A former vice chairman of General Motors, Bob Lutz believes that Tesla’s future looks pretty bleak, on the basis of company’s current financial situation, growing competition and Elon Musk being incapable of running a car company. The former GM executive stated his views in an interview with CNBC, post the news of Tesla being investigated by the Department of Justice in US, after Musk’s tweet about taking the company private.
The former executive claims that Tesla’s doom is imminent stating, “They will never make money on the Model 3 because the cost is way too high. He’s got 9,000 people in that assembly plant producing less than 150,000 cars a year. The whole thing just doesn’t compute. It’s an automobile company that is headed for the graveyard.”
Further Lutz also commented on the rising competition coming from Mercedes, BMW and Audi, who all are developing electric cars at the moment that are at par with Tesla’s models. Not just that, he further believes that the companies have an advantage over Tesla, as they can bear losses and simply recover for it through the sales of their combustion vehicles, which he claims 95 percent of the Americans want.
The on-going investigation on Tesla will also affect the company as the SEC (Securities and Exchange Commissions) will not allow Tesla to raise the capital. Following the news of the investigation, Tesla shares were also reported to have dropped as much as 7.1 percent, closing down at more than 3 percent.
Given the current circumstances and the amount of money Lutz believes Tesla to be spending, he jokingly added, “The jaws are tightening and I think in another year or two we’ll see a movie called ‘Who Killed Tesla,’ a conspiracy movie starring Leonardo DiCaprio.”
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While Tesla did not respond immediately to this, a company share holder Ross Gerber was quoted by CNBC saying that the worst is over, and that Tesla is pretty confident over the next 12 months. An Oppenheimer analyst Colin Ruscha was also stated to have the same views. He claims Lutz’s views are just speculation at this point and that, “If the fundamentals are going well we think the long-term story starts to feel intact, even if Elon Musk isn’t there.”