Tesla doomed- Bob Lutz

[Mega]

http://www.motorauthority.com/news/1...s-tesla-doomed

[santafe2]

Re: Tesla doomed- Bob Lutz

So what would Lutz do if he was in Elon Musk's position? Cut costs and introduce a range-extended model. He said Tesla should give up on having a full line of all-electric cars, and introduce a model with 50 or 60 miles of electric range and a supplemental internal-combustion engine, which he claims could be built cheaply and sold as a higher-volume, entry-level model.

I'm not sure that's a very convincing argument. Lutz is talking about Tesla making a Chevy Volt like product. I love my Volt and think it makes a lot of sense but Volt sales in the US have been awful, (down 20% from 2013-2014 and apparently will be down another 20% in 2015), while Tesla sales should be up about 20% YOY. However, Tesla is burning money. It was almost $200MM last quarter GAAP. That's about $27k per vehicle sold in Q2 and sales were down about 20% at Tesla between Q2 and Q3 so the cost per vehicle sold is most likely higher. We'll have to see how Musk spins this one. "Earnings" will be announced at 2:30 Pacific Time on Tuesday.

[BK]

Re: Tesla doomed- Bob Lutz

In the car business selling 9000-20000/yr of a model is normally consider = FAILURE

GM is big enough to afford a failure of one or two models (not that I'm bullish on GM) and Tesla Motors $30-$40Bill valuation is dependent on a low selling hobby car.

See EV sales numbers: http://insideevs.com/wp-content/uplo...ber-vfinal.png

Then look at cash flow for Tesla Motors:http://finance.yahoo.com/q/cf?s=TSLA

[GRG55]

Re: Tesla doomed- Bob Lutz

In the car business selling 9000-20000/yr of a model is normally consider = FAILURE

Really? I don't believe Ferrari has ever had a year of sales above 7500 units total, all models. In its best ever year just over 2500 Lambos went out the door of their factory. I think these are the very definition of a "low selling hobby car".

Now I am not suggesting the Tesla Model S is comparable to either of these storied works, but there is no rule that says a car company is a failure under 20k units a year.

GM is big enough to afford a failure of one or two models (not that I'm bullish on GM) and Tesla Motors $30-$40Bill valuation is dependent on a low selling hobby car.

See EV sales numbers: http://insideevs.com/wp-content/uplo...ber-vfinal.png

Then look at cash flow for Tesla Motors:http://finance.yahoo.com/q/cf?s=TSLA

Tesla isn't comparable to the mainline automakers such as GM either. It has never suggested it aspires to be a volume producer on that scale.

Tesla may be somewhat comparable to Studebaker in the decade after WWII, during that company's association with Raymond Loewy. Striking and beautifully designed cars, beset by production problems in a company without the financial resources to undertake the engineering and development to solve them. Below a pic of the '53 Starliner:




Compared to what Chevrolet was peddling at the time:

[Mega]

Re: Tesla doomed- Bob Lutz

http://www.autocar.co.uk/car-news/ne...scheduled-2016
A middle-ground car a-coming

[BK]

Re: Tesla doomed- Bob Lutz

Sorry to have winged my response.

Yes = Elon Musk has said often that he plans to get to much higher volumes that is why the current market cap is $30-40 Billion!


Studebaker was not an up start or startup - https://en.wikipedia.org/wiki/Studebaker

Ferrari wisely avoided going public - until this year.

My biggest complaint about Tesla Motors is Elon Musk is running it like it is a software company. Logistics and suppliers is always a last priority.

Building cars = huge financially liabilities.

My favorite flaw with the Tesla Motors Model S is the crap electric motor which results in the lack of reliability.

http://wmkelleher.com/2015/10/elon-m...otor-supplier/

[touchring]

Re: Tesla doomed- Bob Lutz

Not really a follower of Tesla stock, but with a market cap of only 26 billion, can't Apple just buy over the entire Tesla?

[BK]

Re: Tesla doomed- Bob Lutz

I assume you mean "why can't Apple just buy Tesla?".

That is one of the many insane notions that TSLA share holders cling.

Apple is a software company and hardware designer (not a hardware manufacturer). Apple uses FoxCon to build the Apple hardware designs. Look on the back of your favorite Apple device and you will see the words "Designed by Apple" - and not "Manufacturered by Apple".

[Milton Kuo]

Re: Tesla doomed- Bob Lutz

I assume you mean "why can't Apple just buy Tesla?".

That is one of the many insane notions that TSLA share holders cling.

Apple is a software company and hardware designer (not a hardware manufacturer). Apple uses FoxCon to build the Apple hardware designs. Look on the back of your favorite Apple device and you will see the words "Designed by Apple" - and not "Manufacturered by Apple".

That doesn't necessarily preclude Apple from buying Tesla and its manufacturing facilities. From various reports I have read, it does appear that Apple is looking to design/manufacture its own electric vehicle.

[BK]

Re: Tesla doomed- Bob Lutz

Those reports are lubricious!

Why would Apple ruin a great business with getting in the auto business and manufacturing.

Apple is a tremendous cash generation machine and auto business is cash intensive/volatile business.

Anyone want to bet ....Apple is not going to buy Tesla Motors - it would be INSANE mode for Apple to acquire TSLA.

[Milton Kuo]

Re: Tesla doomed- Bob Lutz

Those reports are lubricious!

Why would Apple ruin a great business with getting in the auto business and manufacturing.

Apple is a tremendous cash generation machine and auto business is cash intensive/volatile business.

Anyone want to bet ....Apple is not going to buy Tesla Motors - it would be INSANE mode for Apple to acquire TSLA.

I'm not saying that Apple is going to buy Tesla. I, too, believe that it would be a terrible, terrible business decision on Apple's part. I can't remember which source it was but I remember reading that Apple is hiring people (not ex-Tesla employees) who have experience in the automobile industry. This seems to suggest that Apple is doing something automobile-related. I think it's reasonable to guess that Apple will try to create some sort of in-auto dashboard type smart device, perhaps partnering with existing automobile manufacturers. That said, it remains to be seen if Tim Cook is a good executive. I see him as a bean counter and bean counters have been prone to making really bad business decisions (see Steve Ballmer.)

I'll have dig through my notes and see if I can find anything more concrete. Maybe it was Google that was interested in building its own electric vehicle. (And, yes, I think Google buying Tesla would also be a very bad business decision.)

[DSpencer]

Re: Tesla doomed- Bob Lutz

I'm not sure that's a very convincing argument. Lutz is talking about Tesla making a Chevy Volt like product. I love my Volt and think it makes a lot of sense but Volt sales in the US have been awful, (down 20% from 2013-2014 and apparently will be down another 20% in 2015), while Tesla sales should be up about 20% YOY. However, Tesla is burning money. It was almost $200MM last quarter GAAP. That's about $27k per vehicle sold in Q2 and sales were down about 20% at Tesla between Q2 and Q3 so the cost per vehicle sold is most likely higher. We'll have to see how Musk spins this one. "Earnings" will be announced at 2:30 Pacific Time on Tuesday.

Yeah, the idea sounds idiotic to me. Basically, give up on Tesla's main point of differentiation (long range, all electric) and do a me-too hybrid.

[thriftyandboringinohio]

Re: Tesla doomed- Bob Lutz

..Anyone want to bet ....Apple is not going to buy Tesla Motors - it would be INSANE mode for Apple to acquire TSLA.

Apple buying Tesla is slightly different than Apple entering the car business.
Apple buying Tesla only makes sense if Tesla goes bankrupt and Apple buys the company for pennies on the dollar.

However, Apple designing and manufacturing a car does make sense.
Remember, Apple is sitting on $200 billion cash.
That is enough money to design four or five automobiles, build three factories to manufacture them, purchase and install all the tooling; hire and staff the factories; and manufacture 4 months inventory of the cars. And still have $100 billion in the bank left as a contingency

Apple's business model is to do ground breaking design, then hire out manufacturing to other firms.
So they probably won't build the auto plants, they will find a car or truck company with spare capacity, and the world has plenty of those right now. Apple will probably finance all the tooling and testing for their manufacturing partner, all from cash.

They prefer the corner of a marketplace where low volume meets high prices and high margins.
Apple does pretty well with the iMac still, and makes no effort to push out Dell or HP.
Apple lets those guys struggle with tiny margins and high volumes, Apple sells expensive iMacs to the few who will pay for them.

The product design community and high tech community seem convinced Apple is designing a car, probably a self-driving EV.
Google "Apple car" or "Apple project Titan".

Here's a typical article http://gas2.org/2015/10/26/5-things-...the-apple-car/

5 Things (We Think) We Know About the Apple Car
October 26th, 2015 by Guest Contributor

Everyone seems to be talking about the new car Apple is developing. Even The Onion did a satire piece on it (see photo, above), giving the car epic features like suggested speed limits, based on the user’s history, and a price of $199, when a 2-year Verizon contract is signed. The best part of it is that some news outlets are picking up bits from The Onion’s parody, and publishing them as if they were fact. There’s a lot of misinformation circulating about the so-called iCar, but what we do know to be fact, really comes down to just five things.

1. Apple Won’t Admit They’re Developing a Car
As recently as an October 1 interview with NPR News, Apple CEO Tim Cook dodged questions about the car. While the discussion mostly surrounded privacy and the company’s offshore accounts, the interviewer flat-out asked Mr. Cook, “Is there going to be an Apple car?” The CEO laughed, and responded with, “Do you have another question?” The pair spent a few moments trying to talk over each other- the host asking about the car, with Mr. Cook pushing the latest releases from Apple, and the interview concludes without Cook so much as acknowledging the existence of an Apple car.

2. Business Mogul Carl Icahn Says there will be an Apple Car by 2020
Just a few months ago, CNBC reported that Carl Icahn has made over $3.4 billion by investing in Apple. At the time of their report, the mogul had 52 million shares of Apple stock, and he’s #22 on the Forbes List of Billionaires, with an estimated net worth of $21 billion. Mr. Icahn investigates thoroughly before he invests, which is why he’s so successful. In May 2015, he wrote an open letter to Tim Cook, saying that he believed they were developing a car, and offering suggestions to make the venture more successful. He also noted that the Apple car would be the “ultimate mobile device,” and that it would be released in 2020. Interestingly, Apple VP Jeff Williams echoed this sentiment in a May Interview. When responding to a question about where Apple tech is heading, he responded, “Well, the car is the ultimate mobile device, isn’t it?” However, he could have been referring to CarPlay, or have been hinting at automotive development.

3. Apple has Been on a Hiring Spree, Grabbing Numerous People from the Auto Industry
While there’s obviously going to be some tech carryover between the automotive industry and the tech industry, especially with the release of CarPlay, Apple’s hiring scheme raises some eyebrows. The Wall Street Journal says Apple has hired hundreds for the project, though recent reports say there could be as many as 600 working on “Project Titan” (the iCar) for Apple. Some of the most-notable hires are listed below:

Doug Betts: An exec with previous experience at Fiat Chrysler, Michelin, Toyota, and Nissan.

Johann Jungwirth: A specialist in autonomous driving and Internet-connected cars, previously the head of Mercedes-Benz’s research and development team.

Steve Zadesky: An engineer and former product designer, previously with Ford.

4. Apple was Sued by a Car Battery Company for Poaching Employees
A123 Systems creates high-tech batteries with numerous applications. Some of their projects involve batteries for electric cars. Although the case has now been settled, A123 sued Apple for hiring away several of their senior employees and engineers, causing the company irreparable harm. While it’s entirely possible Apple wanted to improve their battery technology for their existing product lineup, it could also be a sign that the non-existent iCar is electric.

5. An Autonomous Vehicle Test Site Signed a Confidentiality Agreement with Apple
According to a report from The Guardian, Apple is looking into test sites for autonomous vehicles. Execs from the tech firm recently visited GoMentum Station, which is a former naval base about 40 miles away from Silicon Valley. Though representatives from GoMentum won’t say anything more than that they’ve met with Apple and can’t talk about it, the site hosts a known autonomous vehicle test track. Like Apple, GoMentum is also known for being incredibly secretive. Just a few months ago, armed guards stopped execs from Tesla from entering the facility because a few members were foreign-born, and one refused to give up his social security number.
Beyond this, the rest is only speculation. It certainly looks like Apple is building an electric automated vehicle, but until hard evidence leaks, or the company fesses up, there’s no way to know. Most sources say that if the company produces it, it could begin selling as soon as 2019, though other experts in the field say 2025 is probably a more accurate estimate. If it does materialize, it will indeed be “the ultimate mobile device.”

Source | Images: this content was generously supported by Jason Bekiaris and The Dilawri Group, anautomotive group and one of Canada’s 50 best managed companies. Jason is also a 25-year Canadian rock star and on-air broadcast legend, otherwise known as The Greek SINsation. And host of Canada’s #1-rated The Web Show.

[BK]

Re: Tesla doomed- Bob Lutz

Thrifty,
I respectfully disagree. I'm wrong fairly often.

Consider how GM destroyed all of the EV1s- Why? a car with your name on it is a huge liability. Look at GM and the ignition switch crisis.

Look at what the Chinese say about Tesla patents http://www.shanghaidaily.com/busines.../shdaily.shtml

Elon offered up his patents because there is no IP that anyone wants at Tesla Motors. The Emperor has no clothes!

[santafe2]

Re: Tesla doomed- Bob Lutz

Really? I don't believe Ferrari has ever had a year of sales above 7500 units total, all models.

It just hurts when anyone compares Ferrari to Tesla. The new 488 GTB, 670 HP, 205 mph is a real vehicle. Mr. Musk is not capable of designing a $250K vehicle anyone would choose over a Ferrari.