I looked at Lutz's arguments and and assuming he is quoted accurately they are pretty sad.
If the only thing you knew about was joining a large established company and trying to run it for trivial annual profits (and then failing in that endeavor) then sure, if you did not have the brains to recognise the difference between that and a massively growing startup then you might come to the same conclusions.
'Bleeding cash'. Wrong. Check the asset line growth and hey presto - There's the cash.
'Securitized Assets'. Wrong. Check the overseas shipment growth line - there's the revolving credit line. Additional assets are a backstop during reconciling customer receipts after the car is handed over. Not to be confused with Ford mortgaging off its assets while GM was going bust.
'It's true that the world may be running light on buyers who will spring for a big-dollar electric vehicle that can't make the hike from Detroit to Chicago without stopping for a [short and free] charge.' Wrong, Demand is at an all time high and growing.
"cheap gasoline isn't helping Tesla's case". Wrong. Cheap gasoline is not helping gasoline's case. Tesla demand at an all time high.
"Right now, prices around the country are hovering close to $2 a gallon. If that's bad news for the Prius and the Volt, it's worse for the Model S."
Wrong. Prius and the Volt exist to just save gas. Model S is not bought just to save gas, demand at an all time high and growing.
"In addition, there's never been any secret sauce to the company's battery technology." Wrong. Tesla's battery tech clubs the tech available to other auto makers to death like a baby seal. Not just in chemistry, energy density and price but in electronics and software, and in first mover advantage with all sorts of benefits when it comes to scaling.
"Now that Audi has announced it's getting into the EV game, Tesla should be even more concerned." Wrong. The Audi concept vehicle slated for 2018 is beaten hands down by Tesla's 2016 products. By 2018 Audi will be abysmally behind.
"If you're a luxury buyer, which car would you rather have?" No brainer. The Tesla, DUH. Anyone want to be a guinea pig for an untested me too EV product from Audi? I think not.
"Nobody has ever been successful with company stores". Tesla has.
"But the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids." And they said Elon insulted Apple.
"A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory." OK, the guy has clearly lost the entire plot. Maybe he should visit a Tesla store. A Tesla store sits in an upscale mall. It typically has 2 cars and a chassis on display and perhaps five demo cars in the adjacent parking lot. That's it. The rest is online, and the cars are good enough for customers to order and wait in line for them. Inventory problem? Dinosaur problem. Advantage Tesla.
"Under a traditional franchise arrangement, the factory never has to carry that burden. " What burden? The burden of an outdated business model. See above. What Tesla has for is pains is direct customer relationships, full retail margins on its products and most importantly cost control and direct technical feedback from its service centres. We will see in future how much of an encumbrance it is on auto makers trying to compete with Tesla's autonomous fleet operations with dealerships claiming rights to all sales and to all service as a profit center. Franchised dealers are the bane of the auto industry. Hear me on this.
"[Model X] A big, expensive vehicle with a compromised structure to accommodate gullwing doors can hardly be a sales knockout." Wrong. Safest SUV on the planet, 30,000 waiting customers.
"If I were sitting in Musk's seat, I would take an urgent look at cutting cost. Not just taking cost out of the car, but reducing expense in general." Lutz. That is why Musk is worth $13 billion and climbing at the beginning of an automotive career to rival that of Henry Ford, and you are a semi-retired ex employee of a failed GM griping from an armchair. The man is in an entirely different league, might be an idea to show some respect. Musk makes big bets and wins while lesser men pinch pennies and lose. Way of the world.
"I would seriously consider an entry-level model with a cheaper, range-extended hybrid driveline.". Lack of product integrity is a losing strategy. customers are not as dim as you think they are. Take a look your failed Volt program, Lutz.
"but can carry on under gasoline power". Sad.
"Would an internal-combustion engine dilute the Tesla brand?" Obviously, just as it diluted the Volt brand and will kill GM entirely.
"Unless Tesla rights its organization and products in a hurry, it'll join those ranks." What a sour loser. I think Musk can figure it out just fine without the advice of a guy that ran GM into the wall.
- - - Updated - - -
Another way to put it is that Lutz's comments have nothing to do with Tesla.
They are a commentary on what it would be like if a Legacy car maker was unable to do channel stuffing.
On a technical point that may have gone under the radar. Lutz appears to be confused about Tesla's revolving credit line which it uses to ship cars abroad while keeping the sale cash flow positive. The facility allows them to ship up to $750 million per month without finished goods inventory touching the bank balance assuming the time from factory to customer is one month. He seems to have it mixed up with Ford mortgaging its assets to stave off the bankruptcy Lutz and his cohorts landed on GM / the taxpayer.
When last seen Tesla had drawn down only $50M of that $750M revolving credit line. The primary security for that revolving credit line is of course the cars in transit to customers while car is still owned by Tesla. Once the car is handed over Tesla has pledged additional security as a backstop so that the lenders are always secured even during the time it takes for customer cash to be reconciled after the ownership of the car passes to the customer (hence the incredibly cheap terms).
This is what Lutz is talking about when he says 'Tesla is securtitizing its assets'. Essentially Lutz has it completely backwards. The same thing goes regards Tesla's in-house 'dealerships'. They do not function to carry sales inventory. They typically have one or two display vehicles and two to five test drive demonstrators in an adjacent car park. All new car inventory is processed from factory to consumer direct. There are no acres of inventory at Tesla's sales locations.
