It’s not the first time former General Motors Vice Chairman Bob Lutz poked Tesla, and this week on CNBC he advised investors to flee while also noting the Chevy Bolt will be a loss leader for GM.
In light of cheap gasoline and reduced electric car sales, Lutz minced no words in outlining a dire picture for Tesla which today released its fourth quarter earnings report mixing positive news with losses.
“Tesla’s business model is upside-down anyway,” said Lutz, “their costs have always been higher than their revenue, they always have to get more capital, then they burn through it. The whole distribution model with their own dealerships is extremely expensive and consumes capital.”
While the car is excellent, the business has always been lousy. Now, it’s super lousy because the generic demand for electric vehicles is down. And here’s why this is going to kill Tesla: because whether there’s consumer demand for electric vehicles out there or not, the major OEMs like Ford, GM, Toyota, Volkswagen, etc., they have to build electric cars — a certain number — in order to satisfy the requirements in about half of the states. Those have to be jammed into the marketplace, otherwise they can no longer sell SUVs and full-size pickups and the stuff they really make money on. So that is going to generically depress the prices of electric vehicles.
Which brought Lutz – who has been called the “father of the Chevy Volt” – to his former employer’s 200-mile 2017 Chevy Bolt EV.
“It doesn’t take a rocket scientist to figure out that GM is not going to make money on that,” said Lutz.
But, as will other major automakers, GM’s EV will take a hit for the team, Lutz said, while adding Tesla does not have this luxury.
To top it off, Lutz said the Model X looks unbuildable with issued with the falcon wing doors.