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Bob Lutz in Road & Track.

Grendal

SpaceX Moderator
Jan 31, 2012
5,753
7,011
Santa Fe, New Mexico
The new Volt seems like an excellent improvement on the old Volt. I hope the Bolt is a great little EV. I hope the Bolt pushes Nissan into making the Leaf 2.0 better. GM isn't Tesla and they won't be dethroning Tesla anytime soon. If the Model 3 is anything close to what Elon has said it will be then there is no contest. The Bolt will sell, maybe, 30K cars a year. That is below 1/10 the amount Tesla will sell of the Model 3.
 

SabrToothSqrl

Active Member
Dec 5, 2014
3,697
2,973
PA
This guy is a 200 year old fossil. Of course he'd cut costs. Look how well any GM is put together. It's crap.
Scrapping the super charger network?! That's just stupid.
This is business in 2015. He's literally too old for this crap.

Tesla is doing, and will do an amazing job.
 

bob_p

Active Member
Apr 5, 2012
3,638
2,773
Road & Track - Is Tesla Doomed?

Article posted on MSN and Road & Track websites by Bob Lutz - with major concerns about Tesla.
 

SW2Fiddler

We Are Cognitive Dissidents
Mar 19, 2014
2,362
3,247
Houston TX
His Trifecta Of Doom has less than three legs to stand on. (One is the MASSIVE inventory that a manufacturer car store HAS to keep on ACRES of land!) Thus the argument falls over without even touching the "Spend ALL The Cash" leg.
 

techmaven

Active Member
Feb 27, 2013
3,618
9,711
This is a rehash of an old interview with Lutz. This has been beaten to death here.
Bottom line... ICE car guy doesn't get EVs.

I don't believe that. Lutz knows cars. He understands EVs. But does he understand Tesla's business model and processes and how it differs materially from what he is used to with the big automakers with dealerships? I don't think so. I think he's fed some stuff and that stuff is typical analyst BS and he took it from there.
 

Grendal

SpaceX Moderator
Jan 31, 2012
5,753
7,011
Santa Fe, New Mexico
I don't believe that. Lutz knows cars. He understands EVs. But does he understand Tesla's business model and processes and how it differs materially from what he is used to with the big automakers with dealerships? I don't think so. I think he's fed some stuff and that stuff is typical analyst BS and he took it from there.

To an extent he is right if Tesla were GM. Tesla is not GM, nor will it ever be GM. He doesn't even mention Tesla Energy and the battery factory and how that has an impact on Tesla's business strategy. He is simply looking at the vehicle sales and vehicle development. If that was all that Tesla was doing then he is very likely right. Tesla is doing a lot more than that and that is what he can't calculate as a car guy. He's also thinking about upper management cutting costs to create their management bonuses. None of that is what Tesla is about. So "Bob Lutz doesn't understand Tesla" is what the title of the article should be.
 

TEG

Teslafanatic
Aug 20, 2006
21,766
8,742
My senses it that Mr. Lutz usually has an agenda, and will present things in a certain light in an attempt to achieve some goal. I think "with a grain of salt" rules apply here.
 

wdolson

Well-Known Member
Jul 24, 2015
7,451
9,946
Clark Co, WA
We ought to be careful about shooting the messenger before reading the message. Bob does have some valid points. There are very good reasons why there hasn't been a fully new auto maker since the 1920s.

Elon & crew are very knowingly betting the farm in a very high risk game. I figure that Tesla has a 50/50 shot (at best!) at surviving for another 5 years as an independent company. But I also think that they are too big and have done too well to die; the brand alone is incredibly valuable. If they were to financially collapse, they could be purchased and live on as an "electric brand" subsidiary of a larger automaker. Or they could become part of Google or Apple - either of which could pay whatever is required to see Tesla through to time where they have enough mass to become fully profitable. Either way, I'd be willing to bet a lot of money that the Tesla brand will still be attached to high end electrics in a decade.

That said, Bob's assertion that Tesla should make something that sounds very suspiciously like a new Volt is a bit disingenuous. It's not like anybody from GM is in a position to lecture the world on how to be successful and innovative automaker.

In the article he criticizes Tesla for trying to adopt the Apple store model and says it doesn't work with cars. He said all Apple needs to do is lease space in a mall and hire a bunch of kids to run the place. Last week I went to the nearest Tesla store for the first time for a test drive. (I had driven a very early P85 briefly, but this was the first time I had a chance to really drive the car I wanted.) It was in a shopping mall and most of the staff were 20 somethings. The guy who gave us the test drive was a recent grad of my alma mater which was sort of funny. So it looks to me like Tesla can open a store in a shopping mall and staff it with kids.

Having re-read the editorial, I think Lutz's words shouldn't be dismissed out of hand. He may not be completely right, but he may also be seeing some patterns Tesla should be paying attention to. He says in the article, "bleeding cash, securitized assets, and mounting inventory. It's the trifecta of doom for any automaker." Tesla is technically losing $4000 a car, but not all of those are on fixed costs like GM had to deal with before the bankruptcy. A fair amount of those expenses are things Tesla chose to take on like building out the supercharger network. If they needed to, they could cut back on that development and stem the bleed. In the past year they have been building the Gigafactory, building out the supercharger network, and putting a lot into R&D for two new products (the Model X and 3) and they are only losing $4000 a car.

I'm not completely sure what he means by securitized assets. He may mean leased vehicles. He also says inventory is climbing. That one had me confused, but I did find an article that made the case Tesla was quietly building to inventory and selling the cars as demos and/or used. However the article was from February of this year and I couldn't find anything more recent. They may have stepped up the rate at which they retire demo cars and sell them on, which would allow them to build a few more cars on spec, but I think the vast majority of new sales are custom orders.

The introduction of the dual motor cars has created a bit of a glut of used rear wheel drive cars. I think the bulk of used Teslas on the market right now are from people who upgraded to a newer Model S. There is a willing market out there for people who want a Model S, but can't afford a new one. I suspect they would probably sell out a large number of the CPOs if they lowered the price a little more, maybe a CPO sale at year's end? But they want to keep the prices up on used Teslas to keep the market strong. Another thing I've noticed with CPOs is Tesla enables any firmware disabled features when they turn the car around to sell as a CPO. This boosts their profits. They can low ball someone selling back a car without supercharging enabled or the tech package, then enable those features and sell the car on for more money with those features enabled.

I think Tesla is in a stronger position than Bob Lutz seems to think, but I also agree that there are a number of scenarios where Tesla could also end up a subsidiary of another company. My first bet would be Google. Elon Musk is good friends with the top people at Google and I think he really doesn't like Apple too much. He almost sold out Tesla to Google in early 2013. I would give a little better odds that Tesla survives though, probably about 70-80% chance of survival.
 

Merrill

Merrill
Jan 23, 2013
3,706
1,260
Sonoma, California
Ten years ago I blew Tesla and Elon off, thinking here is a guy with millions who is making a electric Lotus. The company has proven it makes an incredible product, both high tech and beautiful. After researching Elon and finding out where he is coming from and what he wants to do and why he is doing it I changed my mind about both him and his companies. I want Tesla to succeed and feel that buying his product I can help in a very small way to make this happen. You will not find older entrenched automobile executives that can move with the future, so they feel threatened and most want Tesla to go away.
 

wdolson

Well-Known Member
Jul 24, 2015
7,451
9,946
Clark Co, WA
To an extent he is right if Tesla were GM. Tesla is not GM, nor will it ever be GM. He doesn't even mention Tesla Energy and the battery factory and how that has an impact on Tesla's business strategy. He is simply looking at the vehicle sales and vehicle development. If that was all that Tesla was doing then he is very likely right. Tesla is doing a lot more than that and that is what he can't calculate as a car guy. He's also thinking about upper management cutting costs to create their management bonuses. None of that is what Tesla is about. So "Bob Lutz doesn't understand Tesla" is what the title of the article should be.

Back in June Lutz was trashing Tesla energy too.
 

ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
10,315
7,396
Maine
I'm not completely sure what he means by securitized assets. He may mean leased vehicles. He also says inventory is climbing. That one had me confused, but I did find an article that made the case Tesla was quietly building to inventory and selling the cars as demos and/or used. However the article was from February of this year and I couldn't find anything more recent. They may have stepped up the rate at which they retire demo cars and sell them on, which would allow them to build a few more cars on spec, but I think the vast majority of new sales are custom orders.

IIRC, Tesla took out a credit line against its inventory. It dipped into the credit line last quarter. Then it did the the Jonas-autonomous-cars-pump-bond/issue to add $700+M to its cash reserves.

Lutz is right about Tesla's precarious debt position. The X delay has it burning cash. Remember that the $2B it raised was supposed to be about the Gigafactory. Right now it hasn't even completed Gigafactory part 1 and it's used up that money. It's in the same position it was in 2012/2013 with the Model S, where it need to ramp production with reasonable margin, or it'll run out of money and it'll be hard to get people to lend it more. Back in 2013, Tesla was smaller and could have adjusted by lowering its capex and reeling in expansion plans. But now, Tesla's accumulated debt and future competition mean it's Gigafactory and Model 3 or die.

Complete the X ramp well, the doom-mongering will quieten down, Tesla will be able to get Gigafactory Part 1 producing batteries, which will start to recover some of the related capex, and Tesla will be in a more positive position to raise more capital to invest in Model 3 and getting cell production in Gigafactory Part 1.
 

electracity

Active Member
Jun 8, 2015
4,028
2,531
60606

That authors dreams of not owning a car, vastly different than Tesla position as a luxury car maker.

He says: " and on the other hand he fails to mention Tesla's highly efficient supply chain management and just-in-time inventory,"

How does the author know how Tesla is doing in this area compared to major manufacturers? I see no one refutes Lutz point by point. Tesla looks like it needs a couple of billion to get to 2020. Tesla has a high burn rate, regardless of the gigafactory, supporting the sales offices and superchargers.

Here's a clueless young engineer at a clueless major auto manufacturers comment on the S frame:

Young Auto Manufacturing Engineer Nitpicks a Tesla - Album on Imgur
 
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Caligula

Member
Oct 14, 2015
596
149
San Diego
Here's a clueless young engineer at a clueless major auto manufacturers comment on the S frame:

Young Auto Manufacturing Engineer Nitpicks a Tesla - Album on Imgur

Can you elaborate at to why he's "clueless"? He seemingly makes good points but as a layman, it's impossible to tell.

Last week I went to the nearest Tesla store for the first time for a test drive. (I had driven a very early P85 briefly, but this was the first time I had a chance to really drive the car I wanted.) It was in a shopping mall and most of the staff were 20 somethings. The guy who gave us the test drive was a recent grad of my alma mater which was sort of funny. So it looks to me like Tesla can open a store in a shopping mall and staff it with kids.

Tesla hires college gratuates... still gets accused of employing children. What am I missing here?
 
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trils0n

2013 P85
Feb 12, 2013
1,527
1,947
SF Bay Area
Here's a clueless young engineer at a clueless major auto manufacturers comment on the S frame:

Young Auto Manufacturing Engineer Nitpicks a Tesla - Album on Imgur

Comments about the frame in the showrooms don't apply to the cars built in the factory. The display frames are built by hand in a 3rd party body shop. The frame is never actually at that state in the manufacturing process -- it is simply for illustrative purposes.

EDIT: Also, those pictures were taken a year ago. It wouldn't surprise me if many of those parts had undergone revisions, as Tesla constantly upgrades their parts (they don't wait for model years to make changes)
 
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Caligula

Member
Oct 14, 2015
596
149
San Diego
Comments about the frame in the showrooms don't apply to the cars built in the factory. The display frames are built by hand in a 3rd party body shop. The frame is never actually at that state in the manufacturing process -- it is simply for illustrative purposes.

This is a very good point. I guess that why they won't let you stand on them in the showroom, heh.
 

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