Published on February 8th, 2016 | by Steve Hanley
Bob Lutz Bashes Tesla Model X, Disses Electric Car Market
Bob Lutz is never one to keep his opinions to himself. In a recent interview on CNBC, he had a lot to say on a variety of subjects, beginning with the Tesla Model X. “The Model X appears to be unbuildable with those automatic gull-wing doors, which everyone in the industry always said were not going to work,” Lutz offered. The Model X was delayed almost two years while Tesla engineers struggled to overcome technical difficulties with the falcon wing doors, self presenting front doors, and panoramic windshield.
At the time the Model X was finally revealed to the public, Musk said, “I’m not sure anyone should have made this car,” according to Business Insider. “We probably should have just [modified the Model S],” he added. “There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars.” He claimed prior to the launch that the Model X was “the most difficult vehicle to build in the world.”
Lutz was also highly critical of Tesla’s business model in general. “Tesla’s business model is upside down…their costs have always been higher than their revenue,” said Lutz. “They always have to get more capital, then they burn through it.”
If Lutz was down on Tesla, he was doubly down on the business case for electric cars in general. “[T]he 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: whether there’s consumer demand for electric vehicles out there or not, the major OEMs like Ford, GM, Toyota, Volkswagen, 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. That is going to generically depress the prices of electric vehicles,” he said.
Lutz went on to say, “Look at the new GM Chevy Bolt, which after federal incentives costs roughly $30,000. GM is not going to make money on that. But the majors are going to accept the losses on the electric vehicles as a necessary cost of doing business in order to sell the big gasoline stuff.”
Tesla stock is down more than 30% since the first of the year. Will investors be encouraged when the company reports its 4th quarter earnings on February 10? We will be sure to let you know.