Former GM CEO on Apple Car: 'They Have No Idea What They're Getting Into'

[B4U]

Yes, he's good at washing his hands... Very good. When did he know about the ignition problem that killed who knows how many (we'll probably never be sure)? Why was the recall done so late? Certainly after 2010 when he got there.

Also, GM is so peachy now that he feels he should comment now; so, I guess since he should give back the extra 10B back the government hasn't seen from the bailout.

Anyone from GM, of all companies should be keeping their mouth shut; If someone from Volkswagen had said something, maybe I'd respect it.

Being from Motown myself, I certainly see the picture differently than most of the folks outside of it.
Let them go bankrupt. And guess what? Michigan will simply turn out the lights. And you are gonna feed us here.

The recall has nothing to do with this news article.
The 10b simply went to keep not only GM & Chrysler, but all the other suppliers around here alive.

Lastly, I am not defending GM. I am one of the people that hate what GM does even I am in Motown.

 

[HKZ/MST3K]

You mean just like the cellphone market was before the iPhone (and, for the most part *still is* except for the iPhone)?

Well when you use what amounts to slave labor you can maintain high margins. They don't make such profit because they are 30% better than the competition, they do it by using dirt cheap labor and by making sure the ones in this country don't get the opportunity to make more by using non-compete agreements. Apple makes profits because they make sure to spend the least amount of expensive labor as possible, not because no one else knew how to make money before they came along.

----------

Audi has been building all aluminum vehicles as part of their lineup for over 15 years..

Audi doesn't build an vehicle that's all aluminum that's comparable to an F-150 though.

 

[Zellio]

You mean just like the cellphone market was before the iPhone (and, for the most part *still is* except for the iPhone)?

I don't think I've heard this stupid argument enough times, please keep repeating it.

And the cell phone market was *NEVER*, and still isn't low margin. Game consoles like the Playstation Vita are low margin, in fact are sold at a loss. Cell phones are made at around the same price as the Vita and then sold for $400 more.

 

[Keirasplace]

Being from Motown myself, I certainly see the picture differently than most of the folks outside of it.
Let them go bankrupt. And guess what? Michigan will simply turn out the lights. And you are gonna feed us here.

The recall has nothing to do with this news article.
The 10b simply went to keep not only GM & Chrysler, but all the other suppliers around here alive.

Lastly, I am not defending GM. I am one of the people that hate what GM does even I am in Motown.

I don't think they should have gone bankrupt either. I'm just saying that when you've got a pole in your eyes, you don't point at the spec of dust in some other guy's eye .

The lack of recall until very late though is inexcusable, yet he's been there as the debacle dragged on. Happened before him, yet he wasn't part the solution when he came on.

 

[McGiord]

Well more rumors based on certain facts: Apple indeed has job openings looking for engineers with typical automotive background.
We'll see how all this pans out.

 

[B4U]

I don't think they should have gone bankrupt either. I'm just saying that when you've got a pole in your eyes, you don't point at the spec of dust in some other guy's eye .

The lack of recall until very late though is inexcusable, yet he's been there as the debacle dragged on. Happened before him, yet he wasn't part the solution when he came on.

Again, the recall is relevant to Dan saying something about Apple building cars?
The ignition issue had never reached to the decision makers until 2014. I have read the entire report submitted to NHTSA except the crossed out names.
GM had gone through Rick Wagoner, Fritz Henderson, Ed Whitacre, and then Dan Akerson during this whole time. How is this only Dan's issue?

 

[Keirasplace]

Again, the recall is relevant to Dan saying something about Apple building cars?
The ignition issue had never reached to the decision makers until 2014. I have read the entire report submitted to NHTSA except the crossed out names.
GM had gone through Rick Wagoner, Fritz Henderson, Ed Whitacre, and then Dan Akerson during this whole time. How is this only Dan's issue?

The climate of total disregard for quality and ethics that led to "not reaching decision makers", also called plausible deniability in most hand washing, hand wringing circles... Is mighty convenient. Knowledge about the issue in the company goes back a decade!

They're going to go through hell in court for all they didn't do and should have done. There are possible many dozens of death related to this.

http://www.claimsjournal.com/news/national/2015/02/06/261429.htm

It is only started and many more things will undoubtedly come out.
GM should probably had settle, even if it cost them 1B dollars.

 

[The Captain]

I love how every thread around here about the state of Apple's professional products, products they had been making, it gets overrun with people saying apple shouldn't even care about the pro market because it's too small and there is not enough margins to care about. Yet when rumor comes of Apple making a very niche car a very complicated device they have never made, that would have to have even lower margins it's all this is the greatest move ever talk.

 

[Keirasplace]

I love how every thread around here about the state of Apple's professional products, products they had been making, it gets overrun with people saying apple shouldn't even care about the pro market because it's too small and there is not enough margins to care about. Yet when rumor comes of Apple making a very niche car a very complicated device they have never made, that would have to have even lower margins it's all this is the greatest move ever talk.

Margins are lower, 13%, market is immensely bigger even for a so called niche car. A niche car in this case make give 10B in revenues and 2B in profits. See, no contradiction.

 

[The Captain]

Margins are lower, 13%, market is immensely bigger even for a so called niche car. A niche car in this case make give 10B in revenues and 2B in profits. See, no contradiction.

I honestly think everyone is highly overestimating how many people would buy an Apple car. Double at the price point that is getting rumored too.

Edit: And Tesla is sell what, around 14,000 every nine months or so? If that is representative of that market there are way more "pros" wanting to use high end Mac software.

 

[Keirasplace]

I honestly think everyone is highly overestimating how many people would buy an Apple car. Double at the price point that is getting rumored too.

How is this overestimating. 10B in revenues is 200K cars at 50K; pretty small volume for a car maker. Certainly not shooting for the stars.

If Apple gets 20% profit, going into cars would be a very profitable experience.

 

[AppleScruff1]

Margins are lower, 13%, market is immensely bigger even for a so called niche car. A niche car in this case make give 10B in revenues and 2B in profits. See, no contradiction.

More numbers pulled out of thin air.

 

[The Captain]

How is this overestimating. 10B in revenues is 200K cars at 50K; pretty small volume for a car maker. Certainly not shooting for the stars.

If Apple gets 20% profit, going into cars would be a very profitable experience.

Where is this 200k cars coming from? I don't think there are nearly that many people who are willing to spend 50k (at the low end I think) for a car that would also choose a "brand" over the actual functionality of the car. Tesla has it, but they weren't a brand associated with other products first. They where all "car snob" from the beginning (which is fine). And i just can't imagine Apple making a car (likely a 4 door sedan) that beats the Mercedes, Audie's, Lexus's, ect in functionality around 50k. Sorry, I just don't see that many people that could afford it and would choose and "icar" over a Jaguar XF for instance.

 

[H2SO4]

My same thought. Exactly the same things that were said about the iPhone. These people have been so entrenched in their own way of thinking for so long that it's almost incomprehensible that someone from outside of the industry could do the same thing and do it better.

Some of the comments here are crazy at best.
Of course it’s possible somebody outside of the industry might do well, he’s not saying they can’t ever do that.
The guy is correct, they have no idea what they are getting into.

The iPhone is an iPod with baseband chip on it. The iCar will not be Mac Pro or any other product Apple make with some wheels attached. People laud Apple for how good their production is and the technology behind their processes. It’s like you people think that body panels are cut by hand with a hacksaw and stapled together.
I’ve been in some of these factories, the sheer amount of resource and number of different materials and different processes in use to reach a finished article is mind blowing.
The test regimes the vehicles go through is so far removed from what a piece of consumer electronics has to go through that it just isn’t within the bounds of comprehension for some on here it would seem. A large auto company has to go through a lot of the same tests that Apple would for wireless technologies and so many other things but I’m not sure the opposite applies.
That doesn’t take into account how the industry works, how the different parts of the industry come together and loads of other things.

They might be able to make a go of it, and a good one at that but as it stands, right now, they have no idea what they are getting into.

 

[gnasher729]

Then please explain what those experts from Mercedes, who have nothing to do with infotainment, are doing at Apple now?

My guess would be that instead of deciding to build a car, Apple decided to invest into finding out whether going into the car business is feasible. There is potentially big money to be made (or to be lost if you mess it up). Apple can afford to spend a few ten million to hire the best to find out if they can make it or not.

 

[s2mikey]

Being from Motown myself, I certainly see the picture differently than most of the folks outside of it.
Let them go bankrupt. And guess what? Michigan will simply turn out the lights. And you are gonna feed us here.

The recall has nothing to do with this news article.
The 10b simply went to keep not only GM & Chrysler, but all the other suppliers around here alive.

Lastly, I am not defending GM. I am one of the people that hate what GM does even I am in Motown.

No, let them go bankrupt and the markets will "correct" and the other mfgers will pick up the slack and things will get sorted out. Propping up failed businesses is absurd and the whole bailout was just a ploy to cater to the UAW and such. Shareholders got screwed, the taxpayers gor screwed, only the coddled workforce made out like bandits.

By now, sales of cars made by other companies would have covered the GM loss and all of those small suppliers would simply be making parts for the other cars since car sales volumes would have increased and the extra parts would be needed.

It's called free markets. Geesh.

 

[G-Force]

That's another matter and at least viable feedback to the comment. Claiming his comments are the same as Ballmer's shows a lack of reading comprehension to those making the claim.

But then again - many of these people are also posting that same comment pages into a thread where it's been said before. So clearly reading comprehension (or impulse control) is an issue.

I did not say the former CEO feels threatened, the industry as a whole feels a threat coming. Apple has entered several new markets over the past years and has succeeded. They (car manufacturers) SHOULD feel a threat. Also, I said "PRETTY MUCH", Ballmer kinda suggested the same. The iPhone would be to expensive, it would not survive. And a phone without a keyboard? IMPOSSIBLE... This person does pretty much the same, suggesting Apple should not even consider entering the car market where margins are low. Guess what, Apple might change that... Also he kinda laughs it away, just like Ballmer did, suggesting Apple would not be able to "hardcore manufacture" a car. I did not say he said exactly the same thing as Ballmer, that's what you make of it... Talk about lack of reading comprehension.

 

[Keirasplace]

Where is this 200k cars coming from? I don't think there are nearly that many people who are willing to spend 50k (at the low end I think) for a car that would also choose a "brand" over the actual functionality of the car. Tesla has it, but they weren't a brand associated with other products first. They where all "car snob" from the beginning (which is fine). And i just can't imagine Apple making a car (likely a 4 door sedan) that beats the Mercedes, Audie's, Lexus's, ect in functionality around 50k. Sorry, I just don't see that many people that could afford it and would choose and "icar" over a Jaguar XF for instance.

Well, Musk didn't know crap about cars or even manufacturing until he started, and even though he's rich, he's not even close to having the kind money they have to develop this. He ran into financial issues. Its not even in the same ballpark. So, they could side step a lot of his difficulties by poaching top level engineers left and right and buying companies with lots of IP.

Very few make electric cars. The key to them is battery tech. It is a brand new field were incumbent don't have a major advantage on up and comers with money. In that, it looks a lot like the smart phone industry in 2006.

BTW, Apple also could even easily buy controlling interest in BMV and still have more than 130B cash to play with.

As for the 10B. Its coming from my own what if numbers. If you do 10B in revenues your in the top 30 car makers in the world right now. Most top 30 makers right now are profitable. They don't have to shoot for the moon to make a good profit. IF the average price per car is 40K (a bit less than the average selling price of a Lexus) that's 250K cars. (that's about 60% of the numbers Volvo ship).

If you look at most high end makers I listed, their low end cars are usually in the 35-40K range. 35-40K is usually the high end price of the normal car range too (say the Nissan's Maxima). That's the crossover point it seems.

Selling cars direct (bypassing dealers) and adding electronic flourishes, Apple could boost the usual net margins. We got(10-13% high end margins) + (half the normal dealer margin (3-4%)) + (whatever markeup for Apple's specific tech (say 5-8%)) = 18-25% as a potential net margin.

That's for normal cars. But, electric cars are simpler beasts from a manufacturing point of view (but not the R&D point of view), were battery cost accounts for a big chunk of the current cost. IF you controlled the battery tech and the electronics. You could significantly boost your margins. That's what Tesla is attempting; but battery development is risky and expensive. That's an area were Apple's financial clout would give it a big leg up.

The Apple "brand" car would have al the functionality of others cars, plus whatever Apple adds. Not sure why you think it would have less functionality than all other cars if it ever exists. The reason people trust a brand is because there are actual implied guarantee of some level of quality/service/experience/cachet behind it. They don't do it only for marketing reason (Apple spends less on marketing per revenues than its competition anyway).

 

[galrito]

General Motors CEO Dan Akerson: "They'd better think carefully if they want to get into the hard-core manufacturing. We take steel, raw steel, and turn it into a crappy car with major malfunctions that killed people. They have no idea what they're getting into if they get into that. Now that I think about it, we also don't know in what we got into, since we opened for business in 1908 and still don't know how to make a good car. Oh, and we are broke.

But we are an innovative company, I think we may be the only company that created a car with a tail lamp malfunction that disables cruise control and brake-assist system. Our cars have hundreds of innovations like this. We are not so bad."

 

[samcraig]

I did not say the former CEO feels threatened, the industry as a whole feels a threat coming. Apple has entered several new markets over the past years and has succeeded. They (car manufacturers) SHOULD feel a threat. Also, I said "PRETTY MUCH", Ballmer kinda suggested the same. The iPhone would be to expensive, it would not survive. And a phone without a keyboard? IMPOSSIBLE... This person does pretty much the same, suggesting Apple should not even consider entering the car market where margins are low. Guess what, Apple might change that... Also he kinda laughs it away, just like Ballmer did, suggesting Apple would not be able to "hardcore manufacture" a car. I did not say he said exactly the same thing as Ballmer, that's what you make of it... Talk about lack of reading comprehension.

Excellent backpeddling. In a thread about an article about one person commenting, you stated they feel threatened. So again - who is they? The industry? How can you make that statement based on one comment from one former CEO. Context is everything. You provided none.

"Pretty much" is splitting hairs. You see what you want to see in his comments. And like others in his thread immediately liken him to an irrelevant analogy.

Nice job though!

 

[G-Force]

Thanks bro!

 

[TimelessOne]

I wonder how much it would cost to make a car if you got rid of the unions - i'm not saying create sweat shops but make the industry like every other non-union industry in the U.S. How much overhead do unions add?

Umm pretty much the same they cost now. You and others screaming unions are bought the gop lie that it killed them. Even in the "More expensive" Union shops that really are not more expensive the total cost of the labor is about the same which is 10%. So please stop screaming the same lies over and over again.

The reason the big 3 had issues was not the unions. They had a huge management issue.

 

[Dmunjal]

Umm pretty much the same they cost now. You and others screaming unions are bought the gop lie that it killed them. Even in the "More expensive" Union shops that really are not more expensive the total cost of the labor is about the same which is 10%. So please stop screaming the same lies over and over again.

The reason the big 3 had issues was not the unions. They had a huge management issue.

You're forgetting the enormous defined benefit pension and healthcare costs compared to non-union workers. It wasn't just the wages.

 

[TimelessOne]

You're forgetting the enormous defined benefit pension and healthcare costs compared to non-union workers. It wasn't just the wages.

Even factoring that in same answer. It was put in.
As for the pension cry me a river as it is safe to say that they were under funding them for years and when it came time to pay up OMG they do not have the money.

So yes it is the same lie that far to many bought hook line and sinker. Facts show otherwise but that is not going to get in the way of a good smoke screen.

 

[The Captain]

Well, Musk didn't know crap about cars or even manufacturing until he started, and even though he's rich, he's not even close to having the kind money they have to develop this. He ran into financial issues. Its not even in the same ballpark. So, they could side step a lot of his difficulties by poaching top level engineers left and right and buying companies with lots of IP.

Very few make electric cars. The key to them is battery tech. It is a brand new field were incumbent don't have a major advantage on up and comers with money. In that, it looks a lot like the smart phone industry in 2006.

BTW, Apple also could even easily buy controlling interest in BMV and still have more than 130B cash to play with.

As for the 10B. Its coming from my own what if numbers. If you do 10B in revenues your in the top 30 car makers in the world right now. Most top 30 makers right now are profitable. They don't have to shoot for the moon to make a good profit. IF the average price per car is 40K (a bit less than the average selling price of a Lexus) that's 250K cars. (that's about 60% of the numbers Volvo ship).

If you look at most high end makers I listed, their low end cars are usually in the 35-40K range. 35-40K is usually the high end price of the normal car range too (say the Nissan's Maxima). That's the crossover point it seems.

Selling cars direct (bypassing dealers) and adding electronic flourishes, Apple could boost the usual net margins. We got(10-13% high end margins) + (half the normal dealer margin (3-4%)) + (whatever markeup for Apple's specific tech (say 5-8%)) = 18-25% as a potential net margin.

That's for normal cars. But, electric cars are simpler beasts from a manufacturing point of view (but not the R&D point of view), were battery cost accounts for a big chunk of the current cost. IF you controlled the battery tech and the electronics. You could significantly boost your margins. That's what Tesla is attempting; but battery development is risky and expensive. That's an area were Apple's financial clout would give it a big leg up.

The Apple "brand" car would have al the functionality of others cars, plus whatever Apple adds. Not sure why you think it would have less functionality than all other cars if it ever exists. The reason people trust a brand is because there are actual implied guarantee of some level of quality/service/experience/cachet behind it. They don't do it only for marketing reason (Apple spends less on marketing per revenues than its competition anyway).

Your just taking the numbers that would make an Apple car a success for Apple, and then working the sales figures out from there and saying that's what they'll be. That's completely BACKWARDS. Your also changing the price point in every other post too (is it 50K?, 40k? or what ever is convent for the math at the time?).

The amount of stuff people don't know about cars on these threads is starting to make my head hurt. And I also said I wasn't going to debate religious zealots on the internet this week. So I'm out. None of this matters since after sleeping on this I've decided this is all pointless rabble. Apple is never making a car and we all go sucked in by overzealous press rumors. Are they working on a car related project, yea probably, but not a whole car. We got fooled. How much time did I waste talking about the Apple TV?