Tesla’s chief executive officer Elon Musk doesn’t know how to drive a car company, according to Bob Lutz, who is the former vice chairman of General Motors.
“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,” Lutz said during an interview.
Lutz comments came after the reports of a criminal probe into Tesla, as well as a new competitor touching down on the market in the form of Audi’s new electric car.
“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 DiCarpio,” Lutz added.
Earlier in the day, Tesla said the Justice Department requested documents last month relating to Musk’s tweets about taking the company private. Tesla has since ditched such plans.
The acknowledgment followed a report that the federal agency has opened a criminal investigation into Musk’s comments.
Tesla shares slipped as much as 7.1 percent on the news, eventually closing down more 3 percent.
Lutz said that Tesla is “hemorrhaging cash” and due to the federal probe, the Securities and Exchange Commission will not let it make a capital raise.
He also added that there is competition coming from not only Audi but Mercedes, BMW, and Porsche. He claimed that those manufacturers can sell their cars at a loss and make up for it on sales of internal combustion vehicles.
“Tesla has no…tech advantage, no software advantage, no battery advantage. No advantages whatsoever,” he added.
The former GM executive has been a vocal critic of Musk and has said that the Tesla CEO must step down. This is also not the first time he lambasted and predicted the end of Tesla.
Meanwhile, Tesla shareholder Ross Gerber doesn’t think the Justice Department investigation is anything to be jittery about.
“We all know what happened. I mean, Elon made a mistake,” said the CEO and president of Gerber Kawasaki. “I don’t know if that’s a crime.”
He admitted that this year has been tough for Tesla. However, he thinks the worst is over.
“This is an exciting time for the company. So this is just another annoying footnote in what will be the long-term track record of Tesla and we’re very confident over the next 12 months,” said Gerber.
Oppenheimer analyst Colin Rusch is also concentrating on the fundamentals since there will likely not be a solution anytime soon by the feds.
“If the fundamentals are going well we think the long-term story starts to feel intact, even if Elon Musk isn’t there,” he stated, pointing ot Apple’s success after Steve Jobs left as CEO.
He also contradicted Lutz’ notion that the SEC will not allow Tesla to raise more money, tagging it as “purely speculation.”