It’s no secret former General Motors executive, and self-proclaimed car guy, Bob Lutz, is no fan of Tesla. However, amid a roaring company value and climbing stock prices, he returned to CNBC to discuss why he thinks Tesla is ultimately doomed and operates under a “flawed business model.”
“How in the world is he going to make money on a $35,000 small car?” asked Lutz, referring to the more affordable, upcoming Model 3 sedan. “The cost of a car does not come down proportionally to price.”
Lutz goes on to say if Tesla cannot make money on its most expensive vehicles, it’s a poor outlook for any future endeavors. But what about Tesla’s in-home batteries and solar roofs? Lutz doesn’t buy it either.
“I think they’re doomed,” he said.
“Elon Musk is the greatest salesman in the world. He paints this vision of an unlimited future, aided and abetted by some analysts,” Lutz said. “It’s like Elon Musk has been beamed down from another planet to show us mortals how to run a company.”
Meanwhile, GM CEO Mary Barra was praised for her efforts in injecting quality, safety and discipline into the automaker. Panelists agreed GM’s stock is grossly undervalued.
Comments
i hope tesla succeeds. it would be great to get all your energy from the sun and use it to power your house and car.
but right now, it makes no financial sense. without tax incentives, tesla would be dead.
also i’m not so sure driving an pure electric vehicle(powered by coal/natural gas power plant) is any better for the environment than a high mileage hybrid like the chevy volt.
self-proclaimed car guy, ”
What drugs are you on, Sean?! Mr. Bob Lutz was at the highest echelons of the car industry before you were even born. He has worked for BMW, GM, Ford and more. And he is still talking passionately about cars well into his 80s.
Not only having a long and stellar career in the automotive industry, Bob was a highly decorated attack helicopter pilot in the Marines, speaks 4 languages, and pilots his own fighter plane for a hobby. You, on the other hand, are relegated to writing poorly written articles and sad left-wing propaganda pieces making as car stories on a second-rate blog. Must be a jealousy thing…
Did you forget that the gasoline for your car (and all those hybrids) also need electricity which comes from ” coal/natural gas power plants”. Or do you get gasoline piped into your home direct;y from the oil well?
Electric cars uses the same energy needed for the gasoline and Diesel infrastructures to drive a longer distance, generate no pollution, and waste almost no energy as heat. So why waste electricity to pump gasoline, where it can power an electric car directly?
You know how Bob could help GM the most…? By shutting his pie hole. I use to have some respect for this man, but now all he does is bash on Tesla and tell false hoods about how Tesla is only surviving because of government subsidies, and losing money on every car they make. Bob is calling the kettle black when he speaks of government subsidies/bailouts. GM almost went bankrupt in/around 2009. Who saved them, the government. Who is ultimately the government, we, the tax payers. The subsidies Bob says Tesla is getting are the same ones they received, and Tesla wasn’t bailed out by the tax payers (Too much detail to post here). And yes, Tesla is currently spending more than they bring in, but they do actually make, at least, 20% gross margin on their cars. Sorry Bob, and other big autos, that you cannot figure out how to make profits on EVs. And if you look into why, it’s because they are tied to the legacy auto market (Auto dealers for just one example. They, by LAW, cannot sale without them.).
tesla knows how to make ev’s profitable?
From a guy who kept yapping all kinds of garbage above. Jealous of Lutz much?
Judging by all the down votes you are getting, you are obviously not the majority opinion.
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Tesla just announced a semi tractor. I wonder if it will have “Ludicrous Mode”?
Here is the deal.
Tesla needed the S to fund the work on the X model CUV. Well it was way over budget ad sales are no where near what was expected.
This left a short fall for money for the 3 model. Tesla had to pre sale the car to raise the funds to finish it nearly 2 years late. Now having spent much of that money to get the 3 in production they now have to build several years of 3 models to deliver product they already spend the down payment money on.
So now Musk has sold 2% of the company to Chinese investors to raise more money.
Now keep in mind how many cars a year they normally build and how long it will take yeti filk those orders. Will all wait?
Then you have Porsche coming and others with S competitors at a time the S is growing old and is in need of a redo. It can not be ignored as it is the cash cow.
The 3 is not going to be $35k as it will be just over $50k once it is optioned with what most want.
Tesla is not totally doomed but their path is filled with challenges most mfg could never navigate.
I think a Tesla would be better suited to mfg systems and sell them as a supplier to most automakers like Eaton does.
As for their solar stuff it is not going to save the day as most people can not afford it.
As long as other power sources are cheap most people will it change and the market will need to continue to be propped up by the goverment.
For once we agree!!!
Hell must be getting colder lol!
The whole Telsa business reminds me of DeLorean. It is a house of cards.
https://www.linkedin.com/pulse/musk-from-future-roger-c-lanctot – Musk IS from the future, Bob, I already wrote that blog!
“..GM’s stock is grossly undervalued.” That is very true! GM has more value in properties, equipment, materials, and labor force than TM or Ford. TM’s stock is in “paper” or a figurative value, probably propped up by the brokers to get TM more money. They are getting a $1,000 interest-free loan from over 100,000 “reservations” (more than $100 million dollars) to pay for the Model 3 development and pre-production, and will not sell final production units until the end of this year.
Meanwhile, the Chevy Bolt EV has a head start since December 2016, is selling in the thousands, and will take up the BEV market for this year and the next year, too.
What the hell is happening to you Ray?
I know you are a GM fan but really, why are you lying about the numbers?
It’s 400,000 reservations, not 100,000.
Bolts are not selling in thousands as they hardly sell 1000 per month, but i hope those numbers will go up soon but there is only so many people willing to pay big money for a uncomfortable electric firefly.
I’ll bet you that Tesla will sell way more 3’s than Gm sells Bolts by the end of this year.
I remember a few years ago on gm-volt, i could rely on you for stating facts. I guess those times are gone.
Yes Tesla has many presold cars but it will take them years to build. Note they had to presell as they needed the money the X model did not bring in.
Also how many will wait with other models coming to market?
Second the 3 will be around $50k once it is optioned up so it really never was a Bolt competitor.
Actually I have been in the Bolt and it is very comfortable. Also the price is below the market average for a new car.
Both cars will do fine but they are two different cars in two different segments and will see two very different prices.
Note even Musk at the 3 intro stated that by the time the 3 arrived it would be more than the $35k.
Even with the 3 selling well Tesla still has issues and many investors growing tired of no return. One group is calling for additional leadership to be installed to look out for their investment.
Elon also sold if I saw correctly a percentage to a Chinese group.
”Yes Tesla has many presold cars but it will take them years to build.”
So you see in the future now? Based on what? Tesla has had 50% YOY increase in car builds sinse the beginning, but all of a suddent, he’s gonna hit a wall? Right!
the S was suppossed to make the money for the 3, not the X, reread the Master Plan part one to get your facts right. The X was added in the mix cause Musk taught it would be an attention getter and would push the enginering chalenge further. It did. Now the car is a success with a 20% profit margin.
Yes most 3’s will be 50K, where is that a problem? That’s where the profits go up, not on base models but 35K base models will be available soon enough. They went the same path with the S and the X.
Sinse when do a Porsche like car compete with a firefly, in what world? Should stop readind headlines from ignorent publications and see for yourself that both cars have their own distinctive buyers and the only fact that both are electric does not mean they will compete.
As for comfort, I read a lot of reviews and a lot of them say the seats are too narrow and too short. I cannot comfirm it nor do i care but i want both cars to be a success.
musk said average price after the car has been optioned would be around 42K, any other numbers would be pure speculation from you or me and i think, being in Canada, my 3 will cost around 75K, clearly out of Bolt territory.
As for new members on the board, i’m hesitant for the simple reason there is no time to f***k around the bush. This guy is changing the world and so far he’s succeding according to his plan while Lutz winnes and lies.
As far as i know, the chinese group Tencent bought 5% of regular market shares. Elon never sold Tencent anything.
So much to learn and that’s hard. But it’s easier to spread lies, like Bob does…
Bob Lutz is THE MAN. We should be so lucky to live as impactful and awesome a life as him. 85 and still yelling!
Spreading lies is awesome to you? Great!
Tesla has never posted a profit. It is an overhyped tech giant. We had many companies like these in the 90s. Tesla is reliant on government subsidies and high fuel prices. It has several analysts in its pocket. How can it make profit on a $35k car (even $50k with options) when it can’t make a profit on the model X at $100k? Elon Musk has done great things, but he doesn’t know how to make money yet. But if you want to talk about hyper loops and Mars, he’s game.
But yes, Lutz is THE MAN.
Shareholders letter says Tesla makes over 20% profit on every cars they sell, that’s what i’m going to rely on, not lies frrom Maximum Bob!
Musk does not konow how to make money?!????
”Tesla is reliant on government subsidies and high fuel prices.”
What high gas prices? What Government subsidies? you mean the same GM, Nissan, Toyota and all the others get?
You, the Gas gusslers SUV and 4by4 made by GM buying public are subsidied at a rate of 10 times what the electric gets. i get a tax rebate when i buy an EV, once. You guys get a taxe rebate every time you buy gas. I dont like subsidies anymore than the next guy but if we were to stop all susidies on gas, we would be in a world of hurt so we have to tough it during the transition to cleaner energy, Trump or not.
Feel free to rely on doctored shareholders letters, but last I checked the P/E ratio on Tesla was a permanent divide by zero error. If anything, buying out solar city was probably done for some sort of accounting gymnastics. Tesla is the new Solyndra – promising in theory, but not yet delivering. By all means, dump your money in it. Porsche, BMW, VW, Ford and Chevy will be the winners in the EV battle because they don’t rely on burning shareholder cash.
Don’t trust me, ask the CFO who just resigned less than 2 months ago. Seems like the ponzi scheme might be up!
Bob Lutz can read the tea leaves because he has lived through what will happen in the next couple of years as Toyota has just introduced the Mirai a Hydrogen fuel cell vehicle which could be followed by a Lexus fuel cell version of the LS sedan and RS crossover; will people still buy Tesla if they can get a fuel cell Lexus for the same price.
Foolcells? only the uneducated come up with that crap. you are really stuck on having to hop in you’re ride to go fill her up, arent you? I wake up every day to a full charge on my car. Why on earth would i want to go to a Hydrogen station?
Hydrogen comment are ONLY made by people who have NEVER sat in an EV and don’t get that EV’s are full of energy every morning, no need to go spend $60 every week to fill her up.
How is that so hard to get?
I can go five times further in an EV as i would with a hydrogen car because hydrogen is a high energy consuming process to get it to your favorite Hydrogen station.
With my Volt, i drive for 1 cent per kilometer in my part of the world but if i were to drive a fuelcell vehicule, it would cost around 15 cents a kilometer. How the hell would that be better for anyone??
A little research would not do you any harm……