Former GM Product Czar Bob Lutz Asks: Is Tesla Doomed?Former GM Product Czar Bob Lutz Asks: Is Tesla Doomed?

Former General Motors product czar Bob Lutz, now retired for a few years, is largely respected within the auto industry.
He stopped flying his MIG fighter jet when he turned 80, as the story goes, but he remains a larger-than-life persona in an industry with fewer and fewer of them.
He’s still involved with range-extended electric truck maker Via Motors–and he’s still sought out for his opinions on the news of the day.
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Last week, he published an opinion piece in Road & Track, the enthusiast magazine, in which he suggests that electric-car maker Tesla Motors is “doomed.”
The article opens with a bang:
Tesla’s showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory.
It’s the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away.
2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
Lutz’s argument is based purely on the financials, and on the staggering capital costs of starting, operating, and growing a global car company.
The last car company in the U.S. started from the ground up by entrepreneurs–whose brand survives today–was Chrysler.
That was 90 years ago.
No one’s succeeded since then, though many have tried–including Preston Tucker, Henry J. Kaiser, Malcolm Bricklin, and John Delorean.
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Lutz writes that Tesla’s apparent woes have many sources, from the limited market for $75,000-and-up vehicles to cheap gasoline. 
He spends a fair amount of text on the distribution problem–words that were promptly sent out in an e-mail blast by the National Automobile Dealers Association.
The lobbying group for the political interests of U.S. auto dealerships highlighted Lutz’s quotes on Tesla assuming the huge cost burden of stores, service centers, and the like.
Nobody has ever been successful with company stores, though plenty of manufacturers have tried them. When I came to BMW in the Seventies, it had five factory stores.
Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]
The idea was, like Tesla, to be in control of the retail environment and give customers an upscale experience. They were all money pits.
As for the Model X, Lutz asserts, “A big, expensive vehicle with a compromised structure to accommodate gull-wing doors can hardly be a sales knockout.”
The next year should test that theory.
To be fair, Lutz calls the Model S “a fabulous car” and says he likes CEO Elon Musk–but he also notes that “history’s filled with defunct companies with great products run by brilliant people.”
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His recommendations for Tesla: Cut costs, and develop a less pricey model–but not the Model 3 electric car now underway with a 200-mile range and a $35,000 price tag.
Instead, he says, Tesla should make it “an entry-level model with a cheaper, range-extended hybrid driveline” that gives it 50 or 60 miles of electric range.
That vehicle might be something remarkably like the 2016 Chevrolet Volt, in fact, with its EPA-rated 53 miles of range.
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It’s worth recalling that Lutz protected the nascent Chevrolet Volt project throughout GM’s 2009 bankruptcy and restructuring, when the Obama Auto Task Force wanted to kill it because it would lose significant money.
These days, Tesla is a publicly traded stock, and any discussion of the company’s prospects generates remarkable passion among supporters and detractors alike.
And Lutz remains a controversial figure, as most accomplished and interesting executives are.
He doesn’t accept the science of climate change, which caused GM PR professionals endless grief in his day.
And he remains an old-school high-performance car guy in a world moving toward electrified, autonomous, networked, shared vehicles.
Mercedes-Benz F015 Luxury in Motion concept, 2015 Consumer Electronics Show [photo: Matthew Askari]
Time will tell whether Lutz is right, and his views–and, sadly, the man himself–will be fiercely attacked for suggesting that Tesla could fail, let alone that it may do so soon.
But those views come with more experience and authority in the auto industry than most, and his grasp of the finances of auto companies may be unparalleled.
Read it and ponder.
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