GM/LUTZ

(Reuters)

Bob Lutz’s Double Talk on Apple Car and Volkswagen Emissions Cheating

By Business Leaders FOXBusiness

I love it when executives tell it straight instead of hemming and hawing or diluting the truth with politically correct rhetoric. But there’s another class of leaders who have mastered the art of making their own self-serving spin and duplicitous motives sound like straight talk.

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In a TV interview on Monday, former auto industry exec Bob Lutz revealed that he’s the latter type, trashing Apple’s electric car initiative and then exhibiting herculean hubris in condemning Volkswagen’s emissions violations as criminal, as if he played no role in GM’s (GM) ignition switch scandal that claimed the lives of more than 100 people. 

During the interview, when asked if Apple (AAPL) is doing the right thing by getting into the auto business, Lutz said this:

“No, I don’t think so. If I were a shareholder I’d be very upset because they are currently engaged in a very high margin business. 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. They are generally money losers ...”

“When it comes to actually making cars there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagon, Toyota, or Hyundai. So I think this is going to be a gigantic money pit …”

“By the way the electric car market is still miniscule. That just doesn’t make sense.”

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Funny, I can still remember all the pundits and analysts saying exactly the same thing about Apple getting into the dog-eat-dog cell phone business. And smartphones were just a tiny niche. Today the iPhone is the most successful single product in tech history, bigger than the total revenues and profits of nearly every S&P 500 component.

We’ve heard the same refrain over and over again: what does Apple know about the music business? Digital payments? Smartwatches? Smart TVs? The iPad is nothing but a big iPod Touch, and so forth. There’s nothing to see here; move along.  

Who can blame the guy for getting testy about Silicon Valley getting all up in Detroit’s business? But talk about talking out of both sides of your mouth, I bet you didn’t know that the father of the electric hybrid Chevy Volt, as Lutz is often referred to, is chairman of Utah-based VIA Motors, which builds extended-range electric trucks, vans and SUVs.

As if that’s not enough motivation for Lutz to want to keep Apple out of the electric car business, he is also co-founder of VL Automotive, which had planned to put gas-powered engines in Fisker’s Karma sports car until it merged last year with GreenTech Automotive, manufacturer of the electric Mycar.  

Don’t even get me started on the duplicitous economics lesson from the guy who, in his first book, wrote that the second law of business was, “The primary purpose of business is not ‘to make money.’“ And in his more recent book, “Car Guys vs. Bean Counters: The Battle for the Soul of American Business,” Lutz, says, “It’s time to stop the dominance of the number crunchers … and give the reins to the ‘product guys.’”

Wait, it gets better ... or worse, depending on your perspective. When Lutz was asked about VW intentionally cheating on clean air standards for diesel cars, he said:

“Well, I hope and I assume that the government is going to come down on them very hard because, unlike Toyota’s unintended acceleration and unlike the GM ignition switch scandal, if you want to call it that, those were acts of, you could say, negligence or lack of proper oversight but this was willful cheating. I mean this is like deflating footballs or taking drugs in the Tour de France. This is willful. And to me that makes it a lot worse.”

Then the show’s host managed to get a zinger in. Referring to the faulty ignition switch that GM had known about for more than a decade before recalling 30 million vehicles and acknowledging its link to at least 124 deaths and countless injuries, she asked, “But Bob what was the loss of life from what Volkswagen did?” That’s where Lutz gets a little tongue-tied:

“Yeah, ok there you can argue well, I mean it depends how serious do you think eco-pollution is? It is described as a hazard to health and possibly it is because these cars were emitting up to 30 to 40 times the legal limit of oxides and nitrogen which is a particularly harmful pollutant.”

He went on to say that, if it was willful misconduct, it should be treated criminally.

Let me explain something about the GM ignition switch defect. If you accidentally bumped your ignition key ring with your knee while driving down the highway, it killed power to the steering, brakes and airbags, as described by Scott Oldham, editor-in-chief at Edmunds.com.

It was a known problem at GM going back to 2001. That was the year Mr. Lutz was named vice chairman in charge of product development and chairman of GM North America. He retired in 2009.

After years of considering and rejecting fixes to the problem, GM finally authorized a redesign in 2006. The new switch was deployed starting with the 2007 model year but the company did not issue a recall. Not only that, GM’s engineers covered up the redesign by not issuing a new part number. That simply doesn’t happen on its own.

The company did not begin issuing recalls until after the scandal came to light during a 2013 deposition over a woman who was killed in 2009 in a fatal crash involving a Chevy Cobalt. The first recalls began in February of 2014.

Had GM replaced a $2 component when it first learned of the problem back in 2001, more than 100 people would be alive today. Instead, it willfully put short-term profits ahead of customer safety and engaged in a decade-long cover-up that coincided with Lutz’s tenure as the company’s top executive in charge of product development. 

I’m not exactly sure how that man gets on national television, equates the Volkswagen scandal to deflating footballs and cheating on the Tour de France, and says that’s “a lot worse” than the cover-up that cost all those lives. In all my years, I don’t think I’ve ever heard a top executive say anything quite so inhuman and, frankly, delusional.  

When reached for comment Bob Lutz gave FOXBusiness.com the following statement:

On Apple Car:

VL Automotive converts electric Fisker "Karmas" to Corvette-powered gasoline cars. VL no longer has any association with GTA. VIA Motors produces hybrid versions of Chevrolet full-size trucks, resulting in genuine savings for the vehicles that use the most fuel. I am not anti-electric. I merely have doubts about companies that can't seem to do anything except create ever larger losses.

On General Motors:

The record is clear: GM always purchased components that promised high quality and safety. I personally authorized an additional several hundred dollars in per-unit cost to assure excellence in the Chevrolet Cobalt, the main user of the switches. When the problem first surfaced, and for years thereafter, management had no knowledge of the issue. It had been systematically hidden by a lower-level engineer. My point is that nobody at GM ever "wanted" to produce a defective ignition switch. But VW very definitely "wanted" to create the emissions-defeat system. One is negligence, the other a premeditated act.

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