No One Has Ever Made Money On Electric Cars, A Former GM Executive Tells Apple Inc. (NASDAQ:AAPL)

Bob Lutz, a former vice chairman of General Motors Company (NYSE:GM), has advice for Apple Inc. (NASDAQ:AAPL) – keep off the car business because you will fail. Although Apple has not officially announced its car business ambitions, rumors have it that the company could launch an electric car in either 2019 or 2020. However, like with the iPhone when industry experts predicted doom, Apple’s car business is already attracting negative comments from familiar sources.

It seems to Lutz as though Apple is making a dangerous bet in trying to dip its foot in the car production business. According to Lutz, no one has made money from selling electric cars, and Apple won’t do it either. Tesla Motors Inc (NASDAQ:TSLA) is still struggling to squeeze profits from its electric car business.

Giant money pit

Lutz believes that traditional automakers, such as GM, Ford Motor Company (NYSE:F), Toyota Motor Corp (ADR) (NYSE:TM) and others are already doing a great job that Apple won’t be able to match were it to enter the scene. In no uncertain terms, Lutz said that Apple’s car project will be a huge money pit.

Apple has no idea where to put its wealth

It seems to Lutz as though Apple Inc. (NASDAQ:AAPL) is having a problem where to put its huge cash stockpile, which is why the company is trying to toy with risky ventures. If he were an Apple board member, Lutz said he would dissuade Apple against the idea of going into the electric car business.

Nevertheless, Lutz believes that Apple could still take the less risky approach in the auto industry by partnering with incumbents. In particular, Lutz said that Apple could collaborate with Kia or Hyundai in a vehicle production project. Such an approach could save Apple, given that it lacks experience in the auto industry.

Apple is used to cynicism

However, Apple Inc. (NASDAQ:AAPL) is not new to cynicism and Lutz is not the only expert to predict failure for the company. If history is anything, Apple has always proven its critics wrong. A few months before the launch of iPhone, Ed Colligan of Palm Inc declared that Apple’s PC heritage wouldn’t allow it to see success in the smartphone market. Today, Apple is the most profitable smartphone vendor and has diminished the market share of incumbents in the industry.

With critics coming up to predict Apple Inc. (NASDAQ:AAPL)’s failure, perhaps Tim Cook may just feel more elated to push ahead with Project Titan to once again prove them wrong.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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