple focuses on in a car vs what they do.
 
"If I were an Apple shareholder, I wouldn’t be very happy."
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I would have to agree with GM's CEO. Most automobiles sold in the US have a ~20% markup over the material and manufacturing costs. Unless they purchased a preexisting company with the equipment, facility and engineering to make vehicles, the investment to become a "new" competitive automobile manufacturer is just too significant to compete. Tesla is still struggling...
 
I detest Apple but even I think this guy is wrong. Didn't people also say that Apple was crazy to get into the phone market? Never count Apple out as they always have found a way to innovate.

Like Methadras said: This guy is a fool and as an ex-GM'er is a testament to why the auto industry is a sheisty business and always has been.

Maybe Apple will fail at the car manufacturing business if it did it the same way everyone else did. But even as an Apple hater, I have to admit, Apple finds ways to do things that are anything but "what everyone else does".
 
Bah, the GM stock chart was supposed to be 10 year like the Apple stock chart, but none of the charts go back further than 5 years due to the bankruptcy.
 
Premium Marketing, Apple has it.

People pay premium prices for Apple products because they consider them premium. Even with the change in marketing firm Apple has gone through, the lack of innovative products beyond refining what they have already sales are still climbing.

If Apple can successfully transfer this premium marketing to cars (or anything they want really), they have huge cash reserves, enormous negotiating power to squeeze suppliers, and room for higher margins thanks to their marketing.

I could absolutely see Apple designing and seeking cars.
 
Right, but just because I make premium cell phones and/or computers doesn't mean people will trust that premium for a car.

And as for suppliers, starting out so small for automotive supplies, they're aren't going to be able to weild the same amount of power over that supply chain like they do for computer equipment.
 
OEM said:
This.

Its amazing so many people hate on Apple, yet they're one of the most profitable companies in the WORLD.

That is why I love the patent threads.
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You do realize they are profitable for doing things trying to patent basic shapes, colors, and other bullshit like that.

I give credit where credit is due, in 2007 they did change the entire game with smartphones. It was the right place and time and in the proper shiny box that everyone loves. However they didn't invent the idea.

I get a huge chuckle when I see a feature that's been around on android/samsung devices for a few years, yet when apple rolls out with something similar, the fanboys think it HAD to be apple that invented it.

I have no problem with them ripping ideas and then using child labor on the other side of the world to make their products... just be honest about it. They aren't any different than any other sneaky mega-corp.
 
It would be up to the marketing department to transfer the "idea" of being a Premium product from computers to premium product for cars. This is squarely on the marketing's shoulders. Sell the premium image properly, people will buy.

Dangling the carrot of huge cash reserves will help convince new suppliers you are serious very quickly. Getting paid does that. Along with hiring experienced negotiators in the auto industry. Which again you can pay top dollar to acquire as a cost of opening a new market.
 
Apple does have significant experience in driving labor wages so low that they end up as a negative number (bonded servitude), so they might be able to build a cheaper car too. (cheaper to make anyway, I'm sure it will have the same Apple-tax as the rest of their products)
 
CaptNumbNutz said:
I look forward to the day that I cannot change the oil or replace the battery myself on my Apple car. God forbid the alternator goes out, or the windshield gets cracked by an errant rock coming off a truck. That car will be so sealed shut that a trade-in will be required.

:p
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Well, they're going to be electric cars, so no, you won't be able to change the oil or replace the alternator.
 
Tim Cook just wants to know what it feels like to generate a 1 billion dollar loss every quarter like Wagoner did for GM back in 2008-2009.
 
If they teamed up with tesla and used some of their designs, concepts, and tesla battery technology... and if they supported tesla by injecting huge sums of capital... i can see the concept actually paying off big time.
 
collegeboy69us said:
They aren't any different than any other sneaky mega-corp.
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Except they're making billions. So, yeah, they are different. They're profitable.

And at the end of the day, in business that is all that matters. Not ethics, moral, feelings, or any other bullshit.

If a business doesn't play by these rules, they die.
 
OEM said:
This.

Its amazing so many people hate on Apple, yet they're one of the most profitable companies in the WORLD.

That is why I love the patent threads.
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Many banks and oil companies are among the most profitable companies in the world as well, doesn't mean they are saints and beyond citicism
 
The only reason why apple had so much money is they sell cheap crap for expensive prices and market the hell out of it to make people think there getting quality stuff.

Most Imacs and Macbooks and even then iphones only cost for the Imac and macbooks around 500 to make them and then sell them for 4 to 5 grand. The iphones only cost 178.00 to make and cost upwards of 700 each.
 
Ockie said:
If they teamed up with tesla and used some of their designs, concepts, and tesla battery technology... and if they supported tesla by injecting huge sums of capital... i can see the concept actually paying off big time.
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Tesla and Apple would be a match made in heaven... for Apple. They're both "my way or the highway" types, and I can't see Elon Musk caving in to Tim Cook.

Now if Apple wanted to buy Tesla outright, give Mr. Musk a board position, and support SpaceX through the proceeds? Additional billions would do wonders in getting us into space.
 
Parja said:
Well, they're going to be electric cars, so no, you won't be able to change the oil or replace the alternator.
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Funny enough I've been reading up on the BMW i8 -- and things really are going that direction.

In a tech demo at a dealership - it quite literally requires 2, yes TWO people to open the hood. Through a series of pull latches and moving the hood vertical then tilting it outwards. Quoted multiple times the BMW guy says "there's absolutely zero reason the customer needs to be under the hood". Funny enough he was giving tips on how to treat the hood once opened, how the hood will warp itself after sitting in the open position for too long.

Sorry - but if I'm paying 100K, I'll be anywhere I damn well please on any car.

If BMW is already starting it - imagine where apple will try and run to with this concept.

Here's a fun thing I found on reddit -- guy buys a used Prius, a few miles after getting it the battery system takes a total shit, toyota wants $5k to fix it. He fixed it himself for $10 dollars and some elbow grease. http://imgur.com/gallery/j8Bcp/

Imagine buying an apple car where the batteries are sealed, locked, whatever, something goes wrong electrical wise? You must have been driving it wrong, buy a new car.
 
I don't necessarily think it is smart of them to get into the whole car aspect of the market, but I do think it is smart for them to R&D their own car. Then they can choose the most profitable path to take and market that. They have the money to do it, so they should, especially with cars becoming more computerized and electric. There are so many components where they could apply their money/knowledge. And doing R&D for the whole car can be a lot more surefire than just doing R&D for a certain aspect, where you aren't taking it in context.
 
Being apple you can pick any color so long as its white. Not gonna hate on that.

I am sure it will be very over priced. But people will buy it. Question would they still put the apple sticker on the back window if it already has it as a hood ornament?

Now speaking of Tesla, arent they having an issue with dealers associations seeking govt intervention to prevent them from making sales since they are not using the standard dealership model? Does this mean we could buy cars at BestBuy now? Serviced by the geek squad?

I think what the ex-CEO of GM was trying to say, is good luck entering in the competition. Especially when the old boys (GM, Ford, Chrystler) put the squeeze on through local govt.
 
Kitebasher said:
I don't necessarily think it is smart of them to get into the whole car aspect of the market, but I do think it is smart for them to R&D their own car. Then they can choose the most profitable path to take and market that. They have the money to do it, so they should, especially with cars becoming more computerized and electric. There are so many components where they could apply their money/knowledge. And doing R&D for the whole car can be a lot more surefire than just doing R&D for a certain aspect, where you aren't taking it in context.
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You bring up a good point and an interesting path. If they could partner with an existing auto manufacturer at first, similar to what they did with AT&T in a way, they could offset risk and simply manage the partner to spec. After X year exclusivity, Apple can then seek out other interested parties.

May actually be a pretty viable way to go about it; they could even bring manufacturing in-house after the exclusivity period depending on how well the experiment goes.
 
Spire3660 said:
If i was a shareholder, would i listen to the company with a 700 billion dollar valuation or an ex employee of a failed automaker? Tough choice....
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Except in this case you aren't listening to the company, you are listening to rumor mongers looking for page hits.

Apple is NOT building a car.
 
I do believe Apple could buy Telsa and make their own proprietary locked down electric car to sell to rich egotistical pricks. That would be right in line for them. I'm not sure they could get enough Chinese child laborers for the assembly lines though?
 
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