Bob Lutz knows a thing or two about running an automotive company, and he’s applied his wealth of expertise and knowledge in his latest op-ed piece for Road & Track.
Simply put, Lutz thinks things look bleak in the Tesla kingdom. While Tesla has been heralded for crafting some of the greatest electric vehicles to date, and even won a Motor Trend COTY award with its Model S, Lutz lays out the facts.
Tesla continues to bleed money, and lose money on every single car it sells. Combine that blunt knowledge with the costs of operating a manufacturer retail store and the fact gasoline has hovered around $2.00 per gallon across the U.S., and it doesn’t paint the brightest picture.
Lutz takes a swing at what has made Tesla what it is today: its battery technology. The auto executive had this to say in particular:
In addition, there’s never been any secret sauce to the company’s battery technology. The automakers that bought into Tesla’s tech early did so to avoid having to pony up development dollars on first-generation battery packs of their own. Now that Audi has announced it’s getting into the EV game, Tesla should be even more concerned. If you’re a luxury buyer, which car would you rather have?
It’s a valid point, and something we’re sure Elon Musk, Tesla CEO, is thinking about right this moment.
Comments
From a carmaker standpoint, he’s spot on. But from a startup standpoint, there have been startups that have lost more money for longer and have done quite well.
I know what I’d rather have if given a choice of Audi vs Tesla…Tesla all the way.
Given the advancement of the battery tech, in a few years it will be fantastic. As a bit of a tech geek, that car is almost perfection, certianly in relevance to anything else out there currently.
Audi will slam its half-assed infotainment system in there, peices of the parts bin from everything down to the A3, and mark it all up, so that they don’t lose money. What you’re paying for will be a better dealer network, but chances are service will be as much, or more, than Tesla, to bring the proper techs in.
Tesla, when it comes out with its mass market car in a year or so, will be ahead of the game still, with other companies going through the same growing pains as Telsa has had to take an even harder hit on the past few years as the first one in the market.
Bob Lutz is right as while modern EV (electric vehicles) are powered by high energy batteries, this might not be the situation in 3-5 years when super-capacitors may replace batteries as Cadillac recently reported how they’re using super-capacitors for their stop-go system as it may be 3-5 years before Chevy’s Volt replaces it’s battery with a super-capacitor that is cheaper and lighter as well as can be molded into different shapes to fit a car better meaning weight distribution would be better.
I really like Tesla and wish no Ill Will on them at all, but, I rather see GM acquire Tesla then FCA-Chrysler and put it under the Cadillac moniker!! 😉
Or Maybe Tesla acquiring GM if they wanted. Market cap of both companies isn’t far apart with Tesla being a high growth company possibly surpassing GM in the not too distant future.
That would be another AOL Time Warner in the making.
A company with a sky-high stock multiple, acquiring a much larger company that has real profits but a lower stock multiple. Financial engineering at its finest. Swapping stock around like it was Monopoly money.
Toyota didn’t become the world’s largest automaker by going around making flashy acquisitions. They did it through hard work and solid execution. We could use more of that in this country, and less stock market chicanery.
As an Engineer, I take slight offense at the financial Engineering implication. Engineering has nothing to do with it. It’s more like financial masturbation. It may make them feel better, but it doesn’t lead to any productivity. 😉
I have to laugh at your response. Tesla buying GM. GM makes more cars in one day than Tesla makes in a year and you make that dumb statement. You may not think much of GM, but I’ll tell you there is more knowledge within GM than than there is within a thousand Tesla’s.
Bob is right ands says what many do not want to hear or are afraid to say.
Tesla has only gotten this far on excellent marketing as their technology is nothing special. They did take a chance on an expensive model that few thought would sell and did make a good impression with it. But at the end of the day they are still under volume and still not making money.
The new SUV will too make good impressions and sell well for the price they ask but it is not cheap and will still be in what in market terms will be low volume.
The 3 Model is still a ways out and will determine if Tesla will see profits or not as this is the money car. It has to sell in large volumes and make money and that is not cheap at the price point it needs to be at.
By then the S Model will have grown old and has no real set styling updates at this point. The other companies will have similar offerings coming and will make it more of a challenge to sell. The new coming Porsche could really impact this model as Porsche has shown their hybrids are very impressive already.
In the end can they keep this up. Well they could but it is not likely unless he wants to continue with a non profit. Elon has a big ego and will keep this going as long as he can. But unless he has some major break through he is going to struggle at come point.
Most companies understand this is a slow growth market and it also will take a balanced approach of hybrid and electric models using different technologies and continued use of ICE.
The longer he holds on and the more others build on their own technologies there may be few people who could afford to buy Tesla that would want to merge with them if the time comes.
The last two things GM needs is Tesla and FCA. Not sure where you get that one from. I think you will find GM has a model coming at Cadillac that will do all Tesla will does and more. But first they will lead with the hybrid CT6 and work their way there.
Which would I rather own? The Tesla! Absolutely! Lutz is a hero of mine – a co-father of the Volt even… But Bob is no spring chicken.
Anybody who has driven a Model S and been wowed by Model X knows Tesla is on it’s way. GM and Toyota ran the NUMMI plant in Fremont and when a GM plant, it was reknown for stories of it’s massive failures and flubs, including stories of the wrong engine leaving the factory in the wrong car – and many drunken autoworkers passed out at work – taking advantage of extremely strong union leverage at that time. When the stories broke the surface of public scrutiny, as well as the ugly quality of those cars – GM send teams of workers to Japan to study the way autombiles were made there. Later, GM partnered with Toyota to share the load at the NUMMI plant, and finally laid off 6,000 workers, putting them all out on the streets. Go to YouTube to see their astonished and anguished faces and remarks as they are stonewalled out of a union meeting wherein all their union brothers are being told they don’t have jobs anymore.
Now bring in an aspiring carmaker and rocket builder, Elon Musk. His timing couldn’t have been better as he swooped in and took control of the former NUMMI plant, now lying vacant for years and full of cobwebs and broken dreams. Look at it now, as Musk paid off his government loan in half the required time and filled it back up with shiny new robots and brand-spankin’-new aluminum stamping machines! Gaze in wonder as over 3,000 of those workers marched back to jobs building a car imagined in America, developed in America and built in America by Americans! This car does things no Audi has ever done short of e-Tron show cars and vaporware.
Bring to me a sedan that is as sexy as a Jaguar or Aston Martin 4 seater, fast as a Dodge Viper and seats 5 adults and 2 kids…..a car that famously has 100% torque from 0 rpm, no shifting needed. Show me another car that embarrasses the Europeans who have had a lock on the premium luxury market now for eons. While Cadillac struggles each decade to foist up it’s latest BMW 3 and 5 Series challengers and always gets JUST-ABOUT-THERE until BMW quashes them…. Tesla is sticking it’s shiny-new neck out building out an entire fueling infrastructure ( Superchargers ) that their customers fill up at for free ( priced baked into MSRP )!!! The entire dream and fulfillment of Tesla is not only an American dream – an iconic story of driving by the seat-of-your-pants where every penny goes towards building the next iconic car brand — Where dozens of car brands died on the vine. This is an American success story and Model X is just part III. Model III will be part IV. When Model III debuts ( late or not ), it will represent the time when Tesla makes it over the “hump”. The Gigafactory under construction will be well into it’s production of enough batteries to allow Tesla to become mainstream by producing it’s $35,000 EV you would want to own for “everyman”.
So Lutz may take the big corporate view, and listen to the naysayers ( they are legion ) – but while I respect the guy – it’s like grandpa who just doesn’t get those darned smartphones! “Why does everyone love those things SO MUCH?!!!” Next thing we know, ole Bob’ll be yelling at us to GET OF HIS LAWN! – C’mon, Bob – deep inside you want Tesla to succeed, don’t you, Mr. VIA MOTORS Chairman of the Board?
You think Elon Musk has been building rockets from his knowledge? Some people are so dumb! If you think Elon Musk acquired in a few years what scientists acquired from decades of research and development, you are nuts.
Let’s not forget is was good ole Bob Lutz that nearly single handily crippled GM, with his narrow minded thinking, and trying to shelve the Volt project. I’ve been a manager with 2 different GM dealerships and a Saturn dealership over the last 20 years. Let’s not forget that it was Saturn that started the Electric Vehicle movement in the 90’s, the EV1. I had an opportunity to drive one while doing Saturn training in Springhill Tenn. What a vehicle, what a brand and it was GM that eliminated the Saturn brand, what a shame, Saturn was doing great thing in automotive industry, but GM stepped in and killed that quickly, not sure if Lutz had anything to with that, wouldn’t surprise me. It wouldn’t surprise me to see Tesla succeed, they are doing the right things here. GM needs to look in the rear view mirror for them, they can’t have the same mentality that got them into trouble in 70’s and 80’s with arrogant thinking, that no one can touch GM, no longer is it about the Big 3, Ford and Chrysler need to keep up as well. Toyota and Honda has come in and taken the Big 3’s lunch for the last 40yrs, so why can’t Tesla. Elon Musk may have an ego, there is nothing wrong with that, provided it is kept in check.
GM is making strides to improve but they have to do it a faster rate, and not ignore the Canadian Market, limiting the allotment to dealers for certain models, 1 Corvette, 1 Camaro ZL1 a year is what we get, it pains me to turn people away with deposit cheques in hand to buy these vehicles and I can’t get them, there goes $$$ out the door, a sold order should get preference over an inventory piece for the US. When some of the US dealerships are sitting on 20-30 Corvette pieces on their lots, and we are screaming to get even 5 a year, what’s wrong with this picture.
Sorry for the rant but it feels good to get some of this off my chest. Don’t get me wrong I love what I do, I just wish that the Canadian dealers would get our share of inventory and stop being ignored.
Maybe he’s just upset that GM stock price is sorta stagnant. He probably owns a lot of it.