Tesla Motors Inc ‘s Model S has made a good impression on Bob Lutz, the former General Motors and Chrysler executive, but he is not very confident in the firm itself. In a recent interview with CBS’ MoneyWatch, Lutz criticized Tesla’s business model. He also said that the Model 3 will be delayed, and would expectedly cost more than the estimated price of $35,000.
Other automakers in better position than Tesla
Lutz believes that Tesla Motors Inc is quite vulnerable to the reality of manufacturing and selling cars. Other major automakers such as GM and others are also making an attempt to gain market share and credibility, for which they are rolling out new plug-in electric vehicles at “deliberate losses.”
But, other automakers have an advantage over Tesla as they also have traditional cars that tend to offset the losses incurred on electric vehicles, but Tesla can’t do this as it sells all-electric vehicles only. “Tesla has to live off the electrics,” Lutz said. “That’s going to be very tough when everybody else is selling them at a loss.”
Lutz believes the electric car making business leads to monetary losses for all the automakers. “They’re “a deliberate loss to get them on the market, and Tesla doesn’t have that luxury.” Electric vehicles like the Tesla Model S make use of lithium-ion batteries that cost a lot, and hence, is the biggest challenge facing the company.
Lutz is skeptical of Tesla’s business model. “It’s a cult stock, and I’ve been saying for months that the business model doesn’t work. They’re losing a ton of money. They’re running out of cash. Their sales are sideways to down,” the expert said.
Musk – a great visionary, but not always accurate
Lutz says he has no doubt that Tesla Motors Inc CEO Elon Musk is a wonderful visionary, but his (Musk) claims are not always accurate. “Every time somebody tries to focus in on the here and now, he dangles another grand vision in front of them,” he said. Lutz added that the Model X does not have a proper roof structure, and for this reason, its doors will never work.
Lutz has an experience of close to 50 years in the car business, and therefore, his words carry weight age. He does not shun hybrid or electric cars per se, but says the last groundbreaking car in his career was Chevy Volt. He retired in 2010. Lutz believes that self-driving cars are inevitable, but he also argues that they will take the fun out of driving and many automotive enthusiasts share this view.
Early versions of autonomous vehicles were tested when Lutz was still at GM, and the self-driving cars were very much rudimentary at that time. Lutz believes these vehicles would solve urban congestion and driving safety issues, but it will take time for the technology to develop far enough to be credible.