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Bob Lutz on Tesla Motors – “It’s Too Expensive to Run the Company”

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Bob Lutz says Tesla Motors is "Doomed," but in what way?Given that Bob Lutz has been head honcho for a number of automakers and departments of automakers, I would definitely take some stock in what he says about automakers in general, but I wonder if he’s right about Tesla Motors.

In Bob Lutz’ recent article on Road & Track, he asserts that Tesla Motors needs to change its ways if it’s going to survive, and at the root of it all is the Tesla Motors direct sales model.

Lutz says other automakers have tried the company-store direct sales model, to better control prices and give clients a premium experience, but “they were all money pits,” which Lutz figures is costing Tesla $4,000 for every single car that the company manages to sell. Could the same be said for the upcoming Tesla Model X, coming Summer 2016, or the upcoming Tesla Model 3, coming in 2017?

If this is true, then Tesla Motors will remain ever a niche automaker. On the other hand, maybe the success of Tesla Motors can’t be measured in units sold and profits. Indeed, in comparison to one of the world’s biggest automakers, Tesla pales in comparison. Toyota, for example, sells some ten million cars per year, whereas Tesla has only just topped ninety thousand in cumulative sales.

The upcoming Tesla Model 3, Musk expects, will sell something on the order of 500 thousand units per year. Still, Morgan Stanley said that Tesla could be one of the world’s most important automakers, in spite of the fact that Tesla is worth just $30 billion (Toyota is currently worth just shy of $200 billion, about seven times more than Tesla).

Tesla Motors’ success, even if it remains a niche automaker, will be measured in the push that it’s effected on other automakers, to reconsider alternative powertrains, and we’ve already seen the results of that push! More and more automakers are “getting into the EV game,” just as Lutz notes in his article. In the big scheme of things, even if Tesla Motors fails, will be the greater availability of low-emissions vehicles to the rest of us.

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