Bob Lutz, the famously outspoken former executive of GM, Chrysler, Ford and BMW, has told interviewers that Apple will likely burn through large piles of cash if it enters the automobile industry.
In an interview with cable business channel CNBC, Lutz was asked if Apple was wise to enter the car business.
“No, I don’t think so. If I were a shareholder I’d be very upset because they currently engaged in a very high margin business,” Lutz replied.
“The automobile business at best is a very low margin business, and you can’t show me one company in the world that to date has made a nickel on electric cars.”
Lutz later noted that the EV market is still “minuscule”, and that only large sustainable of source of revenue for Tesla is selling electric vehicle credits to other manufacturers.
In the former executive’s opinion, any Apple-branded car will be “a gigantic money pit”, although given that the company is sitting on massive cash reserves, even “if they burn 30 or 40 billion dollars in the car business, nobody is going to notice”.
At the end of 2014, Apple was reportedly sitting on US$178 billion ($255 billion) of cash.
There’s been much speculation as to whether Apple will use the same contract manufacturing scheme that they current employ for their popular smartphone and tablet ranges.
While Lutz believes it’s entirely feasible for just such a setup to occur, he isn’t sure how adding the company’s “software and their interconnectivity” into the mix will move the game on.
He holds this is sharp contrast to Google’s stated aim of being a “supplier of all the equipment to enable total car connectivity, and [the provider of] the software and hardware for autonomous cars”.
Lutz also stated that “when it actually comes to making cars, there’s no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota or Hyundai“.
You can watch the entire interview here.
A report earlier this week claimed that Apple had set an internal “ship date” target of 2019 for its first electric vehicle.
It should be noted that the ship date doesn’t necessarily equate to an on-sale date, and it’s possible that like other products that Apple has investigated in recent times, such as televisions, it may decide to not to go ahead with production even expending large amounts of R&D effort.