Former General Motors CEO Dan Akerson shared a few constructive words of caution for Apple the other day, in response to the revelation that the Silicon Valley tech company is developing its own car, code-named “Titan.”
The Detroit News interviewed the retired executive, whose primary concern is with a high-margin company like Apple perhaps rashly tossing its hat into the ring of a low-margin heavy industry like automobiles. “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, he told the newspaper.
Apple’s contribution to the automotive industry, he says, ought to be restricted to something more up their own alley: developing infotainment operating systems and electronics for cars. “Look at the margins of an iPhone versus a car,” said Akerson. “I’d rather have the margins associated with the phone.” Case-in-point: The Detroit News reports that in Q4 of last year, Apple posted a gross margin of 39.9 percent. GM’s gross margin was around 14 percent.
“[Apple had] better think carefully if they want to get into the hardcore manufacturing,” Mr. Akerson said. “We take steel – raw steel – and turn it into car. They have no idea what they’re getting into if they get into that.”