Tony Posawatz Offers Some Advice For Tesla
Before taking the reigns at Fisker Automotive (at exactly the wrong time), he was known as a GM "lifer", with 30+ years at the company, serving the last six years as the "Vehicle Line Director" for the Chevrolet Volt.
His exit at GM was brought on in part by the great brain trust exodus that took place shortly after the original Volt was launched - most likely due to a behind-the-scenes culling of the herd and apparent R&D work stoppage on the technology that was happening at the time.
When speaking to Benzinga in late October, Mr. Posawatz underlined Tesla's historical reliance on selling ZEV (zero emission vehicle) credits to get their number into the black.
“As one looks at Tesla, I do have some general concerns around their ability to make a profitable model that’s a high-volume model. And I think, if you look at their dependence currently on the ZEV credits for revenue and profit...it is not a business model that I think is sustainable.”
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And while at the time, his statement might have been looked upon with a fair amount of skepticism, almost prophetically a few days later Tesla reported a surprise 3rd quarter net profit of 2 cents a share or $3 million dollars (non-GAAP) after unexpectedly booking $76 million dollars worth of ZEV credits.
The sale of regulatory credits has pushed Tesla profits into the black before, with the company netting hundreds of millions of dollars since inception on the practise. That regulatory transaction is expected to be monetarily fruitless in the very near term as more OEMs finally get their "compliance" vehicles on the road to fulfill ZEV credit requirements, while other automakers such as Nissan begin to sell their excess stockpile, theoretically flooding the market.
Mr. Posawatz felt that Tesla should be focusing more on high volume offerings over new high end products like the Model S P85D.
"I would have preferred ... for Tesla to provide news not for a higher priced car, because the air gets thin up there relative to the number of potential customers in line, but to show signs of driving costs out of the car, and progress into make the lower cost, high volume electric vehicle, which I think is the key to their future success."
The former Chevy Volt/Fisker boss also had a suggestion we think does make a lot of sense - specifically for Tesla to find an automotive partner to share the costs of common parts and leverage their existing volume production.
“This is an industry that requires a lot of capital, and scale does matter as it relates to trying to get your costs down. If you’re buying a million steering columns, it costs you a hell of a lot less than if you’re buying a few thousand steering columns. So I do believe one key element that could lead to greater success for Tesla in the future is increased partnering in how alliances are formed...Tesla can benefit from scale of partners."