Bob Lutz thinks Tesla is Doomed. Do You? 

"Spridget" (dustbustervans) 10/26/2015 at 22:20 • Filed to: Bob Lutz, Road and Track, Tesla, Tesla Model S, Elon Musk, Electric Cars, EVs, Fuel Efficient

2

59

In a recent collum for Road and Track, former Car Exec and champion of the Volt program Bob Lutz outlined why Tesla is doomed to fail. Lutz cited “bleeding cash, securitized assets, and mounting inventory”, as well as falling oil prices, the Tesla store model (“When I came to BMW in the Seventies, it had five factory stores. The idea was, like Tesla, to be in control of the retail environment and give customers an upscale experience. They were all money pits.”), as well as the expensive cost of their cars (“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?”).

But what about, Oppo? Do you think Tesla is doomed to failure?

!!! UNKNOWN CONTENT TYPE !!!

TheHondaBro > Spridget 10/26/2015 at 22:25

1

Naah.

Supreme Chancellor and Glorious Leader SaveTheIntegras > Spridget 10/26/2015 at 22:27

3

The fact his solution would be basically a Tesla Volt....ruins anything he says in this article

beardsbynelly - Rikerbeard > Spridget 10/26/2015 at 22:28

3

depends if they can keep the positive growth in China going. If they get it there they’ll be in the money again.

deekster_caddy > Spridget 10/26/2015 at 22:28

2

Tough call to make now. They are bleeding cash, and their cars are expensive. If they can really make a reasonably priced long range EV, they could make it. But the key here is range, and their battery. I still don’t see the battery swap stations anywhere, and it’s going to take a lot to get many people over range anxiety.

Personally, I’m a huge fan of Lutz’s EREV mindset. I think the combined drivetrain is the way of the future. But then, I’m biased as I drive one of them every day...

Alex from Toronto > Spridget 10/26/2015 at 22:29

2

Hard to say really, have to wait until hydrogen technology catches up to see witch is better.

Steve in Manhattan > Spridget 10/26/2015 at 22:34

7

Lutz is a knee-jerk conservative, so anything that’s not a snortin’ V8 is anathema to him. Tesla will be fine. The internal combustion engine went through infancy as well. The electric car is growing up.

Nauraushaun > beardsbynelly - Rikerbeard 10/26/2015 at 22:37

4

The Model X too. SUVs are such a massive market right now, far above the luxury sedan market the S has managed to survive in for so long. If the X does well enough for them they’ll be much happier.

Rico > Spridget 10/26/2015 at 22:38

7

I think Tesla is doomed to fail. They are cooking the books over there in Palo Alto and I can’t wait until it’s exposed. I’m waiting for the day their stock drops to mere pennies and the doors close down for good. Some of the talented people will end up at Apple. That Gigafactory if it ever gets built will fail tremendously and every employee who’s in on that scheme will lose their jobs and rightfully so. They tried to mock American ingenuity with their hyped up gadgets. Who would want a company such as this to succeed when it sarcastically tries to make us believe that American innovation exists. The nerve!/s

lone_liberal > Spridget 10/26/2015 at 22:39

3

They can make it but it’s far from a sure thing. If they can get to a size where they have some efficiency of scale it would help. Boutique manufacturing has killed the vast majority of the companies that have tried it. It will be tough, but I’m rooting for them.

jkm7680 > Spridget 10/26/2015 at 22:40

1

They aren't going anywhere.

Spridget > Nauraushaun 10/26/2015 at 22:41

2

Yes, absolutely. SUV’s are what the companies are living off of right now. If Tesla pulls thr Model X off, then that could save the company.

Spridget > beardsbynelly - Rikerbeard 10/26/2015 at 22:43

0

I don’t know about China . . . . It seems like the bubble there is going to burst any day now.

Spridget > deekster_caddy 10/26/2015 at 22:45

0

Yeah, combined drivetrain is the way of the future. It’s too complicated to build a good, long range battery, and as a result, too expensive.

macanamera > Rico 10/26/2015 at 22:46

5

I was like waaaaaaat

BmanUltima's car still hasn't been fixed yet, he'll get on it tomorrow, honest. > Spridget 10/26/2015 at 22:49

2

Bob Lutz, the great man he is, is old and out of touch with the modern world.

Luke's Dad Sold His 2000TL To Get a Sienna > Spridget 10/26/2015 at 22:50

1

1. After hearing Consumer Reports say that the long term reliability of a Tesla Model S isn’t that good, I’m a little concerned and the Tesla won’t be that like amazing of a choice to me anymore. Since I put long term reliability super high on my list.

2. I’m 20, I can’t afford a Model S any time soon, so what I say doesn’t really matter, but I’m like a small version of my dad, so kind of matters?

3. I hear that Tesla is making a profit mainly because they sell like “electric car selling” credits to companies like Aston that have a lineup that’s mainly gas thirsty, and that’s the only way they’re staying afloat and when automakers have a successful enough EV car they can sell, they won’t be able to sell their credits anymore.

Dwhite - Powered by Caffeine, Daft Punk, and Corgis > Spridget 10/26/2015 at 22:51

2

While I don’t think they are on their way to death, Tesla’s refusal to follow standard practices in the industry does leave me curious about their true financial state.

Drakkon- Most Glorious and Upright Person of Genius > Spridget 10/26/2015 at 22:51

3

I think Lutz does a good job with product. BUt I think his take on the auto market overall and the day-to-day of particular companies is lacking.

Spridget > Rico 10/26/2015 at 22:54

1

Jeez dude, what did Tesla do to piss you off so bad? Fuck your mom?

scoob > Spridget 10/26/2015 at 22:57

3

You seem to have missed this at the end there.

Spridget > Supreme Chancellor and Glorious Leader SaveTheIntegras 10/26/2015 at 22:57

2

Yeah, it’s hard to like someone who makes a worse Prius then complains about someone else’s car. He’s like that kid on instagram who knows “so much about cars bruh” and has a “m3 and a bugatti and a lambo bruh.”

Spridget > Dwhite - Powered by Caffeine, Daft Punk, and Corgis 10/26/2015 at 22:58

0

Yeah, it does seem weird how opposed to normal practices they are. Eithe they’re hiding something or Elon’s got some crazy-ass OCD.

GhostZ > Steve in Manhattan 10/26/2015 at 23:00

1

I do think the question remains whether or not Tesla has a place in the electric car world, or they’ll end up being sold off, becoming a small niche seller, or moving on as larger car companies pick up the production slack and development after they do the hard R&D work.

Biggus Dickus (RevsBro) > Spridget 10/26/2015 at 23:00

0

It’s the big start up question: will the money run out before the sales growth comes?

When interest rates go up and people stop handing out free money, if at that point Tesla hasn’t started to get cash flow from operations, I’ll start putting nails in the coffin.

Spridget > jkm7680 10/26/2015 at 23:00

1

. . . because they’ve stopped selling their cars with wheels?

Seriously though, why do you think that?

Spridget > BmanUltima's car still hasn't been fixed yet, he'll get on it tomorrow, honest. 10/26/2015 at 23:02

2

When he was a big shot at GM he thought that reviving Pontiac was a good idea. ‘Nuff said.

Spridget > scoob 10/26/2015 at 23:27

1

Derp. This is why I need proper sleep.

Steve in Manhattan > GhostZ 10/26/2015 at 23:40

0

Elon Musk isn’t selling anything, I think, and I believe he offered to share the technology with some other companies.

Rico > Spridget 10/26/2015 at 23:41

0

/s

Rico > macanamera 10/26/2015 at 23:42

3

Manwich - now Keto-Friendly > Alex from Toronto 10/26/2015 at 23:44

2

Hydrogen will never catch up.

GenericSpoon > Spridget 10/26/2015 at 23:54

1

I would like to point out that an EREV drivetrain signifies having two drivetrains (this depends on whether or not the engine is simply a generator or if it can power the wheels directly, in which case it has technically one drivetrain but two power sources), which involves many ICE and BEV systems and subsystems that must work in concert at all times, which increases the amount of parts and things that can go wrong over a simple ICE or BEV. Obviously, this doesn’t stop an EREV from being reliable, just my $0.02.

Manwich - now Keto-Friendly > Spridget 10/27/2015 at 00:01

0

Lutz is being an idiot who just doesn’t get it.

He, of all people, should know that Tesla is burning cash because they’ve been developing and are about to launch the Model X. And they’re also using cash to develop the Model 3.

If they weren’t doing this, they would be making money.

It’s COMMON in the auto industry to burn cash and have no profit until after an important model launches... especially for a small company like Tesla that is expanding into segments where they had no previous model.

He SHOULD know this.

Also he states “I would seriously consider an entry-level model with a cheaper, range-extended hybrid driveline. “

For Tesla, that would be stupid. The Tesla brand is ALL about pure electric cars. Following Lutz’s advice would hurt the brand.

But then again, the North American auto industry is full of execs who have ruined the integrity of many nameplates in the name of a quick, short-term buck, while fucking themselves in the long run.

Honestly... I’m not sure if this is an example of Lutz’s mind going into cabbage territory or if he’s just saying shit because Telsa is doing way better than the crappy Via Motors (also an American EV development and manufacturing company) or VL Automotive (the company that puts SBCs in Fisker gliders)... both of which he’s currently collecting pay cheques from.

wiffleballtony > Spridget 10/27/2015 at 00:08

0

I think their biggest mistake was going after the high end luxury market with a car with hideous reliability. The only people who are buying the cars are those who want to make a statement. If they had made the model 3 their first car instead of their fourth, then they’d have a much larger consumer base to work out their bugs.

wiffleballtony > Steve in Manhattan 10/27/2015 at 00:08

1

Except electric cars have been around for well over a century.

BReLp7dzHM3ytYsE > Spridget 10/27/2015 at 00:10

0

It was a good idea! Just not monetarily I guess :(

Steve in Manhattan > wiffleballtony 10/27/2015 at 00:11

0

Well, at the beginning of the last century, but they were displaced by the gas engine. Jay’s Baker Electric, for instance. But now we need them.

AMC/Renauledge > Steve in Manhattan 10/27/2015 at 00:49

1

Except that Lutz has been on the board of 2 separate electric car firms and battery-makers.

AMC/Renauledge > Spridget 10/27/2015 at 01:03

0

I think Tesla is getting further than a small independent manufacturer ever has. I’m not sure their business model is incredibly sustainable, though. The factory stores are a great thought, but they’re a huge source of overhead.

Their products have always hit the market later than expected, and at significantly higher prices than expected. The S and X are great vehicles, but the S needs some styling updates that I’m not sure if the company can afford right now.

The new Roadster and Model 3 have been announced, but the former won’t have enough parts commonality with the existing lineup to be very economical to produce, and with the company struggling to meet production demand for the S and X, it’d be a low-volume distraction.

The Model 3 needs the gigafactory to go online in order to be produced. That’s a huge hurdle.

I’m sure if anyone can figure it out, Musk can. But Lutz has significant points to make. The odds - even at this point - are daunting against Tesla.

Alex from Toronto > Manwich - now Keto-Friendly 10/27/2015 at 01:16

1

Not with that attitude it won’t.

/s

Steve in Manhattan > AMC/Renauledge 10/27/2015 at 01:17

0

But the right ones?

AMC/Renauledge > Steve in Manhattan 10/27/2015 at 03:39

0

What do you mean?

GhostZ > Steve in Manhattan 10/27/2015 at 07:02

0

It would surprise me a lot if Tesla has the same majority voting shareholders on the board in 10 years. A lot of Elon and other’s shares in the company are only in the form of triggerable options for meeting certain milestones, so if everything tanks the major backing institutions aren’t on the hook for massive amounts of founder’s shares. It seems to me that they’re going to carry out until competition from other automakers gets too high, whenever that is, then they’ll trigger a merge or buyout with another company when there are really 8-9 Tesla competitors in the market. Those options are there to make them more investable with damocles’s sword of “Audi releasing a better electric car” hanging over their head.

That means that their long-term benefit puts them as facilitators of the market, selling batteries and charging stations, not cars.

At the end of the day, the biggest thing they have to get over, to prove they’re not just a flash in the pan startup is that they can build a car outside of the luxury market. The things that make an electric car appealing (lots of front end area for crash protection, low NVH, low center of gravity, low drag coefficient) really only apply to luxury cars. They’re small marginal gains that a normal buyer shopping for a $20,000 car would not fork over 30-40% more for.

And building for MPG just isn’t worth it. Even at $4 a gallon and 20,000 miles a year, a Tesla model S is only $1500 a year cheaper than a 35mpg car. Compare with $2 a gallon and 45mpg and they’re the same price. Since you can get a car with the same performance and interior quality as a Model S and still have enough money leftover to subsidize 15 years of fuel, it’s obvious why people buy them: Safety, NVH, Luxuries, and Image. Which is why the $80,000-$120,000 luxury sedan market is perfect for launching a good electric car in.

I want to see them succeed, but breaking out of that small market they’ve specialized in is going to be tough. Tough enough that I think the managers know that they’ve properly positioned themselves in an overlooked technological area, and now they’re going to cash out once that loophole is closed. That’s how a lot of startups work and falls in line with their track record so far.

Frenchlicker > Luke's Dad Sold His 2000TL To Get a Sienna 10/27/2015 at 08:19

0

I thought the credit selling program ended a year or two ago. It seems like Jalopnik said something about it.

BigBlock440 > wiffleballtony 10/27/2015 at 09:22

0

Because luxury cars are known for their rock solid reliability and nearly non-existent maintenance costs?

Starting in the luxury market was absolutely the right move. Electrics are a niche market anyway, and trying to make any profit on econoboxes just wasn’t going to work. You don’t stay in business making $.03* per car if you only sell 10,000 of them.

*may be a slight exaggeration, but maybe not.

deekster_caddy > Rico 10/27/2015 at 09:37

1

Elon can cook the books all he wants and just dump some more of his own money back in to make up the difference when things are turning sour.

wiffleballtony > Steve in Manhattan 10/27/2015 at 09:40

1

Do we? To me it seems that going electric doesn’t actually solve any problems, it just changes the goal posts. Instead of drilling the earth for oil we mine it for rare earth metals both of which are finite. Batteries themselves aren’t exactly eco friendly. The real solution is renewable fuels that require minimal changes to existing infrastructure and vehicles. Also telecommuting.

wiffleballtony > BigBlock440 10/27/2015 at 09:43

0

So you’re saying they’re turning a profit now? I thought they were in the hole pretty considerably. Plus, every single one of those warranty claims from their hideous unreliability affects the costs. Luxury cars don’t have to be unreliable, they’re not all German.

BigBlock440 > wiffleballtony 10/27/2015 at 09:53

1

If they stopped investing in future product and the new factory, they would probably be turning a profit. At least until people stopped buying the cars. But that’s besides the point. The profit margins on econoboxes are so slim even for traditional automakers, there’s no way Tesla would have any profit to invest in future products. Batteries are expensive, certifications are expensive, even if Tesla tried to make the cheapest, shittiest econobox the could, it would still cost more than the average new car transaction price. Nobody’s paying $35k for a Mirage just because it’s electric. Or, they could spend $15k more on building a better car and be able to sell it for $50k more at the same sales volume. There’s a reason the dozens of other electric car startups failed and Tesla hasn’t yet, it’s because rich people have money to spend and they don’t want a golf cart pretending to be a car, they want a car.

wiffleballtony > BigBlock440 10/27/2015 at 10:40

0

Luxury cars do have a big margin. But then, how much are they losing retroactively on each one of these warranty claims (which apparently are common) to put in a new motor and such? How much is that eating away at that margin. Could they have made it less complicated, and by that virtue more profitable? Is not having pop out door handles a deal breaker?

BigBlock440 > wiffleballtony 10/27/2015 at 10:44

1

Good points, and it probably would have made more business sense to not mess around with the door handles or back doors of the X. Apparently a completely silent, all-electric drivetrain wasn’t enough for Tesla to stand out in the luxury sedan market.

Satoshi "Zipang" Katsura > Spridget 10/27/2015 at 19:29

0

<link rel=”stylesheet” href=”// roa.h-cdn.co/assets/roadandtrack/20151022133122/css/main.css “ />

Are you okay there?

Steve in Manhattan > AMC/Renauledge 10/27/2015 at 19:50

0

Which manufacturers.

Spridget > Satoshi "Zipang" Katsura 10/27/2015 at 19:57

1

I’m ok; Kinja on the other hand . . . .

AMC/Renauledge > Steve in Manhattan 10/27/2015 at 19:59

0

Exide, VIA Motors, and VL.

Steve in Manhattan > AMC/Renauledge 10/27/2015 at 20:48

0

Haven’t heard of any of them. Not sure what to think ....

AMC/Renauledge > Steve in Manhattan 10/27/2015 at 21:01

0

It’s not that he’s anti-electric. He’s just made observations and critiques about Tesla’s specific business model.

Chasaboo > Spridget 10/28/2015 at 03:17

0

2 people at work just bought Teslas. I’m thinking about it. The quality of these cars is amazing. Japanese cars don’t come close and European cars fall short. And that acceleration! That’s addictive.

jimz > Steve in Manhattan 10/29/2015 at 11:35

0

except Lutz was the driving force behind the Volt. try again.