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Former BMW and GM executive Bob Lutz talked to Road and Track about the state of Tesla. Despite the Model S getting a perfect score from Consumer Reports Mr. Lutz things that Telsa is doomed.
This isn't the first questionable prediction that Bob Lutz has made recently. Just a few months ago he slammed Apple's self driving car ambitions as a great way to waste billions.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. Like most big puzzles, the company's woes don't have just one source.
Read more about what Bob Lutz thinks of TeslaAnd then there's the distribution problem. 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. The idea was, like Tesla, to be in control of the retail environment and give customers an upscale experience. They were all money pits.
I think Tesla CEO Elon Musk figured that if factory stores work for Apple, they'll work for Tesla. 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. 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. Under a traditional franchise arrangement, the factory never has to carry that burden. Right now, Tesla does.