Auto industry veteran Bob Lutz has been around the automotive block. Now 85, Lutz has worked for the who’s-who of the automotive industry including BMW, Ford, Chrysler, and General Motors. And while Lutz is high on Tesla’s automobiles, he doesn’t think that’s going to be enough to save the company.
[Elon Musk] hasn’t figured out the revenues have to be greater than costs … when you are perennially running out of cash you are just not running a good automobile company. I don’t see anything on the horizon that’s going to fix that, so those of you who are interested in collector cars, may I suggest buying a Tesla Model S while they’re still available.
Strong words, but I’m not sure I’d read much into them.
The economics have changed. For tech companies, in general — and make no mistake, Tesla is a tech company first, an automaker second — revenue is more of a bonus than a requirement. Companies can exist decades without earning a profit so long as they’ve captured the attention of the masses, continue to show growth, and occasionally release really good products or features.
Uber, for example, lost $2.8 billion last year alone. It’s never had so much as profitable quarter in all its existence yet venture capitalists keep lining up to pad the pockets of the world’s most profitable non-public startup. To date, it’s burned through some $22 billion, according to Crunchbase.
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It’s also “worth” $70 billion, more than Ford, GM, or Honda.
Tesla is also on pace to sell more all-electric vehicles than any automaker to date. And if it could ever get its Model 3 production issues figured out, the company could become the successful automaker of all time — all without turning a profit.
In tech, those with successful products are given a long leash. Elon Musk’s leash might be longer than most. Fix the production issues, investors say, and the profits will come. Or, that’s the hope anyway.
I don’t think Tesla is going anywhere. At least not anytime soon.
via Mashable
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