What’s The Deal With Tesla’s Elon Musk And Bob Lutz?

Elon Musk

FEB 28 2018 BY EVANNEX 73

Elon Musk

Bob Lutz and Elon Musk make an appearance together in the film, Revenge of the Electric Car (Image: Autoblog)

BEHIND THE BLUSTER: BOB LUTZ VS. ELON MUSK

In this corner, the father of the Chevrolet Volt, an auto industry veteran who has held senior positions at Chrysler, Ford and BMW, an unlikely advocate for EVs – a cigar-chomping ex-Marine who has called climate change “a crock.” Bob Lutz!

In the other corner, the mastermind of PayPal, SolarCity and SpaceX, the archetypal Silicon Valley entrepreneur, who wants to electrify transportation and save Planet Earth – and if that doesn’t work, he’ll take us to Mars to start over. Elon Musk!

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

Back in the day, Bob Lutz was a champion of Tesla and Musk, citing the Roadster as a major inspiration for the Volt, and saying that he would “always owe them a debt of gratitude for having kind of broken the ice.” After Lutz left GM, he founded Via Motors, which set out to build plug-in hybrid vans and pickup trucks for commercial fleets, but has had a difficult time finding its market. The 85-year-old Lutz has written extensively about the auto industry. For whatever reason, he has evolved into a harsh critic of EVs, and especially Tesla. In 2016, he compared Musk to the leader of a religious cult. (Musk responded on Twitter, saying, “Dear cult members, I love you.”)

Lutz launched his latest salvo against the California upstarts at a forum sponsored by a provider of insurance for collectible cars, suggesting that collectors buy a Model S now, before Tesla goes belly-up. He had nothing but praise for the car itself: “A Model S, especially with the performance upgrades, is one of the fastest, best handling, best braking sedans that you could buy in the world today,” he said. “The acceleration times will beat any $350,000 European exotic.”

However, Lutz said Elon Musk “hasn’t figured out the revenues have to be greater than costs…when you are perennially running out of cash you are just not running a good automobile company. I don’t see anything on the horizon that’s going to fix that, so those of you who are interested in collector cars, may I suggest buying a Tesla Model S while they’re still available.”

Above: Bob Lutz starts to discuss Tesla and Elon Musk at the 1:06:19 mark in the video (Youtube: Hagerty via InsideEVs)

“Twenty-five years from now, [the Model S] will be remembered as the first really good-looking, fast electric car,” Lutz told the LA Times. “People will say ‘Too bad they went‎ broke.’”

This time, Musk does not appear to have responded publicly to Lutz’s zinger, but naturally a number of his disciples have come to his defense. Enrique Dans, writing in Forbes, notes his admiration for Lutz’s writings on the auto industry, but believes that “he has missed something enormously important. In fact, possibly the most important difference between the old and the new economy: fundamentally, timeframes.”

Lutz (along with legions of stock-market analysts) sees Tesla’s ongoing losses as a sign of the company’s inevitable failure. However, according to Dans, “Seeing the bottom line as the be-all and end-all of management is problematic…The principle that revenue must exceed costs is Management 101. The tricky bit is how you define the timeframe in which that has to happen.”

As anyone following the Tesla story knows by now, the company’s stock market valuation has no apparent connection to the number of vehicles it’s producing. Tesla’s market cap, currently around $59 billion, exceeds that of Ford, and rivals those of GM and Honda (which, interestingly, was once the subject of the same sort of criticism now levelled at Tesla). Stock-market pundits tend to see this lofty valuation as madness, proof of the irrationality of Elon Musk’s mindless minions. However, Enrique Dans finds the reason in fundamental differences in the companies’ missions, and the timeframes in which they expect to fulfill them.

Elon Musk

A younger Elon Musk with the original Tesla Roadster (Image: Car and Bike)

If you parse the pedantic “mission statements” on the legacy automakers’ web sites, you’ll find that they basically amount to: “We want to sell cars.” Tesla’s mission statement is very different: “To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”

Tesla doesn’t just want to sell cars, it wants to change the world. This massive difference of ambition is reflected in the longer timeframe that Tesla envisions.

“In the economy Bob Lutz and other traditional car industry players understand, the goal and the metrics were clear: the quarterly results,” Dans writes. “If they were below what the analysts expected, bad; if they were higher, good. End of story. But the rules have changed…For today’s companies, profits are not the goal, they’re the cherry on the cake. Because the idea is, in the long term, to move toward an infinitely more ambitious goal, one that entails a whole new level of change. Companies that have grasped this can spend many years, even decades, without making a profit, as long as they are able to create a narrative that shows they are on the right track toward the defined goal.”

Tesla’s long road to ultimate triumph is not unprecedented – it’s a path that’s been trodden by other tech companies that set out to transform an industry. “For how many years did Amazon continue turning in negative quarterly results while its share price rose steadily?” asks Dans. “Did Jeff Bezos…supply his investors with drugs to maintain their confidence? Yes, he did, actually: a powerful substance called growth and clarity in the use of funds obtained. Amazon’s mission was never to sell stuff, but to change the world.”

Elon Musk

Tesla’s solar tiles on the roof, along with the company’s Powerwall home battery and new, lower-cost Model 3 sedan in the garage (Image: Tesla)

Amazon is not the only example. In this age of instant communication, in which whole industries can be radically transformed, or even disappear, “reporting a profit each quarter has never been less important.”

“If Lutz is right, if the grand plans for a new economy that will change the world are bullshit, Tesla will go bust,” Dans concedes. “But if Tesla’s plans and strategy make sense, it may well spend a long time in the red, but it will end up as the auto industry’s benchmark.”

Change is taking place ever faster, and humans’ attention spans are growing ever shorter, so it may seem counter-intuitive that the timeline for corporate success should grow longer. However, even in the fast-paced internet era, changing the world, or even one industry, can’t be done in the space of one quarter. Tesla’s mission is a risky one, but so far investors are willing to accept that risk.

Bob Lutz and Elon Musk look at the world in two different ways, and they have very different visions of the future. Which one will prove prophetic? We shall see.

===

Written by: Charles Morris; Source: Forbes

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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73 Comments on "What’s The Deal With Tesla’s Elon Musk And Bob Lutz?"

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CarGuy
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CarGuy

A VIA Motors pickup truck will for sure be a collector’s item. Go Bob, go!!

WadeTyhon
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WadeTyhon

Don’t be silly! Who would ever collect Via motors trucks! 😛

mx
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mx

Exactly.
Two things.
1) Lutz has done nothing for Via Motors, except to prove Via Motors can’t make a hybrid at a price that will sell.
2) Pay-To-Play. Just like the political system buy out by corporate America. Media Personalities can sell their opinions out to shorts for profit. Right wing economists have been doing it for years. Typically second or third raters in their fields sell out. “Supply Side Economics”, that hasn’t worked anywhere in any state, still shilled out by certain “economists”.
This is Capitalism.
Geraldo Rivera sell out to Exxon, on and on.

Windbourne
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Windbourne

Spot on MX.
True competition is what has been missing.
Tesla is offering it, but we still need more.
I suspect that GM and Ford are going to push another bailout. I actually hope they do, but this time, we break these companies apart. If we can get 5-10 american car companies , we will see innovation return.

theflew
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theflew

Not quite sure why GM and Ford would be asking for a bailout. Last time I checked GM was doing pretty good financially.

People keep forgetting for some reason I don’t understand. EV’s represent about ~1% of auto sales. I would love for it to be more, but it isn’t right now. ICE manufactures are not going to get to worked up at this point to chase 1%. All they need to do is make sure they have a plan. And any plan they have is executable within two years. That’s enough time to have battery suppliers build out to whatever supply they’ll need as well as any plant changes.

People view the Spark EV, Bolt and Volt as near misses by GM and that they could have been so much more. What if they were exactly what GM wanted – vehicles to test the technology and feasibility? At this point GM has all the knowledge necessary to electrify any vehicle they want.

mx
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mx

No one believes Ford though.
On their third CEO who isn’t interested in the future of this company. Wall Street SEES.

TwoVolts
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TwoVolts

“All they need to do is make sure they have a plan. And any plan they have is executable within two years.”

I think you are correct that this is the strategy of some/most legacy automakers. None of them yet wants to commit to producing EVs in large volume and lower per unit cost. Nobody wants to be first – especially if ICE vehicles drive profitability. The potential risk with this approach is that Tesla is already first and will only extend their lead in the EV marketplace over the legacy companies. At what point do the legacy companies decide to actually ‘execute’ their plans? That date could be pretty far in the future.

Predictor
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Predictor

Legacy car makers use their sales results to decide when to introduce new models; when the current sales of ICEVs sink, they will crank up the EV lines.

mx
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mx

They are in debt now, they won’t have the money, and by then Wall Street won’t be interested.

There’s a passenger car slump going on right now. Everyone’s waiting for a Tesla.

speculawyer
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speculawyer

GM seems to be doing a pretty good job of a delicate balancing act: continuing to sell profitable old technology while developing a pretty good plug-in line of vehicles.

My biggest complaint is that they don’t make large plug-in hybrids like SUVs, minivans, pick-ups, etc….but I suspect they do that because the ICE is much more profitable and they don’t want to give up that profitable market.

mx
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mx

GM has two expensive cars, that aren’t selling more then 30,000 copies a year. Or, should I say, GM has expensively priced two EV’s.

And the Bolt lease is the worst in the industry. ( How you limit sales. )

Pushmi-Pullyu
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Pushmi-Pullyu

Right. Developing two PEV (Plug-in EV) models which are clearly designed to appeal only to market segments well outside GM’s normal market, and thus not competitive with their gasmobiles, is a rather long way from “developing a pretty good line of PEV vehicles”.

It’s especially noticeable that altho the Bolt EV’s body style would be more appealing in Europe, GM isn’t trying to sell it there in more than token numbers, and hasn’t priced it competitively there. GM has also limited exports of the Bolt EV to Canada and S. Korea, despite relatively high demand in both countries.

Now, I’m not suggesting that there is anything nefarious going on with GM’s sharp limit on exporting the Bolt EV. Likely the car has such a thin profit margin that it can’t be sold profitably outside the USA. But the point is that GM is still very far away from having a “pretty good line” of PEVs for sale worldwide.

GM has stuck a couple of toes in the water of selling PEVs, but certainly isn’t wading in!

Pushmi-Pullyu
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Pushmi-Pullyu
“All they need to do is make sure they have a plan. And any plan they have is executable within two years.” According to Jay Cole, who generally knows what he’s talking about on this subject, the normal development time for a completely new automobile model is 4 to 5 years. So your “executable within two years” claim doesn’t appear to pass a reality check. Now, I do agree that it only takes two years to build out new battery factories and fine-tune them for mass production. So that part of the equation could possibly wait until only a couple of years before a legacy auto maker plans to actually start making and selling compelling plug-in EVs in large numbers… by which I mean at least 100,000 per year. So if they have a “plan” that is executable within two years, then they had darn well be fairly far along on actually producing a production prototype of multiple PEVs which they can put into production within two years. That means a lot more than just “a plan” on paper; that means multiple simultaneous R&D projects actually progressing at the company. I don’t know of any company that’s working on development… Read more »
Windbourne
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Windbourne

Tesla will be profitable this year, as M3 production increases over 4000 cars/ wk.

More importantly, Over the next 2 years, ice sales will plummet, and EVs will own the market. Tesla will continue to dominate as they will have lowest cost for the best cars.

2013Volt
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2013Volt

I hope you are right but think your timeline is ambitious. If you change the 2 to 20 I believe you are spot on.

Pushmi-Pullyu
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Pushmi-Pullyu
Yeah. Gasmobile sales are not going to “plummet” so long as they are the only cars available for most would-be car buyers to buy. When people need a new car, the vast majority of them are going to buy one from what’s available, not wait around for years for a better one to appear. Currently, PEVs are only 1-2% of the market. There isn’t going to be some massive shift to 50% or more of the market in only two years. Even if automobile makers wanted to jump into the EV revolution with both feet — and not a single one of the large legacy auto makers has yet shown any real commitment to doing so — auto makers only put at most about 5 new models into production in any one year. We can hope that with the disruption of the growing EV revolution that pace will be accelerated over the coming 20 years or so, but a tech revolution in an industry that takes such huge capital investments as making automobiles, is almost certainly going to take well over a decade once it really gets started, and I’m far from convinced that it has yet really started. I’m… Read more »
SansIce
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SansIce

+1

Robert Weekley
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I suspect your first analysis is close to correct, and if not by 4,000 Model 3’s per week, maybe by 5,000 per week.

On your second point, that is an interesting take! Not one I have heard suggested before!

Care to respond with a deeper presentation to show how you arrived at that seemingly aggressive change in sales results for ICE Vehicles?

I don’t see enough vehicles with Plugs coming from all Autimakets yet by 2020, let alone straight BEV’s! Not in selection, nor in quantity! Maybe by 2025?

By then, Tesla Should be moving a steady 500,000+ Model 3’s per year; possibly 1,000,000+ Model Y’s per year; maybe 50,000+ 2nd Generation Roadsters per year; Maybe 100,000 Semi’s per year; and be delivering 100,000 each of Model S & Model X per year; and… Might have Launched a EV Pickup, to push Ford, Dodge, & GM, to do better, but they might only be making a few hundred thousand Pickups per year yet, as they ramp up in Multiple ‘Gigafactory’ sites!

Not sure if all that, and all the other Automakers cars with plugs would cause a big drop in ICE Vehicle sales, before 2025!

Windbourne
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Windbourne

If you buy a $80k car TODAY, and 2 years later, it is worth less than 20k, possibly 10k, while the EV competitor which cost around 80K, is worth around 70K, what will u buy next?
I have little doubt that used ICE will plummet in value. As such, the buyers of vehicles that cost 30+K, are very likely going to switch to Tesla, OR, will buy one of the new Porsche, MB, Jag EVs. Because it will be obvious to all that EVs are lower cost to run, and similar cost to ICE ( 2 years from now ), it will turn this into a self perpetuating cycle, and a fast one, when it happens.

Note that if it was just Tesla and the German luxury cars were not switching, then ice sale would continue down, but NOT plummet. I really suspect that ice sales will drop by 20% come end of 2019, early 2020, and continue with a 10-30% drop each year.

Will
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Will

Crazy talk

Windbourne
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Windbourne

Oh, BTW, regardless of how much Tesla produces, it will still happen. Just because there is a drop in ICE does not mean that Tesla will be able to pick it all up.
I fully expect Tesla to be over 1M cars /year by end of 2019, and actually doubling it in 2020. But, I also suspect that a number of car buyers will simply hold out for their favorite to make decent EVs. In fact, I think some 30% or more car buyers will be loyal to company.

Pushmi-Pullyu
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Pushmi-Pullyu

“Maybe by 2025? …maybe 50,000+ 2nd Generation Roadsters per year”

Some interesting guesses there. You may well be correct in saying there is a market for 1 million Model Y’s per year. But total sales over multiple years for the original (2008) Roadster were only ~2450, so I don’t think there is a market for the Roadster Mk II that is anywhere near as big as 50,000 per year.

Likely the Roadster Mk II will be produced and sold for just a few years and then production will be ended, as is the usual case for high-end sports cars. For example, Porsche reportedly produced only 918 of the 918 Spyder before stopping production.

WadeTyhon
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WadeTyhon

“More importantly, Over the next 2 years, ice sales will plummet, and EVs will own the market.”

We can only dream… but that won’t be happening in the next 2 years. Especially not in the US. I think 2 decades might be a more reasonable time frame.

Even Norway, the golden child for EV penetration, had less than 40% market share for plug-ins last year… and many of those where short range PHEVs!

It will be a long while before the ICE begins to thaw. 😉

Windbourne
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Windbourne

Nope. Once a number of Western car makers start doing real EVs, ice sales will drop due to their have no resale value. Simple as that.

And btw, somebody that would normally pay 25K and under, will likely be able to buy 2 y.o. Lexus, Audi, Mercedes, caddies, etc for less, so they will.

mx
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mx

You may be right. Car sales are down, as everyone waits for Tesla.

Ziv
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Ziv

Wind, if Tesla sells more than 7,000 cars a month in the US (average) over the next 5 months, they will hit 200k just before the end of the quarter and will therefore lose the full tax credit 3 months earlier than if they sell slightly less than 7,000 cars a month (in the US) for the next 5 months.

How much do you want to bet Tesla sales in the US fall just short of 7,000 * 5 = 35k over the next 5 months? Tomorrow is the first of the 5 announcement days. It will be interesting to see what happens.

Windbourne
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Windbourne

Ziv,
Bad assumption. U assume that large number of ppl are buying it because of tax break. I would argue that less than 10% do so due to tax break.
The model 3 is a $40-45k car, selling at $35k.
The 3 series, that M3 compete against, have lost loads of sales over last year.
Otoh, EVs like the leaf/bolt, are $20-25k cars selling at $30-37k. As such, they need the subsidy.

springer
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springer

Well Maybe you have better vision of future than Elon Musk! Elon predicted Tesla will be profitable by 2013!! That’s whopping 5 years ago! Tesla profitable this year?? Don’t hold your breath! First quarter will be nearly a billion dollars of red ink!! Way to go Musk!!

Get Real
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Get Real

Clutz is just another bitter old conservative and in this case Musk at like 40yrs old had already far surpassed Clutz’s lifetime achievements.

And mx is correct, Clutz is just another sellout.

Lamata
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Lamata

Exactly, In order for Lutz to Achieve what Musk has achieved “ASSUMING” that Lutz Had The Brain Power to even Approach these Endeavors(((Which he DOES NOT))) that Musk Has Already Conquered ,in his still young life .. It would take Lutz at least 15 life times to achieve , IF AT ALL!! ..Lutz Was A LUCKY Has Been with Lucky Timing & A SELLOUT!

G2
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G2

Bingo

Kevin Z
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Kevin Z

Nice article Charles.

G2
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G2

Who is this ‘Boob Putz’ and how many companies has he not bankrupted?

theflew
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theflew

I hate when people use Amazon as an example because Amazon makes most of their profit from services, not the shipping of products to you and me. So their ability to increase profits relies on their ability to sell AWS and the server farms it runs on. That’s very different than designing and manufacture cars.

Tesla has struggled with profits even though it has had little competition. Guess what – that’s changing in the coming months. Also the Model 3 while a nice car isn’t hitting the sweet spot where the market is right now and that’s CUV/SUV.

The only question for Tesla is when do they plan on turning a profit? Not for a quarter, but ongoing healthy profits. Otherwise, they are at the mercy of their ability to get cash infusions.

Link
Guest
Link

There is another major difference between Amazon and Tesla. Amazon used its growth-over-profit phase to become the uncontested number 1 in its space, crushing all competitors and dominate the market.

Tesla on the other hand is still just a small fish in a large pond, despite all the losses. And I don’t blame them, there was no other way to enter such a major industry, but the comparison with Amazon just doesn’t hold up.

mx
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mx

You’d better start actually reading Tesla’s balance sheet, and stop believing right wing bull without verification.

Tesla has had Geometric Asset Growth since inception.
Tesla has a large product mix now and has increased sales 100X since the roadster.
This isn’t some small California Garage Startup any more.

By the way, Tesla has a better Book Value than Amazon.

Windbourne
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Windbourne

Smart guy. U are paying attention and thinking for ur self.
I would have thought that recent article about Tesla Margins on higher priced cars being much better than regular cars would influence a few of the FRWers. But no.
And they hate college education.

Will
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Will

??? the shift of waiting for growth and profits for decades is a bad example to run a company. A lot of common people that have 401k, IRA, general stocks, mutual funds have heard this guys speak or read this article, they would have been pissed off. why 99 recession happen when whole lot tech companies went broke

HH
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HH

I agree – the comparison to Amazon is so wrong.

First off – Amazon never ran large losses for a long time. Their profit/loss usually hovered around 0, some quarters negative, other positive.

Second – their operational cash flow was significantly positive very early on. That allowed them to expand without constantly having to go to the capital markets.

Tesla is nothing like Amazon

Jacked Beanstalk
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Jacked Beanstalk
Lutz was a positive influence at GM and I’ll forever be grateful to him for the Volt and the mid-engined Corvette. Yes, he bulled the mid-engined Corvette into development but it was cancelled due to the ’08 crash. Now it lives again as the 2019 ‘Vette, which will be a hybrid in either ’19 or ’20. But as the article so beautifully lays out, Lutz is a prisoner to the same quarterly profits corporate governance strategy that has bankrupted most American manufacturers in the past 40 years. Always cutting corners on quality, on performance, and on customer service and satisfaction, always cutting to meet those quarterly profit goals and secure the yearly pay bonuses, without a thought in the world to the long term health and reputation of the corporation itself. This flawed strategy plays out in the Bolt. It’s a great car, but with a little more investment by GM it could have been a trendsetter that beat Tesla at their own game. Imagine a Bolt with a simple but elegant interior, independent rear suspension, a rear motor option, and sexy styling. They would have lost more money short term, but the boost to their reputation would have been… Read more »
Get Real
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Get Real

Good assessment and I would add that G and all the laggard, legacy OEMs are pretty desperate to make sure that electric cars DO NOT compete with their ICE models.

This because their main IP and all of their sunk costs are in ICE and they therefore want to slow walk the inevitable transition to full electrification as much as possible.

Jacked Beanstalk
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Jacked Beanstalk
Yeah I figure they want to fund EV development with ICE sales all while they maintain the same profitability, which is only possible if EV development remains on a back burner. They should have had a back burner EV skunkworks since the 90s, but props to the new management for doing the right thing now. Based on what I’ve heard from a few guys at GM, the new EV strategy wasn’t a done deal until the Bolt succeeded, and a few careers would have been lost in the event of the Bolt flopping. We can thank the ’08 bankruptcy for delivering a mortal blow to the crusty good ‘ol boy management culture – a culture that viewed even guys like Lutz with suspicion. Lutz’s book is a good read on the management dysfunction at American auto companies. He relates a pretty sad tale of one GM truck project with a removable cap on the back – over an upholstered SUV-like interior. Market research and PPT presentations were used to gain approval and the truck predictably flopped. But management only learns one thing from the mistake: don’t take risks. Thus the march towards bland mediocrity continued…
Windbourne
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Windbourne

That is why I have said that if we end up bailing gm/ford out again, I want to break them up. W/O screwed that up. Either let them flounder, or break them apart and have competition between small enough companies take hold.

Jacked Beanstalk
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Jacked Beanstalk

I’m not sure it’s feasable to break GM up into smaller companies. GM’s R&D facility in Warren, MI designs the cars for every name plate and IP is shared among all three nameplates.

Shared R&D costs also benefits consumers. If Chevy, Buick, and Cadillac each have to engineer their own EVs then it’s cars like the Bolt won’t be possible as soon.

Windbourne
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Windbourne

Great post.

TheWay
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TheWay

I find it interesting how many people find losing on a net basis while profiting on a gross basis and focusing on long term growth to be weird… it isn’t new, 50 years ago it was the norm. Until wallstreet convinced people net profit is what they want and suddenly we have corporations operate on a QoQ basis leading to companies who existed for a hundred years to end up bankrupt for the sake of short term profits.

The reason wallstreet sells people on net profit is because when they buy stocks low and let them grow 1000X, they need someone to buy the stocks and be happy with 5% growth or dividends. So by directing amateur investors towards net profit, they can get huge gains and have someone to sell to once the stock matures.

As for Lutz vs Musk, not surprising. When Lutz was with GM, Musk wasn’t a threat to him at the time so he had no problems saying the truth. But now that he went his own way and tried it himself as Musk becomes more and more successful, Lutz gets more and more jealous.

Jacked Beanstalk
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Jacked Beanstalk
It sure sounds like jealousy, doesn’t it? I really don’t know if Tesla will succeed. Those writings by an insider at the Gigafactory are disturbing and if true then how will they ever master profitable production? In a nutshell, they hire workers and managers with no manufacturing experience whatsoever and pay them crap wages for a job that’s 40 miles round trip from the nearest town. The only road in is often closed, which halts production. The power company is unreliable so outages are frequent and they not only halt production, but junk an entire day’s worth of batteries. Virtually nobody there, neither managers nor workers, is mechanically inclined, so when they try to fix expensive equipment they usually break it, slowing production while new parts are shipped from Japan. I find it believable because in Silicon Valley they’re used to contracting production out to Chinese factories brimming with experienced workers and engineers. It’s madness to expect the same results with a bunch of unskilled former casino personnel. Too bad he didn’t set up a Gigafactory in MI – we’ve got excess skilled workers who would love to build futuristic cars. But they would expect to be paid enough to… Read more »
TheWay
Guest
TheWay

You mean like the insider who claimed Tesla permanently scrapped the solar panels?

Not to mention if they really had outages, they could have easily solved it by installing a few Tesla Powerpacks. This alone makes the claim pretty suspect. Even more so since the industrial center is home to multiple companies like Amazon and the like… you think they would be staying there if there was outages all the time?

Not to mention both Panasonic and Tesla have staff there who have plenty of manufacturing experience.

As for MI? You mean the state that bans the sales of Tesla cars? Tesla did buy a workshop in Michigan for other purposes though.

Lastly concerning salary, Tesla on average pays 70k-100k more than average. Overall you do realize that labor is only usually like 10% of the cost right? And lastly, MI is too far from Tesla’s supply line and the humid weather is not good for batteries.

Pushmi-Pullyu
Guest
Pushmi-Pullyu

“Those writings by an insider at the Gigafactory are disturbing and if true then how will they ever master profitable production?”

But only a serial Tesla basher like you, “Jack”, would suggest that those Reddit posts from an anonymous claimed insider are actually true. Those of us who have been following the “story” of Tesla for many years are not so easily fooled.

They say “You shouldn’t believe everything you read.” When it comes to the internet, it seems you shouldn’t believe most of what you read!

Jacked Beanstalk
Guest
Jacked Beanstalk

Grow up, dude. I’m not a corporate fanboi so I won’t fawn over Tesla as if they can do no wrong. If they ever build a car under $50K with a heated steering wheel and Apple CarPlay then I’ll probably buy one.

As far as I can tell, you don’t believe the insider accounts because they’re negative. If they were positive then would you dismiss them so readily?

Scramjett
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Scramjett

I think Lutz forgot Management 102: “It takes money to make money.”

dinhh68
Guest
dinhh68

He took the Trump Univ ICE Management 001 “Take more money to lose more money”

dinhh68
Guest
dinhh68

The petrolclown, Lutz, just upgraded his iphone8 for the latest iphoneX.

bjrosen
Guest
bjrosen
When comparing Tesla to Amazon the very important difference is that Amazon has been profitable since just before the dot com bust. Amazon sucked up huge amounts of cash during the dot come boom, just like Tesla does now, but two quarters before the boom ended Bezos flipped the switch to profitability. Amazon has always been minimally profitable in that they invest almost everything they make back into new businesses, but the key is that they don’t lose money and they have never been in danger of running out of cash. Tesla hasn’t made that switch yet, they are still a cash fire. They are playing a game of chicken, burning a billion dollars a quarter with the assumption that they will be able to raise more before they run out of cash. As long as they can continue to raise money they are fine, but as soon as they can’t then they will crash. In don’t think that Tesla will disappear if that happens, I just think they will cease to be an independent company. Around Aug of this year Tesla is due to run out of cash. If they have sorted out the M3 production problems in the… Read more »
Get Real
Guest
Get Real

Not going to happen as right now they have 20 BILLIONs$ in orders.

They could at any point stop investing in future products and start being profitable but they are instead going for dominance as the premier brand of mid-high end compelling PEVs and a complimentary ecosystem of DCFC and solar and energy storage products.

Will
Guest
Will

Yeah Apple can just buy Tesla with its $500B of cash it has laying around. 20b is nothing tp them

HH
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HH
“They could at any point stop investing in future products and start being profitable” If people only had a bit of understand of how a profit/loss calculation works and that “investing” a priori has little to do with it, that would be really helpful. Investing only comes in with depreciation. Tesla doesn’t even have its needed Model 3 production line fully set up – so its depreciation costs now are actually lower what they need to be. They could cut R&D by quite a lot (not completely though, every car company needs R&D) – but that would still not make them profitable. As they sell more Model 3, their other costs will rise as well. They will need more service centers (#of service centers rises with fleet size, not with yearly sales numbers; so this part needs to be increases even if sales remained flat). All of this put together – Tesla cannot be profitable, even if they stopped all investment unrelated to current products right now and smoothly increased Model 3 production to the 5000/wk target. Btw – the latest Bloomberg tracker estimate shows that they think Telsa is still only at 1000/wk – one month before they are… Read more »
Jacked Beanstalk
Guest
Jacked Beanstalk

That would be a terrible investment for Apple given that they have no automotive manufacturing experience whatsoever.

If Tesla fail because they can’t solve mass production then only a company with such expertise could benefit from owning Tesla. My guess is a Chinese auto company would snap them up since the company not only has sexy cars but a built-in dealer network. They could keep design in Silicon Valley and move production to China where they could easily pump out millions of Model 3 cars per year at lower costs.

Will
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Will

+ ???

Jacked Beanstalk
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Jacked Beanstalk

So Apple, who have no automotive manufacturing expertise, are going to buy Tesla in the event the go belly up due to an inability to manufacture in volume.

Anyone else see the problem here?

TheWay
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TheWay

Tesla has already hit cash flow positive. If they maintain cashflow positive and earn gross profit, even if they lose net profit, they can continue for a thousand years without raising a penny. (People really don’t understand want net profit is, sigh)

Pushmi-Pullyu
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Pushmi-Pullyu

Reality check:

Amazon.com did not start showing consistent quarterly profits until 2016. It showed a net loss as recently as Q1 2015.

https://www.theverge.com/2016/7/28/12313526/amazon-q2-2016-earnings-report-aws-cloud-profit

It is a never-ending source of amazement to me that anti-Tesla FUDsters so often post claims which are so quickly and so easily disproven. Wouldn’t it serve their purpose better to stick to the truth so far as possible? Don’t lies work better when they include as many things as possible which are actually true?

I mean, there is a real issue with Tesla consistently not showing a net profit, quarter after quarter. So why in the world would you feel the need to lie about it? You Tesla bashers keep shooting yourselves in the foot by so often posting assertions which very clearly, and often quite obviously, are not true.

Do you really think your reading audience is that clueless? Or is it that you don’t actually care if anyone believes you or not?

Both sad and strange.

speculawyer
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speculawyer

Lutz is a cranky old man that is stuck in the past.

Musk is a young scientist/engineer pushing the technology forward.

What more is there to say really? No doubt that Musk tends to get ahead of his skis a bit…but he does do roadmap planning that generally works out even if it takes him a couple of extra years of development & refining. I criticize Musk a lot but I’d still bet on him…many of my criticisms turned out to be dead wrong.

I prefer the “can do” types to push hard to solve difficult problems over the old “can’t do” naysayers that sit back.

Jacked Beanstalk
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Jacked Beanstalk

“American’ts” is what they are.

We can’t do this, we can’t do that, it’s too expensive can’t do it, nope, it’ll never work, we can’t, just go back to the Old Way when America Was Great.

I’m sick of them. Here we are on the cusp of an energy revolution and our leaders fear to compete and instead pine for a return to the America of their childhoods when everything was Just Right.

Now that traitor wants to cut alternative energy research by 70%. He really wants this country to fail into irrelevance among developed nations.

Pushmi-Pullyu
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Pushmi-Pullyu

I actually doubt there is a deliberate strategy by the Traitor-in-Chief to reduce the USA to a third-world nation, easily pushed around by our rivals and made the biggest laughing-stock in the entire world.

No, I don’t think it’s a deliberate strategy. I think it’s more a case of the biggest example in history of the Iron Law of Institutions:

“The people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution “fail” while they remain in power within the institution than for the institution to “succeed” if that requires them to lose power within the institution.” — Jonathan Schwartz

Or, to put it more simply, they are acting as if their guiding principle is this:

“It is better to rule in hell than to serve in heaven. — John Milton

Jacked Beanstalk
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Jacked Beanstalk

Good point. Thanks for that Schwartz quote, it’s perfect.

Steve
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Steve

People seem to forget the 2011 recording of Bob Lutz speaking directly to Elon Musk – on camera. He had a different opinion then.

https://www.youtube.com/watch?v=NO0DRa5gLoI

Pushmi-Pullyu
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Pushmi-Pullyu

That was back when Bob Lutz still had power within General Motors. That was back before he became a bitter, jealous has-been, watching the continuing rise of the younger and now much richer — and apparently much more talented — Elon Musk.

It’s an old story; fading star versus rising star. I think the movie “A Star Is Born” (1954) told it best.

Jacked Beanstalk
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Jacked Beanstalk

Lutz is a real piece of work. I think it was Colbert who asked him, right after the bailout, “do you need to change your small government conservative beliefs? Do you feel any gratitude for the government saving GM?” (paraphrasing)

Lutz responded no, he didn’t have to change. The government was the reason GM went bankrupt, so it was only fair that they bail GM out.

The guy literally believes GM has no responsibility whatsoever for their own bankruptcy.

Nix
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Nix

Bob is trying to “punch up” because his Via failure is going nowhere, and the only way to draw attention to himself is to attack the clear market sector leader.

Each attack simply validates and solidifies Tesla’s market sector leadership. You don’t hear GM and BMW and etc attacking Honda or Toyota or Fiat for their EV’s. That’s because they aren’t the market sector leader. Tesla is.

So bring it on. Every attack simply validates Tesla as the one on top to go after.

Pushmi-Pullyu
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Pushmi-Pullyu

“’Twenty-five years from now, [the Model S] will be remembered as the first really good-looking, fast electric car,’ Lutz told the LA Times.”

No, that would be the (2008) Tesla Roadster.

“People will say ‘Too bad they went‎ broke.’”

Yeah, just like people kept saying about Amazon.com. It was only, I think, 2-3 years ago that self-appointed “analysts” stopped complaining about Amazon.com not being profitable. How did that turn out, again? 😉

Charles L Exner
Guest
Charles L Exner

Notably missing is RANGE I need a vehicle with at least a 500 mile range. A place to plug-in at my destination. Only hybrid vehicles are fully capable of meeting my needs. Not to mention in order to afford a Tesla I would need to sell my first born and he and his wife would probably object