Is Apple biting off more than it can chew when it comes to manufacturing its own car? Dan Akerson, a retired CEO of General Motors, certainly seems to think so.
Bloomberg has an interview with Akerson in which he says that Apple is simply out of its depth when it comes to car manufacturing, which is a much more involved process than anyone in Silicon Valley imagines. In fact, he even goes so far as to say building cars wouldn’t be worth Apple’s time since it’s so hard to post consistently high profit margins in the auto industry.
“I think somebody is kind of trying to cough up a hairball here,” Akerson told Bloomberg. “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.”
It would be easy to write off Akerson’s statement as yet another worried rival trying to scare Apple away from disrupting another industry, but he actually makes a fair point. Jean-Louis Gassée of The Monday Note has a sharp take on why manufacturing a car really might not be in Apple’s best economic interest.
“Yes, Apple has plenty of money, but the century-old auto industry doesn’t seem like a good way to make more of it,” he wrote earlier this week. “Ford, the healthiest US car company, made $835M in net income last quarter, less than 4% of their $34B in sales. Compare that number to Apple’s record-breaking $18B profit. Tesla, Apple’s supposed rival in the fantasy blogs, pulled in a little less than $1B last quarter, and it lost about 10% of that. There isn’t an inkling of an explanation for why and how a superior product designed and built by Apple would bring superior returns.”