Nowadays, it seems that Bob Lutz, former GM Chairman and now involved in a few low volume car projects, can’t give an interview without taking swipes at Tesla and Elon Musk. To be fair, he is often asked about it and led to comment on the subject, but it gets old really quick.
We can’t expect to change everyone’s mind and have them get on board with electric vehicles easily (well BEVs since Lutz is on board with PHEVs), but in this case, Lutz is spreading false and misleading information about Tesla in order to make his point.
The automotive executive gave an interview to CBS’s MoneyWatch this week.
MW: Yeah, I wanted to ask you about that. You’re on the record as saying the electric vehicle was inevitable, but you’re not a fan of some of the models out there, particularly ones made by Tesla.
Lutz: I’m a great fan of the vehicles. I’m certainly a great fan of the Model S. The Model X isn’t working too well because it doesn’t have enough roof structure, so those doors are never going to work. The Model 3 — we’ll see what happens with that. I think it’s going to be delayed again.
We can’t really argue against the Model 3 potentially being delayed, it could very well happen – no one knows – but again? As the Model 3 already been delayed?
As for the Model X’s Falcon Wing doors, Tesla didn’t deny having some difficulties with early units, but it now got the production rate up to over 700 units per week. They are now producing and delivering the doors in volume to apparently satisfied customers and they are getting raved reviews. I find it difficult to understand how he can claim that “those doors are never going to work” when they are already working.
My argument with Tesla is the business. 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.
Here’s my main issue with Lutz. Those statements are either false or misleading. It’s true that Tesla is losing money every quarter, but it’s because they are heavily investing in a production ramp up, a giant battery factory, retail and service expansions, charging infrastructure and R&D for future vehicles. Not because Tesla can’t make money on its vehicles. Tesla’s gross margin on the Model S has been over 20% for several quarters now.
“They’re running out of cash.” This is false. The company has a healthy financing pipeline and its cash position never went under $1 billion for years. Here are Tesla’s assets (in thousands) over the last 4 quarters:
“Their sales are sideways to down.” That’s also not true. In its first quarter 2016 shareholders letter, Tesla confirmed that Model S net orders rose 45% during the quarter compared to the same period in 2015. That’s neither “down” or “sideways”. Unless Lutz is implying that Tesla is lying to its shareholders, which would have serious consequences with the SEC, his statement is simply inaccurate.
Here’s the rest of Lutz’s comment on Tesla and electric vehicles during the MoneyWatch interview:
MW: What would you say to someone who bought one of the pre-orders for the Model 3? Are they wasting their time?
Lutz: I would say be prepared for far more delays than you have bought into, and secondly, be prepared to pay more than what you thought you were going to pay.
MW: Can you foresee a time when electric cars will become as mainstream as gasoline cars?
Lutz: The problem today is that electric cars — because of the battery — cost more to make. Tesla’s big problem is that other producers like GM, Toyota, BMW, Volkswagen and Mercedes-Benz — everybody is going to be producing electric vehicles at a loss, a deliberate loss to get them in the market. Tesla doesn’t have that luxury. Tesla has to live off the electrics. That’s going t o be very tough when everybody else is selling them at a loss.
MW: Elon Musk recently announced plans to ramp up production of the Model 3 a lot sooner than people thought. There’s a lot of skepticism about whether the plan is technologically feasible. Do you share that skepticism?
Lutz: You know, Elon Musk is a wonderful guy. He’s a visionary. He’s personally charming. He’s the eternal optimist. [However,] he does make a lot of claims and a lot of statements that as time goes by prove to be not to be quite accurate. Every time somebody tries to focus in on the here and now, he dangles another grand vision in front of them.
I think it’s important to remind everyone that Lutz is or has been a climate change denier:
Featured Image: Beautiful pictures of a Tesla Model 3 prototype in the Marin Headlands [Gallery] – with permission courtesy of Joseph Neuman.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.