Former GM Product Czar: Tesla a "Fringe Brand"

cartechboy writes There's been plenty of skepticism when it comes to Tesla. The Silicon Valley startup unveiled an all-electric car that stunned the world and had many other automakers rolling their eyes. Fast forward to 2014 and Tesla's preparing to launch its third model, the Model X. Production of the Model S sedan is humming along, and this new automaker continues to make headlines multiple times a week. Industry veteran Bob Lutz was the champion behind the Chevrolet Volt, and has been quite vocal about Tesla from the beginning. So what's his view on the company now? He said Tesla will remain a "fringe brand" until it launches its next generation of vehicles and the smaller, less expensive Model 3. Speaking Wednesday on CNBC's "Squawk Alley" finance show he said that Tesla's stock price was "kinda high" at the moment.

Comments

How does the quote go...?

[Chris Mattern]

"First they ignore you, then they laugh at you, then they fight you, then you win."

Re:How does the quote go...?

[MightyMartian]

FTFY

"First they ignore you, then they laugh at you, then they fight you, then you win, and then their paid lobbyists have you legislated out of business.."

Re:How does the quote go...?

[HornWumpus]

From that it follows that anybody being ignored is destined to win?

Re:How does the quote go...?

[Jeremiah Cornelius]

HAHAHA HAHA HA!

Guy from GM - one of the most heavily subsidized corporations in the HISTORY of CAPITALISM has something to say about building a business and a "brand"?

Donald Trump has good advice on how to be born rich, and pretend you are a financial wizard, too.

Re:How does the quote go...?

[i kan reed]

If it helps, the quote came from a person who was ignored, then fought, then lost, but it commonly misattributed to someone much more successful.

The quote is so full of bluster, and bravado, you just can't take it seriously.

Re:How does the quote go...?

[sinij]

Pedantic correction - Donald Trump might actually offer good advice on how to be born rich, as he has first-hand experiences.

Re:How does the quote go...?

[rogoshen1]

don't let the fact that he worked for GM fool you, Bob Lutz is a car guy through and through. I'd say given his experience in the industry, he probably knows a thing or two.

Re:How does the quote go...?

[Anonymous Coward]

Producers of weapons systems are even more subsidized than GM. I am certain that there was a time when Boeing, Lockheed and others were laughing at the fringe rocket-scientist-wannabes called SpaceX. Now there's the first company in that business making a name for itself that didn't get billions shoved down their throats for creating tactical rockets

Re:How does the quote go...?

[ksheff]

Oil changes are very simple and don't really take that long to do. There are much bigger things to worry about with an IC car than oil changes.

Re:How does the quote go...?

[Archangel Michael]

Bob Lutz is a ICE car guy. New world is coming.

Re: How does the quote go...?

[Anonymous Coward]

I'm still at the first stage. Been stuck for a while actually.

Re:How does the quote go...?

[geekoid]

It's a complete BS saying based solely on biased hind sight.

Because there are thousands of:

"First they ignore you, then you go out of business"
"First they ignore you, then they laugh at you, then you go out of business"
"First they ignore you, then they laugh at you, then they fight you, then you go out of business"
"First they ignore you, then they laugh at you, then they fight you, then you win., for a while."

Being around for a while doesn't mean what you peddle works.

The guy is right. Until they have a more affordable version, the with be a niche. Bugati is also a niche. Niche doesn't mean bad.

Re:How does the quote go...?

[geekoid]

"one of the most heavily subsidized corporations in the HISTORY of CAPITALISM"
no it isn't, not even close.

Did you read what he said? of course not, to busy jumping to conclusions.
Of course, the bailout was due to the financial division, not branding, marketing, or cars.

Re:How does the quote go...?

[ericloewe]

Being Portuguese, I'm damned happy that my ancestors laughed Columbus out of the country.

Only a grade A moron arrives in America and says to himself "I have arrived in India!".

The Earth's radius was known with some precision back then. Nobody with an education really believed that the Earth was flat. Anyone with half a brain who planned exploration would've figured out that the continent whose existence was vaguely known was not far enough to be India.

Re:How does the quote go...?

[geekoid]

And there are much bigger things with combustion cars that can go wrong that can go wrong with a Tesla. Your point?

Re:How does the quote go...?

[geekoid]

Tesla is a cutting edge car, and they are planning on less expensive models.
Initially, the automobile was a fancy tow for the rich.

Re:How does the quote go...?

[LWATCDR]

Actually I expected this level of FanBoi response it is a real shame that people don't bother to read anymore.
"He said Tesla will remain a "fringe brand" until it launches its next generation of vehicles and the smaller, less expensive Model 3. "

Just how right can anyone be. The current Tesla is in the same price range as the Audi A8, MB S Class, and BMW 7 series. In other words a lot more than the average annual income in the US.
When it launches the Model 3 and if it can for a good price it will be moving into the mainstream.

So exactly how is this in anyway ignoring them or even fighting them. Sounds like simple facts and observation to me.

Re:How does the quote go...?

[Mister Liberty]

Depends.
The spouse might not be born rich, but be in the possession of even better advice that trumps (pun intended) the lineage of the other party.

Re: How does the quote go...?

[Anonymous Coward]

His point was that he said the exact same thing as you, except he said it first (and better). So I guess the real question is...what is YOUR point?

Re:How does the quote go...?

[Anonymous Coward]

Except that you miss the sarcasm and inevitable fact that you can't control to whom or how you are born, as it already happened.

Re:How does the quote go...?

[Mr D from 63]

Exactly. The guy may be wrong, partially wrong, or right, but to simply dismiss the points of someone with his experience is not exactly a wise thing to do.

Re:How does the quote go...?

[rsborg]

Only a grade A moron arrives in America and says to himself "I have arrived in India!".

Is it really the case, or was this justification for conquest of the new world - I don't think the business world has changed significantly in the past few centuries - we put a new name on some business model, but the underlying goals and direction is the same.

In this case, I can clearly see it as "something to tell the people and our competitors" - if the mission fails, no hint is left that it is the "new world" that was failed, only what others have failed at before (ie, faster route to India). If the mission succeeds... well, again we want exclusive access the plunder and possibilities.

Re:How does the quote go...?

[Bill, Shooter of Bul]

Yeah, that's a really weird thing to worry about, or brag about not having to deal with. Its a solved problem.

Re:How does the quote go...?

[cant_get_a_good_nick]

Probably really the case. Remember that his crew very nearly mutinied because he underestimated ration needs for the first trip.

Re:How does the quote go...?

[GLMDesigns]

Are you serious? It was an amazing trip. One can say anything one wants about going west (in order to go East) but until it's done it's unproven and highly experimental. You say you're Portuguese - then take another look at how long it took voyagers to go from the Canary Island to rounding the cape of Africa. It took technological innovations (the caravel among others) and decades.

Then here comes a guy who says that he'll sail west instead and you say he was a moron for mistaking the Carribean for the Indies. Yes some Persian and Arabic cartographers had accurately estimated the circumference of the globe but that doesn't mean it was universally known. Europeans (while technologically advanced in a lot of technology was still influenced by Ptolemy.

Re:How does the quote go...?

[Opportunist]

He's a car guy?

Then what the heck was he doing at GM?

Re:How does the quote go...?

[Opportunist]

It's kinda hard to take someone's opinion on a competing product without a grain of salt. It's like some ex-MS head honcho calling the iPad a fad that will never replace the desktop. He may be right, of course. But it still smells a bit of sour grapes.

Re:How does the quote go...?

[Opportunist]

My bad. I always thought that GM's main business was branding and marketing cars. Guess it's not, so what else is it?

Re:How does the quote go...?

[ericloewe]

He originally pitched his idea of the route to "India" over here, so he was most certainly not aware of what was going on. Whether anyone in the whole operation knew is a different story.

Re:How does the quote go...?

[Anonymous Coward]

Steve Ballmer was a software guy through and through, but that didn't keep him from making himself look like an idiot by making fun of the first iPhone on national TV.

Same thing seems to be happening here.

Re:How does the quote go...?

[Mr D from 63]

I would argue its a lot easier to dismiss his points based on that, rather then to put some thought into them.

Re:How does the quote go...?

[Anonymous Coward]

Easier, yes. Smarter, no.

Re:How does the quote go...?

[Anonymous Coward]

Yep, just like the dinosaurs used all their experience to build underground fortresses to survive the asteroid impact fallout.

Re:How does the quote go...?

[Opportunist]

The Earth's radius was pretty well known, yet still Columbus worked with a few very wrong assumptions. His expectations of the distance to China (on the "known" route to the East) were vastly overblown (mostly because a good deal of that distance estimate came from Marco Polos expedition there some three hundred years earlier), while at the same time his estimate of the size of the Earth were a bit too small. Search for Behaim Globe (Behaim was a German cartographer who made globes before America was discovered) to see what his expectations of Earth would have looked like.

From this point of view, his idea wasn't as idiotic as it may initially appear. Actually, he expected to hit China or at least Japan approximately where the US midwest would be.

Re:How does the quote go...?

[zwede]

My bad. I always thought that GM's main business was branding and marketing cars. Guess it's not, so what else is it?

Unfortunately GM figured out that there was much more money to be made in financing car buyers (GMAC). Before the bankruptcy GM was widely considered a financial institution who also occasionally made cars.

Lutz really is a car guy and I have much respect for him. He has had a very frustrated career at GM, fighting accountants and finance guys through the years.

Re:How does the quote go...?

[ericloewe]

The number was not universally known, but it was known among those who could make use of it (explorers and cartographers).

The western route was probably ruled out for a number of reasons:
It's significantly longer
Requires much more exploration and there's little to no information on what's beyond the Atlantic
An Atlantic crossing is significantly more difficult than a journey hugging Africa (more places to stop, basically) - the difficulty of the latter may have been underestimated at first.

It's also important to note that the long timeframe was designed into the method used (intentionally or not): Expeditions that slowly chart a bit further and then report back, so that the next phase can be planned and then sent on its way.

Reaching India by going West would have required pretty much the same innovations, and it's safe to assume most were aware of this.

Re:How does the quote go...?

[Anonymous Coward]

His point is that you should be happy about all the other things that won't go wrong with your electric car, not just saying goodbye to oil changes.

Re:How does the quote go...?

[Xac]

What exactly would possess you to believe that all technology follows a similar path? Where is the resurgence of passenger zeppelins?

Re:How does the quote go...?

[Immerman]

Let me guess, you're one of those temporal linearists aren't you? I hate to break it to you, but your ridiculous beliefs have been out of fashion since the 5700's.

Re:How does the quote go...?

[Jeremiah Cornelius]

Troll.

Steve Ballmer needed coaching to know the difference between software and hardware.

He was a sales org MBA, through and through.

Now? He's just through.

Re:How does the quote go...?

[hambone142]

Lutz isn't the sharpest knife in the drawer. I watched him make the same comment several years ago in an Elon Musk documentary that I watched on Neflix. He also referred to the techies in "silicone (sic) valley". It appears he's using the same line now. Apparently this is a comment he repeats.

Re:How does the quote go...?

[davydagger]

yeah, but he's more than a little biased.

Tesla isn't a "fringe" brand. They are a "niche" brand, like apple. Unlike GM, they are extremely profitable for selling extremely expensive, polished products to a niche market.

Re:How does the quote go...?

[Jeremiah Cornelius]

GM does major weapons systems contracting.
http://www.militaryindustrialcomplex.com/totals.asp?thisContractor=GM%20GDLS%20Defense%20Group%20LLC
http://www.trucktrend.com/features/consumer/163_1305_military_trucks/

GM built the engines for Grumman aircraft, and won a good deal of the Pacific theatre in 41-45.
GM provided the industrial manufacturing capability to produce the M16 A1 variant for southeast Asia.

Re:How does the quote go...?

[jythie]

They will not even have to bother with that. After Tesla tests the market, builds confidence, primes infrastructure, and makes enough advances that electric cars are profitable, the big companies (who have not been absorbing the cost of these things) will come in and crush them.

One of the downsides of our system is that companies that are innovative get the short end of the stick. Boring companies that sit and wait for others to make mistakes on their own dimes pull in the long ter profits.

Re:How does the quote go...?

[Anonymous Coward]

HIs point was if you're worrying about oil changes in your ICE car you're worrying about the wrong thing. Regular cambelt maintenance, fuel quality, ensuring you (or your SO) doesn't wreck the injectors by misfuelling, wrecking your cat converter, catastrophic coolant loss. All things that can trouble an ICE car which don't trouble a Tesla. Basically a Tesla is a big battery, some motors and an ECU. That's a hell of a lot simpler than an ICE car - and a double hell of a lot simpler than a hybrid, which is basically both an ICE and an EV shoved into one chassis and rudely mated. Yes, I'm sure it's expensive if you need to replace a Tesla motor or its battery (aren't they planning swap in / swap out batteries though?) but that's about the only likely major fault.

Re:How does the quote go...?

[tompaulco]

Only a grade A moron arrives in America and says to himself "I have arrived in India!".

Taken out of context, this happens quite frequently today.
As far as Columbus goes, if he really thought he had arrived in India, why did he go around naming all these places which in the populated country of India would have already had names?
He certainly pitched the trip as a western route to the east, but I don't think he had any beliefs upon arriving in the Americas that he had reached a known Eastern destination.

Re:How does the quote go...?

[lgw]

New world is coming.

Eventually. But for now, he's right - Tesla is currently a niche company, only selling expensive vehicles. Most such brands like, say, Maserati, are just brands within a larger mainstream company - Maserati is just the mid-priced Fiat brand. Tesla though only sells the expensive cars, and so remains on the fringe for now.

If the Model 3 succeeds, this could all change. And while Tesla's stock price already assumes the Model 3 will be a resounding success and Tesla will become a mainstream company, it hasn't happened yet.

Re:How does the quote go...?

[mattack2]

There are plenty of other electric vehicles that aren't extremely expensive. Yes, people have "range anxiety", even though the lowest of them get twice the average daily round-trip commute.

Re:How does the quote go...?

[Anonymous Coward]

Same AC here. I know I should have googled, but thank you for taking your time to provide those facts!

Re:How does the quote go...?

[mattack2]

As far as Columbus goes, if he really thought he had arrived in India, why did he go around naming all these places which in the populated country of India would have already had names?

You think Mt. McKinley and Mt. Everest don't already have names by the natives?

Re:How does the quote go...?

[lister king of smeg]

HAHAHA HAHA HA!

Guy from GM - one of the most heavily subsidized corporations in the HISTORY of CAPITALISM has something to say about building a business and a "brand"?

Donald Trump has good advice on how to be born rich, and pretend you are a financial wizard, too.

Not even close.
Ever heard of The East India Trading Company?
they make our "defense" contractors look like a fucking kickstarter indi startup. Just go look at the wikipedia list for English Crown Chartered Companies.
http://en.wikipedia.org/wiki/C...

Re:How does the quote go...?

[Anonymous Coward]

Catastrophic coolant failure is still a problem with a Tesla. Those batteries get so hot they have to be water cooled.

Re:How does the quote go...?

[Cyberax]

Bob Lutz championed Volt inside GM. So he definitely knows a thing or two about electric cars.

Re:How does the quote go...?

[Cyberax]

Other pure electric vehicles (LEAF, Ford Energi, etc.) get less than 100 miles of range. Tops.

Re:How does the quote go...?

[Anonymous Coward]

that you're an idiot who repeated what he said then challenged him? in you zeal to protect Saint Steve of Jobs, er sorry Lord Elon of Musk

Re:How does the quote go...?

[Anonymous Coward]

Only a grade A moron arrives in America and says to himself "I have arrived in India!".

Arriving at Heathrow, on the other hand, one could be easily forgiven this mistake ;-)

Re:How does the quote go...?

[CraterGlass]

also referred to the techies in "silicone (sic) valley".

Silicone Valley: Breast implant capital of the world. Must be all the porn studios nearby.

Re:How does the quote go...?

[Dahamma]

Until they have a more affordable version, the with be a niche. Bugati is also a niche. Niche doesn't mean bad.

Bad example. Bugatti isn't a niche, Bugatti is just a marquee brand of the Volkswagen Group.

And while obviously Tesla will remain relatively small until they have the pricing and capacity to sell more cars, that's not really a very good definition of a niche. They are backordered for months and have already announced longer term plans for their next 2 models. That's called *startup*, not a niche.

As far as the price - maybe it's high, but also maybe Bob Lutz doesn't quite understand the concept of stock valuation. In theory its price is based on the POTENTIAL value of the company, not it's current state. Or maybe he's just butt hurt his former company's stock (GM) has tanked while Tesla's has skyrocketed.

Actually, if you want *real* niche, it's Lutz's new company, who's car (I'm not making this up) is basically taking a Fiskar Karma and replacing the electric motor with one from a Corvette ZR1: http://www.autoblog.com/2014/0...

Re:How does the quote go...?

[Anonymous Coward]

Tesla cars are like assholes in Oslo, Norway, everyone has one. You see Tesla's parked outside low income housing here. They used to be cool, now everyone has one. Of course, here taxi cabs are Mecedes Benz

Re: How does the quote go...?

[Anonymous Coward]

So true, but at the same time (natch;) the 5699 conference saw the strictures of facepalming for novice naÃveté to be gauche=+ and that fashion held sway (and swag; like teashirts with slogans like "only idiots laugh at idiots") until the bce and actually the Greeks reclaiming the term by inventing it in that space time.

  That's for the reverse linearists of course. Some say we're backwards but I'll think they're just jealous

Re:How does the quote go...?

[gl4ss]

well..

Tesla is a fringe brand, until they launch something that is mass market(in terms of cars).

I don't see whats so strange about stating facts?

Re:How does the quote go...?

[CaptnZilog]

The Earth's radius was pretty well known, yet still Columbus worked with a few very wrong assumptions. His expectations of the distance to China (on the "known" route to the East) were vastly overblown (mostly because a good deal of that distance estimate came from Marco Polos expedition there some three hundred years earlier), while at the same time his estimate of the size of the Earth were a bit too small. Search for Behaim Globe (Behaim was a German cartographer who made globes before America was discovered) to see what his expectations of Earth would have looked like.

From this point of view, his idea wasn't as idiotic as it may initially appear. Actually, he expected to hit China or at least Japan approximately where the US midwest would be.

Well, and actually if it hadn't have been that their size calculation was off and there was an entire continent in the way, they would have probably starved to death on the ships before making it to "the East" (or even to that "US midwest" distance they thought it was).

Re:How does the quote go...?

[Anonymous Coward]

WTF are you talking about, it's far from a solved problem if you consider getting your oil changed the problem. I hate getting an oil change, it's a complete waste of time. I am excited to own a vehicle that includes less time sinks.

Re:How does the quote go...?

[Anonymous Coward]

Its not even as complicated as sour grapes. It's just a bullshit, sleight of hand, apples to oranges comparison. Sure the iPad will never replace the desktop, hell that never even happened on star trek tng and sure tesla is a fringe brand compared to mass market bullshit. This is like mcdonalds commenting that the local diner in town only has six restaurants in it's chain - it really doesn't speak to the flavor of a steak dinner.

Re: How does the quote go...?

[Anonymous Coward]

Modern day Corvette for one thing.

Re: How does the quote go...?

[Anonymous Coward]

A tesla gets a bit more and has a better charging system. The point that you are missing is that most people use their cars to drive 100 miles or less most of the time. Back and forth to work, dropping kids off at school. Getting groceries. Saving 80% or so on the costs if they use an electric vehicle to make those trips.

So what if you can't drive it cross country. There are better, faster, more economical ways to get do those long distance trips. Besides, no one is realistically talking about 100% of vehicles being electric just yet. There is no grand solution here.

Re:How does the quote go...?

[david_thornley]

According to TFS, Lutz said that Tesla is a fringe brand, and will remain one until it produces lower-priced cars. Not that Tesla never would become mainstream or anything like that. Seriously, Tesla sells luxury cars and nothing else right now. That makes it a fringe brand. They have plans to make less expensive cars, and when those are selling Tesla will cease to be a fringe brand.

Re: How does the quote go...?

[Cyberax]

Tesla gets 300miles of range (well, about 250 in the real world) and charges about 10 times faster.

Re:How does the quote go...?

[mattack2]

Yes, and the 70-80 miles (you're actually vastly overestimating) are over double the average daily commute.

Re:How does the quote go...?

[Cyberax]

Most of my daily commute distance fits into 40 miles of my Volt's AER. Yet about once a week I need to do 70-80 miles a day, or I have to skip a charge. In this case I'd be worried if I had a purely electrical non-Tesla car.

Re:How does the quote go...?

[mattack2]

Then you're not a candidate for a pure electric car. (Though IMHO, you could do well with a hybrid and use relatively little gas overall.)

Re:How does the quote go...?

[Cyberax]

Well, my current mileage is 27600m on my Volt and the average economy is 90 mpg. I'd say that my Volt works just fine for me.

I'd switch to a purely electric car, but 60-90 miles is simply not enough. I'd say that 150 miles is the minimum amount for me and at 250 miles I'd be able to switch without any worries.

Re:How does the quote go...?

[lgw]

Sure there are. But not sold by Tesla. Tesla will remain a fringe manufacturer until it moves the sort of volume that mainstream brands move, not the tiny volume that rich-boy toys move. And that, after all, is the goal of the Model 3.

Fringe Brand

[nospam007]

Look who's talking.
Somebody from a 'Killer Brand'.

Re:Fringe Brand

[Jeremiah Cornelius]

Look who's talking.
Somebody from a 'Killer Brand'.

"Let's destroy innovation and excitement around this place, boys. After all... We make a living fleeting Federal and municipal organizations with white vans and cars that NOBODY will steal..."

Remember the '72 Malibu SS? The '68 Impala? It's been a LONG time.

Because GM is scared.

[Anonymous Coward]

GM is in the process of getting disrupted, both in terms of business model and technology. They are afraid of Tesla, and it's obvious and there isn't much to see here.

GM should have been out of business long ago anyway. Leave it to Ford and Toyota who actually know how to make and sell things. They will be able to compete with Tesla where GM will not.

Re:Because GM is scared.

[The Grim Reefer]

GM is in the process of getting disrupted, both in terms of business model and technology. They are afraid of Tesla, and it's obvious and there isn't much to see here.

No, they are not afraid of Tesla. As TFS stated, they think of Tesla as "fringe" Which at the moment, they are kind of correct. GM has sold almost 80,000 Volts. The Model S is has probably sold 30K units to date. Granted, the Volt is cheaper and has been for sale two years longer. But it's also not something that GM really cares about. And that's just looking at their electric vehicle sales. GM probably averages 200,000+ units sold per month in the US alone.

That being said. They should take notice. Times are changing and it's hard for large companies who have been around forever to see threats. And Tesla has been and is a very forward thinking company

GM should have been out of business long ago anyway. Leave it to Ford and Toyota who actually know how to make and sell things. They will be able to compete with Tesla where GM will not.

I wouldn't count GM out just yet. They still sell a lot of vehicles.They've also been very innovative in the past. It's possible they can do so again.

Tesla is worth 60% of GM !

[macpacheco]

GM market cap 51.8B
Ford market cap 58.44B
Tesla market cap 30.66B and this is after a major drop in stock price, I believe it has been higher than GM !
A fringe brand that is worth over half of the big auto boys... Fringe my a..
If only any other brand got rave reviews like Tesla is getting. Specially in customer satisfaction.

Re:Tesla is worth 60% of GM !

[l0ungeb0y]

Well from GMs perspective, until Tesla gets a Government Bailout they will remain a fringe brand.

Re:Tesla is worth 60% of GM !

[HornWumpus]

Crispy Cream Donuts was once worth more than the entire remainder of the US baking industry.

Before you think of shorting, remember 'The market can remain irrational longer then you can remain solvent'. Buy out of the money put options instead, much safer. If you can find someone making the market.

Re:Tesla is worth 60% of GM !

[macpacheco]

ROTFLMAO !!!!

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

They did get a government bailout. Then paid it off early.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

You might want to learn to look at stocks. Market cap is simply a multipler of price x # of shares; if a company is overvalued then it's market cap will be high, so market cap is not a good indicator of if it's actually overvalued; they're measuring the same thing.

http://finance.yahoo.com/q?s=GM

http://finance.yahoo.com/q?s=TSLA

Look at EPS, or earnings per share. Tesla -$1.35, GM $1.19; Tesla is losing $1.35 for every share whereas GM earned $2.39 for every share, and gave to it's shareholders $1.20 each! Tesla has sold ~39,000 Model S's since it's introduction in 2014, meanwhile GM sold 256,000 cars just in July of 2014.

That's what he means be "fringe brand" and "overpriced". Tesla is on a path towards getting it together, but they have yet to turn a profit and they are a tiny fraction of the big company's sales. As Bob Lutz (one of the smartest men in the auto industry) said, they are and always will be a fringe auto brand until they get a car that's priced for the consumer, not the high end luxury market, hence is comment on the Model 3.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

GM market cap 51.8B
Ford market cap 58.44B
Tesla market cap 30.66B and this is after a major drop in stock price, I believe it has been higher than GM !
A fringe brand that is worth over half of the big auto boys... Fringe my a..
If only any other brand got rave reviews like Tesla is getting. Specially in customer satisfaction.

GM should kindly shut the fuck up about this and be happy they're still competing against Tesla instead of being replaced by them.

GM would be nothing but a shit stain of former Americana had it not been for the taxpayer bailing their sorry asses out. FUCK their fringe attitude. It took a fringe mentality to consider a bailout in the first place.

Ungrateful bastards.

Re:Tesla is worth 60% of GM !

[HornWumpus]

GM's preferential treatment of debt to the union pension fund has not been litigated, don't count it as an unmitigated success yet. The bond holders will still have their day in court.

Re:Tesla is worth 60% of GM !

[Whorhay]

I've wanted to buy into some Tesla stock for a long while, but I didn't have the liquid funds when they had their IPO. Since then I haven't thought of it when their stock price has had a sane P/E ratio, or more accurately a valuation that was anywhere near in line with the actual value of their assets. Stock values of businesses that are popular in the media and making lots of headlines rarely have any connection to the actual worth of the company, Facebook stock being a great example.

Re:Tesla is worth 60% of GM !

[Frobnicator]

That's exactly the trouble.

If you buy today and the stock goes down, people like those in TFA will continue to say it was overpriced and you are a bad investor.

If you buy today and the stock keeps going up, then you become praised as an early adopter.

Unfortunately my crystal ball is broken so I cannot tell which direction the investment will go. I'm either making a bad investment or becoming an early adopter, only time will tell which.

Re:Tesla is worth 60% of GM !

[David_Hart]

GM market cap 51.8B
Ford market cap 58.44B
Tesla market cap 30.66B and this is after a major drop in stock price, I believe it has been higher than GM !
A fringe brand that is worth over half of the big auto boys... Fringe my a..
If only any other brand got rave reviews like Tesla is getting. Specially in customer satisfaction.

Market cap is nothing but a virtual valuation based on how investors value future revenue. It's basically a bet that the company will continue to grow profitability at an increasing rate. In the case of Tesla, there is a lot of cheer-leading investors in the stock. To maintain that level of growth, Tesla does have to come out with a product that is appealing to a much larger audience than the current product offerings. Today's investors are betting on a mass appeal product, that people will buy the product, and that Tesla will gain a decent share of the overall automobile market.

The point that the ex GM Czar makes is correct. Until Tesla can execute on this vision, they will remain a fringe or niche brand. There is a risk that Tesla will screw up in execution, misunderstand the market, etc. Only time will tell if they can succeed.

Re:Tesla is worth 60% of GM !

[NatasRevol]

There's a bit of open interest all the way out to Jan2016 options.

https://www.google.com/finance...

Obviously a lot more on the call side than the put side though.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

Facebook's market cap is more than all three of these combined. Do you honestly think that market cap is a good mark for what a company is really worth?
 
Slashdot moves the goal posts yet again!

Re:Tesla is worth 60% of GM !

[geekoid]

So you not only don't understand market cap, you also didn't read what he was talking about?

Hint: Tesla is NOT worth 60% of GM.

Yes, Tesla is a fringe product. And it will be until there are less expensive models.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

Market Caps means a heck of a lots less than units sold.

In 2013:
GM 1,984,451
Ford 1,698,197
Land Rover 35,318
Tesla 22,450
Ferrari 1450

So pretty damn niche.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

It's kind of hard to misunderstand the car market. People want cars that do what they want and don't end up exploding, costing more than their value in repairs, or costing them 80 dollars per tank of gas just to drive for one week. Tesla is guaranteed to fulfill at least 2 of those things right off the bat. Offering different models suited to different purposes takes care of the third.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

Market cap of 30.66B with insignificant retail sales? Sounds like something that reminds me of an AMC Pacer, a "bubble car".

Let's save the pedestal erecting till they are in steady manufacturing of an affordable and reliable product that is turning a profit sufficient to pay dividends to their stockholders. Of course you will be able to erect the gravestones for the others around the same time, unless of course they actually decide to compete and do so successfully.

Re:Tesla is worth 60% of GM !

[GodInHell]

He's talking about Tesla.

Re:Tesla is worth 60% of GM !

[JonnyO]

Telsa is fringe. Companies like GM, Toyota, and Volkswagen will all sell more cars in 18 hours than Tesla will sell in an entire year. That's not to say they aren't doing a great job (though their durability and long-term quality are both still questionable), but they are still a niche manufacturer in the marketplace.

Re:Tesla is worth 60% of GM !

[macpacheco]

Market Cap = Stock Price X total number of shares outstanding
Tesla is worth what the market thinks it is. You are welcome to short the stock as much as you want.
I think Tesla will be a US$ 300 stock before 2020. No, I don't own it, I live in Brazil, it's complicated for us to buy USA stock here.

Re:Tesla is worth 60% of GM !

[macpacheco]

BS. Tesla got a loan to tool production for the Model S, a loan that only helped pay for part of the cost. And it was paid off early with interest (like 18 months ago). The US govt made a profit from it.

Re:Tesla is worth 60% of GM !

[Sri Ramkrishna]

Actually, I believe they did get a government bailout. bail out by dept of energy

I believe they were about to go under and they got propped up by the DOE and the Obama Administration. They've already paid everything off and now they are of course doing a good job of keeping it going.

Re:Tesla is worth 60% of GM !

[Sri Ramkrishna]

Yeah I refused to pay 150 dollars for stock that I know is mostly speculation.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

So getting a loan from the government isn't a bail out if it makes your team look bad, but when the other companies get a loan from the gov it's a bailout and they are the sorriest scum of the earth. In case you didn't know everyone paid those loans back, with interest. The gov made a profit even off of GM.

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

There is no such thing called a Crispy Cream donut. Your argument is invalid.

Re:Tesla is worth 60% of GM !

[Zynder]

You're damned right there isn't! They're called Krispy Kreme and they are the best donut EVAR. You can take your Dunkin donuts and use them to feed cattle or something. That is, if they'll eat them!

Re:Tesla is worth 60% of GM !

[Anonymous Coward]

Really? I thought market cap was based on the how interesting the share was. A share doesn't have to have anything at all to do with the company itself does it? It can in fact simply be trend based trading. The more noise a company makes, the more the share will trade (up or down). A highly volatile share is far more valuable to traders who want to ride the wave up and down. Buy on the way up, short on the way down. Tesla makes noise. It's sexy because of volume trading and that it's always in the press.

I personally think that spending huge amounts on a lithium battery plant did wonders for their share, but unless Tesla (Musk mostly) change their opinion/stance on hydrogen fuel cell, they'll be yesterday's news before long. They already made an awesome electric drive train. Their power source is archaic. Toyota and Kia will leave them wanting... or at least looking A LOT less interesting which will hurt them.

Re:Tesla is worth 60% of GM !

[tofarr]

You obviously do not understand the car market, because you left out the most important point : We are a lot less rational than we like to think, and for many people a car is a status symbol. People do not drop 70K on a car that can do speeds which are illegal / impractical in most situations - they pay it because they feel it will get them immediate respect, and possibly get them laid.

Re: Tesla is worth 60% of GM !

[Anonymous Coward]

If u believe that, then you should put your money into shorting Tesla.
Somehow, I doubt that you will.

Re:Tesla is worth 60% of GM !

[david_thornley]

A company that expects massive growth doesn't need a sane P/E ratio. People are counting on the earnings to go up.

Facebook looked to me like a bust, though. It opened at a psychotically insane P/E ratio, and I couldn't see how it was going to increase earnings that much (and I still can't). I consider it a strategy that worked wonderfully to make Zuckerberg rich at the expense of the investors.

It's true

[prelelat]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them. They aren't exactly a larger brand. IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off. Right now it is in the fringe but I don't think it will stay there. That's exactly what the guy in the article said. He didn't say Tesla was a bad idea or that it won't take off, he said it's not there yet but this next model could very well take it there.

It will be exciting to see where we go from here.

Re: It's true

[Anonymous Coward]

...most logical post that will arrive for this story.

Re:It's true

[Anonymous Coward]

Pretty much, the Tesla is not the "everyman's car"-maker, not by a long shot.

In fact, thinking about how they approached the market (i.e. as a guilt free toy for the wealthy to buy online) they may have cracked it, let some other motorcar company sort out how to make a greener Ford, Tesla can enjoy a high end niche and avoid the mistakes other revolutionary car manufacturers made (Mr. Preston Tucker) and patent the shit out of tech, business models and become the 300 lb gorilla of the battery / fuel cell market. Even if the high end car market goes tits up they can rest gently on a well established and growing power industry.

Re:It's true

[Anonymous Coward]

I don't think most people wouldn't want one

Why would I want a car I can't afford to drive? A car that costs more than my entire car to repair. A car that's worth more than my house! If you gave a Ferrari, I'd sell it ASAP.

Re:It's true

[swillden]

It's a fringe brand in that Ferrari is a fringe brand.

Yes, but I think BMW and Mercedes are better comparisons, at least with respect to price range.

I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them.

I know several people who have Teslas, but no one with a Ferrari. I've not only seen, but test-driven a Tesla, but not a Ferrari. In fact, assuming you're not in a state that is making Tesla's life hard, getting a Tesla test drive is easy. A Ferrari, not so much.

Re:It's true

[Animats]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them.

We get a warped view here in Silicon Valley. Lots of Teslas. No Supercharger stations, though. There are a fair number of electric car outlets around, of too many varieties.

Re:It's true

[Your.Master]

Why would I want a car I can't afford to drive? A car that costs more than my entire car to repair. A car that's worth more than my house!

Because then you can do the other thing you said:

If you gave a Ferrari, I'd sell it ASAP.

Re:It's true

[Rinikusu]

There's quite a few here in Los Angeles. The issues here are mostly related to population density. Rich tech moguls don't really have to worry about street parking and figuring out how to charge the damned things overnight like the rest of the plebes. And, realistically, the average American is having a hard enough time paying for a mortgage (lol), much less trying to pay for a $70k car that's got limited range, requires a dedicated charging station that they don't have a spot to install, etc. I like Tesla, hope they have long-term success, but I'm certainly not in the market for one, either.

Re:It's true

[DogDude]

Speak for yourself. I see, on average, one a day, and I know several people that have one. I'd buy one if I liked large cars, but as soon as they come out with a smaller model, I'm buying one, no question.

Re:It's true

[HornWumpus]

True of any Italian car. Not in detail, but they all cost more to fix then they are worth.

Re:It's true

[pr0fessor]

I see a Ferraris occasionally... I see a lot more lamborghinis, porches, and my neighborhood is littered with corvettes and classic cars of the 50s and 60s.

I live in the mid-west sports cars and classic cars are everywhere.

Re:It's true

[DigiShaman]

Just drive down Westheimer Rd, Houston TX in the Highland Village shopping area. Exotic cars galore. In fact, the Hotel Derek off the corner of Westheimer Rd and 610 loop is practically photo op campgrounds for cars like Ferrari.

Re: It's true

[Anonymous Coward]

Your income and lifestyle may be considered fringe by the typical GM owner, however.

Re:It's true

[multimediavt]

I wouldn't call Ferrari a "fringe brand" anymore. Not since the 1980s, anyway, and even then their racing pedigree made them a household name almost everywhere in the world. Koenigsegg, Pagani, Noble, and a few others are fringe brands that make one off vehicles or limited run vehicles that only car enthusiasts know much about. That's what makes them fringe, their obscurity. Tesla started off as a fringe brand hand making every Roadster six years ago, but once they started mass producing the Model S they stopped being a fringe brand in my mind.

Re:It's true

[David_Hart]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them. They aren't exactly a larger brand. IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off. Right now it is in the fringe but I don't think it will stay there. That's exactly what the guy in the article said. He didn't say Tesla was a bad idea or that it won't take off, he said it's not there yet but this next model could very well take it there.

It will be exciting to see where we go from here.

There is a difference... Ferrari isn't a "fringe" brand, it's a luxury brand. Ferrari never set out to be a daily driver. Tesla, however, has always stated that they were going to first target the luxury/sports car market and then use profits to develop a commuter vehicle with a much larger mass appeal. Based on their own vision, they are still a fringe brand.

Re:It's true

[shadowrat]

i don't think the gp's post was equating the tesla with a ferarri. The ferrari is an example of a fringe brand. It's not dominating the auto market place in volume. It has it's core customers and is clearly not a failure of a company. "fringe" is simply a car that isn't for everyone.

Re:It's true

[geekoid]

Wow. it's like your from the 1970's.

Re:It's true

[Anonymous Coward]

I'd call this a good analogy once Tesla actually turns a profit, which they have yet to do. Ferrari is at least a profitable company.

Re:It's true

[Anonymous Psychopath]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them. They aren't exactly a larger brand. IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off. Right now it is in the fringe but I don't think it will stay there. That's exactly what the guy in the article said. He didn't say Tesla was a bad idea or that it won't take off, he said it's not there yet but this next model could very well take it there.

It will be exciting to see where we go from here.

It depends on where you live. In California they are almost commonplace, especially in the metro areas. A closer cousin to Tesla than Ferrari would be Audi, BMW, Mercedes, Porsche, etc. They are expensive and only the affluent can afford them, but not so crazy expensive that you need to be a CEO or rock star.

Re:It's true

[dbc]

Well, I actually have two friends that have Teslas, see other Teslas on the road often, and Leafs are common as dirt. That has a lot to do with the climate, commute patterns, and infrastructure here in Silicon Valley. That said, the Tesla is a fringe brand for many of the reasons that you say -- it is expensive, its infrastructure needs are scarce in most places, and if you live where cab climate control is necessary, prepare to sacrifice range for that. As Telsa moves down the price curve and Leaf moves up the range curve, they will become more popular and the infrastructure will follow.

Re:It's true

[HornWumpus]

Go ahead, buy a Fiat. But don't say you weren't warned.

Re:It's true

[Savage-Rabbit]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them. They aren't exactly a larger brand. IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off. Right now it is in the fringe but I don't think it will stay there. That's exactly what the guy in the article said. He didn't say Tesla was a bad idea or that it won't take off, he said it's not there yet but this next model could very well take it there.

It will be exciting to see where we go from here.

Ford was a 'fringe' brand too. Then the Ford Model-T hit the market and the Ford brand took off. Every car company, hell every company period, that manufactures something you can put a brand logo on starts off as a 'fringe' brand. Ferrari is more of a niche brand, for most of their history they have been a small volume manufacturer that caters to the super rich elite, they remained a niche brand when they created watered down versions of their super sports cars to appeal to the less illustrious segment of society that is merely extremely well off and they remained a niche brand when they tried to create cars like the Fiat 'Dino' to sell to the wealthier segment of the unwashed masses. Tesla, on the other hand has the technology and the potential to repeat some of what Ford achieved in it's first years. That is to say if the people running Tesla Motors can overcome their current fascination with the $40.000+ luxury car market and use that technology to produce a 21st century Model T that beats the crap out of the competition on price and in the miles per kolowatt department. I'm not holding my breath though. Theree are some very decent and affordable electric cars that are already being shipped by European and Asian manufacturers while Tesla claims they won't have one in the sub $40.000 range before 2017 at the earliest.

Re:It's true

[Tom]

IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off.

I'm quite sure they (Ferrari) could, if they wanted. But it would destroy the brand. These brands are built on exclusivity, on the "not for everyone" factor - not only due to prices, but also due to the type of car they built. I'm quite certain that almost everyone who actually owns a Ferrari also owns at least one other car, for everyday driving.

Tesla, on the other hand, is trying to become upperclass mainstream. I wouldn't compare it to Ferrari, but to fashion designers - their original creations are unique exclusives, but they can inspire collections that are affordable to the average girl.

Re:It's true

[Anonymous Coward]

FIAT: Fix It Again, Tony

Re:It's true

[Altus]

BMW and Mercedes make cars that are in the same price range as the tesla but they also make a lot of cars that are a lot cheaper, and those are the cars they sell a lot of. They are much much larger companies and they ship a lot more cars than Tesla. It is true that it is hard to come up with a comparison to another car company in terms of market but in terms of volume and cost they do have more in common with Ferrari. The big difference is total cost of ownership. Ferrari are very expensive to repair and I would bet they break down more often than Teslas. They also burn gas like crazy while the tesla recharges from your relatively inexpensive wall power. Also they are far more practical cars for a daily driver in terms of design and cost per mile. These are all reasons that you might know more people with teslas than Ferraris. I can report a similar experience but I do see about as many Ferraris on the road as Teslas around Boston.

Still as a manufacturer they are probably more similar to Ferrari even though their target market and the use of the car is very different.

Re:It's true

[HornWumpus]

Fucked In All Things.

Re:It's true

[UnHolier than ever]

It's a fringe brand in that Ferrari is a fringe brand. I don't think most people wouldn't want one but I don't know a soul who has one. Very few have seen them. They aren't exactly a larger brand. IF they can mass produce a model in a reasonable price range comparable to a modern model of car it will take off.

Of course Ferrari is able to do that. They call them Fiats.

Bob's smokin' crack

[tekrat]

GM wishes it could get Tesla's customers... Witness the Cadillac version of the Volt, $70,000 price for a Volt with a better interior -- The Cadillac ELR. How many Volts and ELRs combined does GM have to sell to even come close to the Tesla?

Re:Bob's smokin' crack

[HornWumpus]

The Volt outsells Teslas. Sorry to burst your bubble.

Re:Bob's smokin' crack

[BarbaraHudson]

The Volt isn't an electric car. It's maximum range on batteries is 38 miles. So, as an electric vehicle, it's 19 miles going, 19 miles return, and if you need headlights and wipers be prepared to get out and push it at the end.

Apples and Oranges ...

Re:Bob's smokin' crack

[smack.addict]

Cadillac has a luxury version of the Volt that sells for approximately the same price as the Tesla. No one buys it.

The fact is, comparing Tesla sales to Volt sales is idiotic. They aren't remotely similar cars and they aren't remotely competitive.

The Tesla Model S is outselling every single brand in its class. Porsche Panamera sales in California have fallen to non-existent.

I'd bet damn near no one shopping for a car in that price range who drives a Tesla would buy anything else. It's that good.

Re:Bob's smokin' crack

[tekrat]

Citation??

I see an article that claims GM has sold only 58000 Volts over three years, and I know that Tesla has sold more than that in the same amount of time.

Anecdotal: I see way more Teslas on the road than Volts, and I live in NJ. Admittedly, I'm near the NYC area where the wealthy love to show off fancy cars, but still, way more Teslas, by far, and I'm a fairly good car spotter while driving to work.

Re:Bob's smokin' crack

[j2.718ff]

The Volt isn't an electric car. It's maximum range on batteries is 38 miles. So, as an electric vehicle, it's 19 miles going, 19 miles return, and if you need headlights and wipers be prepared to get out and push it at the end.

Apples and Oranges ...

The Volt isn't an electric car. It's a different type of an electric car than a Telsa, so yes, apples and oranges. If you're pushing a Volt because it ran out of battery charge, you've entirely missed the point of the Volt's ICE. The Volt's target customer is someone with a ~20 mile or shorter one-way daily commute. By charging it daily, they'll run on battery most of the time. The ICE means they can opt for longer trips without advanced planning (researching charging station locations, or getting a rental).

It's not for everyone. But for those (fringe?) customers, it's ideal. I think I could say the same about a Tesla.

You go Tesla

[Anonymous Coward]

Didn't Tesla company pay back the money they borrowed? Also, I haven't heard that they need bailed out lately. And I never liked square wheel wells with round tires in them, GM.

Re:You go Tesla

[Lab Rat Jason]

You would've preferred square tires?

Re:You go Tesla

[Anonymous Coward]

I thought that was only Canadian cars

Re:You go Tesla

[Anonymous Coward]

You should go to work for GM if you don't already work for them. Actually, I was thinking rounded wheel wells look better! Hey, that's just my preference.

Bob

[Anonymous Coward]

Bob Lutz is a smart man and knows the business inside and out. It's a shame that Washington forced him out prematurally as he had finally started turning GM stable of vehicles around. GM will probably decline back to the crap fest of the 80s and 90s after a few cycles with Bob's groundwork.

Re:Bob

[Anonymous Coward]

Lutz knew you need some "halo" cars (Saturn Sky, Pontiac Solstice). It helps when they're not $100K halo vehicles, either.

Tesla Model S has sold nearly as many as Chevy Volt, at more than 2x the price/vehicle. I think Tesla is doing something right.

As the Beancounters slowly return to power at GM, then, yes, it will decline back to the crap fest of the 50's, 60's, 70's, 80's and 90's. The Bean counters cannot resist the profits of SUVs and pickup trucks, and do not want to invest in change or new engineering other than financial engineering.

Re:Bob

[Anonymous Coward]

I never said Tesla wasn't doing it right. By contrast they're going about it the correct way for a niche vehicle. Heck, I considered buying stock in them last year.

Lutz was the one who brought the idea up for the Volt, to paraphrase him "Electric cars are inevitable." However he left before the project was completed. Regulators and Beancounters were too much a part of the equation. They were also probably the reason the vehicle sucked as bad as it did. I do believe he's correct however, the real test for Tesla is their mass produced vehicle using gigastation batteries. That'll make and break Tesla. As for being overvalued. The company is not profitable, gave up most of its patents, sells very few vehicles, and yet has a market cap the same as major 100 year old auto producers with huge book values. That screams dotcom bubble if you ask me. :)

Personally, I think the Cadillac Sixteen was the greatest thing Lutz thought up, and while most of the tech and ideas are in the current Cadillacs. I still really wish that was GM's flagship vehicle. ;)

Wisdom from these guys?

[damn_registrars]

This sounds like the same kind of wisdom we saw from people tripping over each other to buy facebook stock on opening day, paying obscene sums for stock that subsequently tanked on the market. It seems like he's just trying to play the opposite argument now in hopes that he might be able to look less stupid.

Too bad he's just as wrong as his type was before.

Re: Wisdom from these guys?

[Anonymous Coward]

Yet you were the person so sure that the stock would tank that you shorted it and got millions? No, didn't think so.

Re: Wisdom from these guys?

[damn_registrars]

Yet you were the person so sure that the stock would tank that you shorted it and got millions? No, didn't think so.

The stock market has been, for quite some time now, a casino for the wealthy. I was one of many who knew that it was drastically overvalued but had no way to make money on that knowledge. Even to short sell, based on the insane IPO price, required vastly more expendable money than I or most others had.

Re: Wisdom from these guys?

[david_thornley]

I believe that the stock market is filled with people better able to play the market than I am. Therefore, my strategy is to buy companies I have some long-term confidence in and let them appreciate. Day trading puts me in the shark tank. Shorting on a big scale straps leaky blood bags around me and puts me in the shark tank.

Tesla Pricing

[Anonymous Coward]

When Tesla designs a car suitable for the average working person and prices their cars reasonably for the mass market you might see a significant increase in sightings of a Tesla on the roadways. By suitable design I mean sporty and by reasonably priced I mean USD15000.00-20000.00. Yet much of North America is not climate suited to battery-powered auto-mobiles regardless of any perceived pent up consumer demand.

Alibaba

[oh_my_080980980]

And Alibaba isn't over valued?

I remember this play...

[Anonymous Coward]

A chair tossing CEO used something similar about a fruity companies products at one point.

Re:I remember this play...

[spire3661]

Michael Dell said a certain fruity company should be dissolved and the money given back to the shareholders.

Yeah ... but ... it's true.

[GodInHell]

Check out the chart at Wikipedia the Model S sold about 40,000 cars this year. Compare that to the significantly less sexy Nissan leaf with its 130,000 sales - or GM's total sales for 2014 January - June of 4.9 Million vehicles. See, GM's sales report for Q2-14.

Tesla is a great car company and likely to be an even bigger deal in the battery market - but compared to GM, it's sales barely register.

On the stock front - GM's market cap is 51.8B, Tesla's is 30B. So, yes, Tesla is probably a bit overpriced right now - people are buying what Tesla will be, not the company it is today.

Re: Yeah ... but ... it's true.

[tysonedwards]

Tesla actually has a significant profit margin per car sold (25%) versus GM at 0.7% for this latest quarter across all of their divisions. That's where the massive disparity comes from. When you can sell luxury cars at a much higher price with much higher margins, volume doesn't mean dick.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

It also doesn't hurt that they are given zero emission car credits from the California government for each car sold that they then turn around and sell to GM, Toyota, etc for about $30K per Model S. That is where they are getting most of their profit.

Re: Yeah ... but ... it's true.

[geekoid]

"...volume doesn't mean dick."
of course is means something, don't be daft.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Tesla actually has a significant profit margin per car sold (25%) versus GM at 0.7% for this latest quarter across all of their divisions. That's where the massive disparity comes from. When you can sell luxury cars at a much higher price with much higher margins, volume doesn't mean dick.

You don't understand their business models.

If Tesla is claiming a 25% margin, then that's solely on the direct cost of the car and doesn't account for overhead such as the capital depreciation. It doesn't matter how much money they make over the direct cost of the car, what matters is the profitability, money left over after ALL expenses of the company. In accounting circles that's called Net Margin, and Tesla has not has a positive net margin in it's history; they are burning cash to claim market share. That only works for so long.

Last year Tesla lost $75M, which is an improvement over the $350M they lost last year and the $250M they lost before that:

http://finance.yahoo.com/q/is?s=TSLA+Income+Statement&annual

GM makes .7% on their cars. This is a bid for market share. That's ok though, because GM doesn't make money selling cars. They make money on *financing* cars; their auto loan and lease divisions are the real money generators; the physical cars are just an entry point. GM made $5B last year, which was a 3.4% net margin over gross revenues.

I'm a fan of Tesla, but seriously if you're going to make a comparison at least get the facts right and don't obfuscate it with pointless numbers.

Re:Yeah ... but ... it's true.

[suutar]

This. Yes, right now Tesla is absolutely a fringe player. But all the signs seem to point to them growing to be much more substantial, especially once (as Bob himself said) they get their next tier of lower price, less frills up and running.

Re: Yeah ... but ... it's true.

[Mr D from 63]

Margins and profit margins are two different things, don't get them confused. I think the point is that the high end market for Tesla may have limited upside, and therefore they will need to move significantly more to the lower end to have long term sustainable growth. Time will tell, but its not wise to completely ignore a person who has significant business insight and experience, there is usually some underlying basis.

Re: Yeah ... but ... it's true.

[tysonedwards]

Tesla made 750m in profits last year off of 40,000 Model S sales.
GM made 31.8m in profits last year off of 130,000 Nissan Leaf sales alone.

Tesla is generating 3 billion dollars per year in revenue, and of that 750 million is profit.
All of GM combined is generating 155.42 billion dollars per year in revenue, and of that 1.087 billion is profit.
If Tesla sells an additional 18,000 cars per year (58,000 total), they will surpass GM's Combined Yearly Profit.

That is why Tesla is doing well in the stock market, considering that they don't need much staff to build their products, they just build what is already sold, and they don't need to sell many cars to generate a lot of profit for their investors.

Re:Yeah ... but ... it's true.

[Bill, Shooter of Bul]

Chevy sells approx 2,000 volts per month or 24,000 a year. Compare that to the much more expensive Model S selling 40,000.

Yeah overall, they are being traded as a growth stock, but look at those numbers. Can you imagine how much they would sell with a car the same price as the volt?

Re: Yeah ... but ... it's true.

[Anonymous Coward]

That is why Tesla is doing well in the stock market, considering that they don't need much staff to build their products, they just build what is already sold, and they don't need to sell many cars to generate a lot of profit for their investors.

Thanks to the government of California.

Re:Yeah ... but ... it's true.

[GodInHell]

Absolutely, I want a Tesla Model S - I would gladly buy one if I could. I would joyously be part of Telsa's sales - but that doesn't change the numbers. Tesla is a tiny player making big waves - hopefully its just the signs of a new beast rising from the deep - but companies should be evaluated based on their numbers, their vision and their leadership - Tesla has only two of those going for it right now.

Re: Yeah ... but ... it's true.

[GodInHell]

According to Yahoo Finance, Tesla is still losing money and recording a -6.82% profit margin. Their margin per car may be positive, but the company isn't making a profit yet. (Key word, yet).

Re: Yeah ... but ... it's true.

[Opportunist]

Damn those treehuggers for wanting breathable air! It's so Un-American!

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Yes but a negative profit is okay, at least for a while, when a company is expanding. And make no mistake, Tesla is heavily expanding and spending money for the future to solidify itself.

Things like the gigafactory and all the various constructions of the supercharge stations are definitely gonna hit Tesla bottom line. That said, it's undeniable that these are extremely important and it's payoff is likely very large in the long future.

You need only to look at amazon. They often operate at a lost as well but their stocks always stays high because they are in constant growth.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Uh, didn't you just prove his point? What you're saying is that GM sucks at making and selling cars for profit, instead they prey on people who can't afford cars to make money.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

GM made 31.8m in profits last year off of 130,000 Nissan Leaf sales alone.

I'm usually pretty up to date on this stuff, but since when does GM own Nissan? Or did you mean to use figures for the Chevy Volt?

Re: Yeah ... but ... it's true.

[Anonymous Coward]

GM made 31.8m in profits last year off of 130,000 Nissan Leaf sales alone.

This perplexes me, was it the GM Volt and not the Nissan Leaf you were talking about above?

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Uh, didn't you just prove his point? What you're saying is that GM sucks at making and selling cars for profit, instead they prey on people who can't afford cars to make money.

Learn to read. He's claiming Tesla has a significant profit margin per car. That is false as is shown by their SEC filings. He's claiming GM makes .7% on their cars. While that may be true, their cars are an entry point into financing. GMs profits are 3.4%, so his assertion that GM doesn't make much money is false. I'm also going to make a strong assumption here that most on this board are liberal, which means pro-union. GM is a union shop; Tesla is not.

Financing isn't preying on people, get over yourself. Financing is a way to manage a car on monthly payments instead of paying all cash up front. In fact, car loans count as installment loans, one of 3 types of debt that are critical to building credit history and enabling a financial future for yourself, so a well managed car loan is in fact a solid choice for many people.

Re: Yeah ... but ... it's true.

[zennyboy]

Plus, remember, frequently one arm of a company often loans another arm (brand, technology, patents) at a stupid interest rate, making the company 'unprofitable' for tax purposes...

Re: Yeah ... but ... it's true.

[Areyoukiddingme]

Learn to read. He's claiming Tesla has a significant profit margin per car. That is false as is shown by their SEC filings.

It's true. Sale price per car minus expenditure per car equals profit per car, and it is indeed 25%.

The company has negative net revenues because they're busily pouring money into capital investments, tooling up production lines for new cars. It's not like $700 million has vanished down a hole somewhere. They're buying real estate and massive amounts of machinery. Starting a car company from scratch requires investment. You don't just wave a hand and cars start pouring out of a door in the side of a building.

Re: Yeah ... but ... it's true.

[Sri Ramkrishna]

They'll do it too. The marketing guys tell me in Portland they are selling about 4-5 cars per marketing rep (at maybe 2 or 3 there) per week. (I think it was a week, could be a month) Teslas have become more and more common place in Portland.

Re: Yeah ... but ... it's true.

[Sri Ramkrishna]

There are plenty of people who want to do the right thing they dont' all have to be treehuggers. And I commend some of them who have stopped logging and allowed us to use a more sustainable living. The fringe have their uses.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

You made the mistake of arguing with his Holiness Geekoid. He isn't going to like your response....

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Learn to read. He's claiming Tesla has a significant profit margin per car. That is false as is shown by their SEC filings.

It's true. Sale price per car minus expenditure per car equals profit per car, and it is indeed 25%.

The company has negative net revenues because they're busily pouring money into capital investments, tooling up production lines for new cars. It's not like $700 million has vanished down a hole somewhere. They're buying real estate and massive amounts of machinery. Starting a car company from scratch requires investment. You don't just wave a hand and cars start pouring out of a door in the side of a building.

And you don't understand accounting; that's not how that works. That's how a cashflow statement works, but that's not how an income statement works. Buying equipment, factories, and real estate does not count towards income, it's an asset purchase which adds to the balance sheet. You then depreciate the value of that asset over a period of time such as 15 or 30 years, that's how you account for the cost of the asset that has a long life span. All the costs you're talking about? Those costs are going to be there for the next 30 years, because it's against SEC rules and GAAP to change midstream your practices and htey didn't claim it all up front, so they are deprciating it.

Seriously, look at the link I put in; it's their income statement. Their R&D costs have stayed constant, their SG&A went up. Depreciation falls into SG&A, and they won't take the hit entirely in one year. You guys need to learn how to read financial statements.

Re: Yeah ... but ... it's true.

[ppanon]

Maybe he can read income statements just fine.

Depreciation is the devaluing of Assets (usually to represent wear and tear, obsolescence, and so on). What the GP is talking about are Capital Expenditures. Now as you add to your asset base, your depreciation will increase, but only by the same percentage increase that your capex adds to the assets of the company.

From wikipedia: "An ongoing question for the accounting of any company is whether certain expenses should be capitalized or expensed. Costs which are expensed in a particular month simply appear on the financial statement as a cost incurred that month. Costs that are capitalized, however, are amortized or depreciated over multiple years. Capitalized expenditures show up on the balance sheet."

Maybe you should learn how to read balance sheets?

Re: Yeah ... but ... it's true.

[ppanon]

Yeah, I misread his post. Never mind my parent post as it's inanely wrong.

It could be that they are deliberately depreciating their assets faster, but it's more likely that the increased SG&A costs are due to costs in ramping up their sales network beyond California. There will be significant startup costs in building out all those Tesla sales centers (not to mention fighting court battles and lobbying over their legality due to laws favouring dealerships). If they rent the sales locations (and if the Vancouver location on Robson is a typical location, then they must be renting) then many of the setup costs are going to be SG&A or CAPEX with a very short depreciation lifetime compared to property or production line equipment (which means large but short-term depreciation expenses in SG&A). The recurring rental costs will be SG&A too. However those costs can still be substantial to project the luxury image they want for the Model S, and they can opt to move to less pricey locations after a few years, once they've established mind-share through road presence thanks to early adopters.

Tesla don't have the benefit that Toyota had with its pre-existing network of dealerships when it launched the Prius. The Sales Centers are an attempt to establish a national sales presence on the cheap, but building even that is expensive. They say that it normally takes over a year for a restaurant to build up a clientele and become profitable. It shouldn't be surprising that car companies take an even longer investment, because people tend to be pretty conservative when it comes to buying durable goods like cars. Targetting for the niche upscale luxury market, where image is a major factor and can be obtained through some high-profile early adopters, is an interesting strategy for keeping their costs low during the slow process of gaining widespread mindshare. It's still an incredibly long and expensive process but we should be seeing the SG&A expenses plateau as their NA and European sales networks get established. It looks like they've got pretty good coverage now for the large city markets where the Model S can be sold, but they will need to add another bunch of locations in smaller markets as they ramp up to sell the more affordable model 3.

Re: Yeah ... but ... it's true.

[CaptnZilog]

Damn those treehuggers for wanting breathable air! It's so Un-American!

Except that something like 40% of the nations electricity comes from coal plants, so an electric car isn't really "zero emissions", it just changes where the emissions come from - instead of the cars exhaust, it comes out of a big smokestack.

Re:Yeah ... but ... it's true.

[Anonymous Coward]

So, yes, Tesla is probably a bit overpriced right now - people are buying what Tesla will be, not the company it is today.

Uh, yea that's how you're supposed to invest in stocks.

Re:Yeah ... but ... it's true.

[Anonymous Coward]

Can you imagine how much they would sell with a car the same price as the volt?

You're assuming that Tesla can build a car as desirable as the Model S at the cost of a Volt. Maybe they can, but the whole point of the Volt (or the Leaf) is that substantial compromises were made to reach the price point - attractive 'luxury' features like fit & finish; supplemental ICE (Volt); limited range (Leaf). Those compromises are appropriate for mass-market car producers making their first foray into electric, and maybe Tesla's experience in the less price-constrained, high-end market will let them cut fewer corners on their low-end entry. I'm sure their lower price effort will do better than the Volt, but building 200,000 cars at $35k is very different from building 40,000 cars at $70k (or, for the guy who thinks Tesla and Maserati serve the same market, very different from building 7,000 cars at $150,000)

Re: Yeah ... but ... it's true.

[Gavagai80]

First, California has already legislated better electric generation. Secondly, carbon emissions have nothing to do with breathable air. When you're walking down the street, it's the vehicle exhaust that makes you choke and gasp for breath.

Re: Yeah ... but ... it's true.

[Anonymous Coward]

Do you have a source for that? I would genuinely like to read more about it.

Re: Yeah ... but ... it's true.

[Opportunist]

Damn straight! Who needs a planet, what we need is economic growth!

Re: Yeah ... but ... it's true.

[badkarmadayaccount]

Well to wheel efficiency is still better, and smokestacks tend to have better filtering systems. Also, lots of fun torque!

Dog bites man

[Anonymous Coward]

Call me when Man bites dog.

This is news?

[Anonymous Coward]

I was under the impression that the CEO of Tesla basically said the same thing in their last conference call. He said the stock is over valued, the company is still small, but they are looking out for the long run. Detroit should still be scared. Their idea of the long run is early next month.

Umm?

[EagleRider70]

So how about you start producing cars that you don't have to recall because they are killing people, instead of talking down your competition. Just a thought. Last I knew GM had recalled more cars this year then they sold in the last 5 and that was before the latest round of recalls. Sure Tesla has had a few safety issues, but they have addressed them head on. When GM starts doing that, I might actually care what they have to say.

Re:Umm?

[ericloewe]

Tesla has had safety issues?

The only fatality in a Model S was a moron who stole one and crashed in a ludicrous speed chase in the middle of a city, cutting the car in half and wedging one of the halves between two buildings.

Then the three caught fire after hitting stuff (IIRC, only one of them was driving normally and not involved in a crash, but was hit by some nasty debris), but as you said, they addressed that head on, with insane overkill.

I'll subscribe to the sentiment about GM, by the way. I considered the Volt the next best thing until Tesla had something a bit more affordable. Now, I consider it a likely deathtrap, like all GM cars.

Re:Umm?

[EagleRider70]

They did have a battery that was punctured and they quickly addressed the issue and are offering free fixes to all owners. I in no way intended to indicate that Tesla's are unsafe to drive. My point was in the one case where there was an issue found, they quickly responded to the problem. Sorry, if you misunderstood the point I was trying to make.

GM wishes it could keep its Volt customers

[perpenso]

GM wishes it could get Tesla's customers...

GM wishes it could keep its Volt customers. My two Volt owning friends lover their Volts, their spouses too, however they all really wish they could afford a Tesla. When Teslas become more affordable, GM is in trouble. Well, more trouble than they are normally in.

How does the quote go...?

[Xac]

"The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown." That is how the quote goes. Tesla is for giving rich people a fancy toy. Nothing more.

I like Buicks...

[pigiron]

especially 5 year old ones with low mileage. Best used car deals out there by far.

Re:I like Buicks...

[sexconker]

bum bum bum BUM BUM BUM bum bum bum dum dum dum, dum dum dum DUM DUM DUM dum dum dum bum!

Did he get a new car?
Maybe he got a raise.
Good for him.
Good for her.

bum bum bum BUM BUM BUM bum bum bum dum dum dum, dum dum dum DUM DUM DUM dum dum dum bum!

That's not a Buick!
That's, what I tooooooold him!

bum bum bum BUM BUM BUM bum bum bum dum dum dum, dum dum dum DUM DUM DUM dum dum dum bum!

Pick me up?
K I'm here.
Where?
In the Buick.
I don't see a Buick!

bum bum bum BUM BUM BUM bum bum bum dum dum dum, dum dum dum DUM DUM DUM dum dum dum bum!

Re:I like Buicks...

[pigiron]

They do tend not to stand out in a crowd. Nor do they stand out on the freeway in the eyes of the Highway Patrol!

s/tesla/apple/g

[whyde]

Amara's Law: prov. The effect of a technology will be overestimated in the short run and underestimated in the long run.

What seems like just a fringe now, from far away, will soon be the whole surrey with the fringe on top when it gets closer.

Re:s/tesla/apple/g

[Anonymous Coward]

Amara's Law: prov. The effect of a technology will be overestimated in the short run and underestimated in the long run.

What seems like just a fringe now, from far away, will soon be the whole surrey with the fringe on top when it gets closer.

Just that Tesla isn't the technology.

Re:s/tesla/apple/g

[sexconker]

Dipshit's Law: Quotable "laws" are rarely accurate, rarely referenced properly, and rarely attributed correctly.

From Murphy to Moore, these "laws" are nothing more than shit for idiots to bandy about in the absence of actual comprehension, thought, or opinion.

Re:s/tesla/apple/g

[Anonymous Coward]

Someone's jealous that they don't actually have an education.

Re:s/tesla/apple/g

[Anonymous Coward]

So tell us all about what you talk about in church

Meh

[Anonymous Coward]

Some sour grapes from a has-been brand that with all their might couldn't produce an electric vehicle better than a Tesla. 'Nuf said.

Preferred the Volt ?

[perpenso]

The Volt outsells Teslas. Sorry to burst your bubble.

Go ask those Volt owners if they aspired to own the Volt, if they preferred the Volt or if they settled for the Volt?

Re:Preferred the Volt ?

[HornWumpus]

That affects the color of their money how?

Re: Preferred the Volt ?

[Anonymous Coward]

So what you're saying is that a Tesla is something to aspire to, that it is, gasp, kind of on the fringe? Non-story here folks.

Re:Preferred the Volt ?

[shadowrat]

The Volt outsells Teslas. Sorry to burst your bubble.

Go ask those Volt owners if they aspired to own the Volt, if they preferred the Volt or if they settled for the Volt?

i'm sure GM is perfectly happy to have people settle for the volt.

Re:Preferred the Volt ?

[perpenso]

That affects the color of their money how?

It affects customer retention, future money. It Tesla comes out with affordable cars GM is in for serious competition.

Re:Preferred the Volt ?

[perpenso]

The Volt outsells Teslas. Sorry to burst your bubble.

Go ask those Volt owners if they aspired to own the Volt, if they preferred the Volt or if they settled for the Volt?

i'm sure GM is perfectly happy to have people settle for the volt.

You mean GM is perfectly happy that people don't have an affordable option. The point is once those people have an affordable option the meaningfulness of past sales becomes apparent, i.e. not very meaningful at all.

Re:Preferred the Volt ?

[Anonymous Coward]

Price of 2015 Chevy Volt - $34,345, 60 month loan price per month $587

Price of a Model S - $69,900 , 60 month loan price per month $1,187

Anticpated Price of a Model 3 - $50,000, 60 month loan price per month $855
http://www.ibtimes.com/2017-tesla-model-3-starting-price-50000-according-sobering-report-teslas-future-challenges-1690822

I think on a commodity product like an automobile, customer retention will be dictated far more by the average wealth of the consumer and less so on brand. Brand makes a difference when price is comparable.

Re:Preferred the Volt ?

[Anonymous Coward]

The Volt outsells Teslas. Sorry to burst your bubble.

Go ask those Volt owners if they aspired to own the Volt, if they preferred the Volt or if they settled for the Volt?

NO parent has ever been dying to get a minivan over a sports car to feed their mid-life crisis, and damn near every car owner ends up settling for what they can afford, so the line of questioning here is rather idiotic from a realist's point of view. Like I'm gonna lie and say I prefer my run-of-the-mill model over a Ferrari. Please.

Re:Preferred the Volt ?

[Anonymous Coward]

IMHO, if they want the Model 3 to be a "mainstream vehicle", Tesla needs to get it priced in the 20-30K range (essentially the current Prius). People complained that the Volt was priced too high and if the 3 comes in at 50K, the auto industry press will slam it for being too expensive.

Re:Preferred the Volt ?

[perpenso]

Price of 2015 Chevy Volt - $34,345, 60 month loan price per month $587

Price of a Model S - $69,900 , 60 month loan price per month $1,187

Anticpated Price of a Model 3 - $50,000, 60 month loan price per month $855 http://www.ibtimes.com/2017-te...

I think on a commodity product like an automobile, customer retention will be dictated far more by the average wealth of the consumer and less so on brand. Brand makes a difference when price is comparable.

No, its not as simple as comparable. The brand can make a difference when the price is affordable to a particular consumer, even when more expensive.

Using your numbers, fewer potential Volt buyers will settle for a Volt if the Tesla is $855 a month rather then $1,187 a month. GM would experience some loss in customer retention in the scenario you describe.

Re:Preferred the Volt ?

[perpenso]

The important distinction between Ferrari and Tesla is that Tesla is moving towards the mass market.

So?

[morgauxo]

What's wrong with calling Tesla a "fringe brand". Sorry but if you can afford a Tesla you ARE on the fringe!

I don't think that really says anything bad about Tesla itself. Any new car company in the US that can survive as long as Tesla has in the face of the big three has nothing to be ashamed of. The fact that the cars are relatively expensive.. of course they are! They aren't as mass produced as other cars are! Now if Tesla manages to get their cars to a point where they are no longer fringe and a regular person can and is likely to purchase one... that would be awesome! Even if they never get that far, even if Tesla closed up shop tonight I'd say lasting this long in the face of super entrenched and government supported incumbents was a good accomplishment.

Re:So?

[Anonymous Coward]

... in the face of the big three ...

Big two. Chrysler is now Dutch.

Re:So?

[bill_mcgonigle]

Sorry but if you can afford a Tesla you ARE on the fringe!

Not really. We had a 2005 Pontiac minivan. Between acquisition cost, gasoline, repairs (and repairs and repairs), and depreciation, it cost us $50,000 over three and a half years, and that was before the inflationary boom when steak was half the current price.. We had to unload it due to the gas and repair costs and ate it so hard on the depreciation.

The Tesla is slightly more expensive than that, and that was aimed squarely at a typical young American family. The 10-year cost on a Tesla model S is going to be a lot cheaper, not to mention the model 3. It's simply a matter of financing.

Tesla is worth 60% of GM !

[Anonymous Coward]

uhh.. Tesla has been pretty heavily subsidized too. Also market cap only says "this stock is volatile enough that gamblers are interested in riding it like a roller coaster". I have little faith in the long term viability of Tesla. I believe they are just a step towards the second generation of cars. I think self driving clean cars are gen 2. Tesla is not clean and it isn't self driving and I don't believe they can finance clean or self driving themselves. A Google buyout sounds better

500th time

[Anonymous Coward]

How many Tesla vs the world stories can Slashdot post...

$80K cars are fringe models.

[KeithJM]

From GM's point of view, Tesla IS a fringe brand. How many sales does GM lose to Tesla? Granted, some people may be in the market for a $60K Corvette and decide to buy a $80K Tesla Model S instead. But if you look at directly competing models, how many people decide to buy a Tesla instead of a $35K Chevy Volt? Basically, none. If you create a bell curve of all car models by selling price, Tesla will be in the fringe with the other cars that are close to 6 figures. Being a fringe brand doesn't mean you don't make a good car. Lamborghini is a fringe brand too. If you don't think it's a fringe brand, ask all of your friends who have ever purchased a car how many of them have seriously considered buying one.

Re:$80K cars are fringe models.

[david_thornley]

I don't want a Volt. If I lived in a more electric-friendly area, I'd want a Tesla. I can afford one if I really want it.

Read the full quote

[scamper_22]

"He thinks that the company will remain a "fringe brand" until it introduces its next generation of cars, the smaller and less expensive Model 3 currently planned for a late 2017 introduction.

That's pretty much a reasonable statement. Telsa gets a lot of buzz and I'm sure a lot of wealthy people have them. Yet, it is not a common person's car until the less expensive models come in 2017.

There's a lot of anticipation with Tesla and we all wait and see to see how it impacts the regular person with respect to delivery, service, cost, warranty, scale...

The test of Tesla is coming soon to the mass market. The big auto are already ingraining their hybrids and all electrics.

Who knows what they will have by 2017.

Tesla has the benefit of a fresh start. But the rest have all their service centers, branding...

Re:Read the full quote

[King_TJ]

It's a reasonable statement if GM was also admitting that its attempts at electric cars are "fringe" too! The laughable part is when they speak with an attitude like they have the electric car thing all buttoned up.

Quite frankly, if we want to talk about more affordable electric cars that typical consumers would be tempted to buy today? I'd look at such offerings as the electric version of the Kia Soul (should sell at the $35K - $38K price point) before I'd look at GM. The Chevy Volt is one of those cars that's more attractive on the inside than the outside, by most people's standards. The Kia Soul is actually a small SUV that many people *want* to own already, in the traditional gasoline powered form, and choose it over all the other choices on the market.

It's true

[Kartu]

So Porsche, which sells about 80 000 cars annually, is "a fringe brand"? Seriously?

typical /. Elon's Musk worship:

[Thud457]

There goes Ellsworth Toohey ragging on Howard Roarke again. What a surprise!

GM is afraid ...

[perpenso]

So what you're saying is that a Tesla is something to aspire to, that it is, gasp, kind of on the fringe? Non-story here folks.

The point is that Tesla is working on more affordable cars. That "fringe" you refer to is known as walking a new technology down the willingness to pay curve using supply constraints, capturing the maximum value from each buyer, maximizing profits. Its a beautiful fit when your new tech starts out expensive and limited in numbers due to various constraints.

That first high priced iPhone was once "fringe". However once Apple had several generations of phones and could offer them a high, medium and low price points the iPhone became a much more significant part of the market. Tesla is on a similar track. GM is, and should be, afraid.

Re:GM is afraid ...

[Anonymous Coward]

You keep saying things as though you are contradicting the guy above you, but you aren't.

That "fringe" you refer to is known as walking a new technology down the willingness to pay curve using supply constraints, capturing the maximum value from each buyer, maximizing profits.

Yup, that's a fringe.

That first high priced iPhone was once "fringe".

Yes indeed, no need for scare quotes.

When people make a statement about today, you can't extrapolate that out into a steady state universe. The first high priced iPhone was fringe, and that fact didn't change when later iPhones were more mainstream.

Re:GM is afraid ...

[perpenso]

You keep saying things as though you are contradicting the guy above you, but you aren't.

The point you are missing is that the GM exec is speaking as if Tesla is *and will remain* a fringe product. It most likely will not remain such, hence the fact that GM is afraid and talking about it.

Re:GM is afraid ...

[goose-incarnated]

You keep saying things as though you are contradicting the guy above you, but you aren't.

The point you are missing is that the GM exec is speaking as if Tesla is *and will remain* a fringe product. It most likely will not remain such, hence the fact that GM is afraid and talking about it.

No he didn't. Did you even read the summary?

He's right

[mark-t]

Until they start selling electric cars for about the same price as you can buy an otheriwise equivalent capability ICE vehicle, instead of having no less than a markup that is large enough to buy a whole other brand new car, there is no chance that they will become as ubiquitous as ICE vehicles.

What is GM supposed to say...

[Mysticalfruit]

Note: I'm a very happy Volt owner...

However, GM is a publicly traded company... What else could they say? "Wow, the Tesla's a really great car..." How does that help their stock price? GM is in the business of selling cars and in doing so making their stock worth more. You're finding fault when someone is merely towing the party line and confusing a news story for a press blurb.

Looking forward to my $30k fringe brand car

[WillAffleckUW]

Tesla are selling like solar powered hotcakes.

You're either part of the future or you're spending your money on Tag Hauer watches.

Just like the iPhone

[Anonymous Coward]

*nm*

Toyota was a fringe brand once

[cant_get_a_good_nick]

So was Honda...

Hell, at one point even GM was "fringe"...

Im not saying that Tesla will grow that size. Suzuki was, and IS a fringe brand. But saying "hey they're small now" is what screwed GM back in the 80s with the Japanese and Volkswagen invasion.

Other bad (for GM) echos are the possible paradigm shift. What allowed the Japanese invasion in the 70's? They had better small car/low gas consumption cars. Here, Tesla has a huge tech advantage in electric right now. Could this be a tipping point? Dunno... But silly for GM to dismiss

As a side point, it makes me a bit sad. GM had the all-electric Impact. But like Microsoft, Nokia et al., they squandered a huge lead in tech and now are trailers.

I hope this is a "Steve Jobs says a competitor's feature sucks because he doesn't have it, but really sees it useful and feverishly puts it in his next release" Sadly, this probably really is "we don't even see them on our radar" and GM is toast. A lot of people work for GM, and whatever you think about the company (generally poorly run for years) if it goes under it's gonna hurt us all.

I Wish I Was Rich Enough to Buy an Elephant

[Anonymous Coward]

Why do I want an elephant? Well, I don't, I just want to have that much money. So, I wish I was rich enough to buy a Tesla. But I'm happy with the Volt. Even if I could afford the Tesla, I would not buy it. It's just too much money for a fricking car and the ROI just does not work out. So I can aspire to the Tesla all I want, GM's the one that got my money, and Tesla would never have.

Re:I Wish I Was Rich Enough to Buy an Elephant

[Anonymous Coward]

Something about the fox and the grapes..

American new car companies since WW2

[spaceyhackerlady]

I view Tesla as the best bet for a completely new American car company in a long time.

The U.S. Big Three have been around for eons. After World War 2 Hudson and Nash were hurting, merged to form American Motors, and went bust. Packard and Studebaker were hurting, merged, and went bust. Kaiser/Frazer tried, and went bust. De Lorean tried and got in to all sorts of trouble. Nobody seemed to be able to launch a new car company and make it work.

Tesla, on the other hand, seem to have cracked it. They're selling all the cars they can make. I see lots of them around here (Vancouver).

...laura

Ally Bank

[tepples]

Ally Bank used to be GMAC, the financial services division of GM. It began in 1919 by offering loans on new GM cars. In 1985 it expanded into mortgages, and in 2000 it became an online retail bank.

Re:Ally Bank

[david_thornley]

And, from 2005 to 2007, I worked on mortgage modeling software for GMAC. It was interesting, sort of like having an excellent view of the sinking of the Titanic.

Tucker: The Man and His Dream ..

[lippydude]

'The story of Preston Tucker, the maverick car designer and his ill-fated challenge to the auto industry with his revolutionary car concept.' imdb.com

Who Killed the Electric Car?

[lippydude]

"A documentary that investigates the birth and death of the electric car, as well as the role of renewable energy and sustainable living in the future." imdb.com

fark you

[Anonymous Coward]

oh f you. I commute by the Menlo Park Mall in NJ, and daily there are 3-4 Teslas charging up there.

for the record I ride a 4th gen 4runner and I'm not in the market, still I hate arrogant bastards

Is he wrong?

[Dputiger]

Tesla *is* a fringe brand right now. So is Mercedes. So is BMW. So are Porsche and Lamborghini and a host of other high-end luxury car manufacturers. Tesla, like these other companies, builds a product that many would like to own and fairly few can afford.

It seems like what Lutz is saying is "If Tesla wants to meaningfully impact the way the average American gets from Point A to Point B, it needs to build a car that the average American can afford." I don't think there's anything untrue about that statement. I love the Model S and I'd love to *own* a Model S, but there's no foreseeable point in my life when I'll be rich enough to drop $80K on a car. That's why I'm hoping Tesla's midrange offering is a great vehicle with sensible compromises to bring the price down.

Yeah ... but ... it's true.

[Anonymous Coward]

Tesla is a great car company and likely to be an even bigger deal in the battery market - but compared to GM, it's sales barely register.

GM's direct competitor to the Tesla Model S is the Cadillac ELR. ($75,000 Electric Long Range)

Tesla: 40,000 sales
GM: 390 sales
Source:http://www.cnbc.com/id/101817673#.

I think it's GM that is getting the shit kicked out of them in this area.

Who's Idea was That?

[Anonymous Coward]

I have a buick from the last millenium that I have to unbolt the motor mounts and tilt the engine forward just to change spark plugs.

Wasn't Lutz the chief archetect of the Volt?

[Streetlight]

I wouldn't be surprised if the current Tesla model hasn't outsold the Volt by some large number maybe 10 times volt sales. Which would be considered a fringe vehicle?

How does the quote go...?

[Anonymous Coward]

Nah. The electric car company idea which became Tesla was intended from the beginning of Elon's involvement to use the government and the rich to subsidize the innovation and economies of scale necessary for the development of the mass market electric vehicle/model 3.

Give me back my Quad 4

[Dukenukemx]

GM doesn't need to worry about Tesla. They have their own problems. All their cars look like Tonka toys and have the build quality of a Chinese iPhone knock off. They all use Vauxhall/Opel engines which are those stupid Ecotec engines. On the other hand their Corvette/Camaro's are awesome and with v8's can get nearly 30 MPG. Why hasn't any of that tech came down to their 4's which they decided to stick into nearly every car?

Can we just get back those Quad 4 engines? Why does a modern Ecotoc need 2.5L to produce the same power of a 2.3L Quad 4 W41 from 1990?

Re:Give me back my Quad 4

[Anonymous Coward]

it's not the 90s anymore but dear good all new cars look hideous. downhill since the 80s

AC speaks truth!

[Zynder]

Too bad you AC'd this. No one will see it, but I am right there with you. They fucked up and now they want to pretend that nothing happened and they "earned" every dollar they've made. It's nonsense.

The round thing goes in the round hole.

[Zynder]

Ugh, I know. Toyota who has a booty call relationship with GM is also now doing square wheel wells. I despise them so much, it's put me off of buying a new Toyota truck. Instead, I'll find me a 90s beater and fix it back up.

Of course your betters agree with this

[publiclurker]

While you might be deluded enough to think that you would be one of the screwers and not the screwed by these corporations, the truth is that you need air to breathe as much as anyone else.

Don't bash the guy just because he worked for GM

[Undead Waffle]

Bob Lutz is one of the good ones. He is now retired from GM, for the second time if I recall. He also worked for Lotus for a bit as well as plenty of other companies. He wrote a book called "Car Guys vs. Bean Counters" where he talked about fighting management at GM as it was shifting from making cars people want to cutting corners to save money (admittedly, I haven't read it. If I was a big reader it would be high on my list though). Sound familiar? And what he's saying in the article isn't wrong:

But they are going to have to do a next generation of car, which is smaller and with new types of batteries that give a range of two to three hundred miles. And until they do that, it's going to remain a fringe brand.

So he isn't bashing them. If anything he is predicting how they could become very successful.

Preferred the Volt ?

[chicklet427]

I have a Volt, and yes that was my preferred choice. I was quite excited about it actually. I wanted one for years, even before they went into production. I was still very much interested in what Tesla was doing, but more so because I'm interested in the technology in general. The Volt is a great first electric car when switching from a gas-only car because you don't have to worry about getting to a charging station before the battery runs out - the gas engine will take over when it needs to without the driver having to do anything. No, I did not consider buying from Tesla. Partly because of the price, and partly because I live in an area where there is no infrastructure for public charging stations which is a definite must if you plan on making a trip farther than your battery range. So you can't really compare the Volt and the Tesla models. Yes Tesla needs to make a cheaper model that the average Joe can afford but all-electric cars won't catch on if people are worrying about how far they can go before they have to find a charging station. Eventually the batteries will have more range and more charging stations will be built and more average joes will buy electric cars.

Bob Lutz is actually a car guy

[John Jamieson]

The parent poster is correct!

For all the car analogies, very few people here seem to know much about the auto industry.

Bob is a real car guy from way back. He did time at BMW, Ford and lots at Chrysler (where he was responsible for the Viper for example).
He got tired of not the new Chrysler ownership not listening, and moved to GM.

GM doesn't specialize in small cars.

[sethstorm]

All their cars look like Tonka toys and have the build quality of a Chinese iPhone knock off

That's part of the "Check a few boxes and ship a translated owner's manual" treatment of the Western markets. Second to that is the over-regulation by environmental groups that operate by the "small cars for thee, but not for me" philosophy.

Can we just get back those Quad 4 engines? Why does a modern Ecotoc need 2.5L to produce the same power of a 2.3L Quad 4 W41 from 1990?

Making corner-cutting, granola-eating-environmentalist pleasing 4-cylinder-based cars is not the primary specialty of General Motors - especially when you see that most of them are captive imports(Spark/Aveo, Cruze, about anything Buick). The only saving grace is that GM doesn't opt to make cylinders appear through thin air (a la Ford's EcoBoost). Let GM make the larger vehicles for less, which is their specialty, and they will do well.

Personally, I'd not mind if GM decided to make Buick solely a Chinese brand, and then bring in Oldsmobile in their traditional positioning to cover the void in the US. Then find a creative way to (effectively) offer more car than what EPA's CAFE regulations would allow - perhaps by allowing US-spec imports of 4-cylinder cars to be placed on order but not generally stocked. If one were to go beyond that, lobby to have the EPA's regulations removed or curtailed.

GM is expert at fringe brands

[Anonymous Coward]

Their first lesson was that Honda used to be a fringe brand
Some say that GM seems to be working on being one themselves.

To say that Tesla is not a major vendor now is correct.
To say that this predicts the future is wishful thinking.

wrong

[Anonymous Coward]

Coal, Oil and Nat gas are far far more subsidized. They go back centuries.

uh no.

[Anonymous Coward]

Toyota, GM, Chrysler, ford and a german company (i forget which one) got massive near-no-interest loans for re-tooling, and NONE of them have been fully paid.

Gm and Chrysler got their stock bought and much of that has been sold back to the market.

sour "Grape"

[Anonymous Coward]

Bobby the "L", put out the Volt and has recalls with no fixes then gives Tesla Motors bad mouthing. Typical loud mouth, bullies folks and points his stinky finger at those he opposes. Just another big bully , a loser crying he fails with Volt and tries to minimize those that oppose him. Typical. Nothing new to see here, move forward.

Single point to replace

[DrYak]

it just changes where the emissions come from - instead of the cars exhaust, it comes out of a big smokestack.

But then, that means you only have 1 point to change.

Want to lower the emission of you electricity production? You "just" replace the power plant with something else.
Then all the electric car can already run on the new system.

Want to lower the emission of your distributed cars exhaust? Now instead of changing 1 power plant, you need to change every single gaz-powered car.
A tiny bit more complex problem.

Not only have you moved around the emission, by centralizing you've abstracted them making future removal easier, and current car already compatible with future evolutions.

And that's just taking into account the US number about coal-based electricity production. Other countries (random example: Switzerland, Germany, Iceland, France ... ) my burn less coal and either count on renewable energy or nuclear energy (has its own set of problems, but CO2 and global warming arent among them).

Empty space

[DrYak]

Yes some Persian and Arabic cartographers had accurately estimated the circumference of the globe but that doesn't mean it was universally known.

Greeks, too, have calculated the circumference of the globe (knowing distance between city and the height of the sun at midday on the same day).

The problem is not knowing how big the globe is. The problem is knowing what lies outside of the known parts.
Maybe it's only sea? That's what Columbus hoped.
But it turned out that there was a whole New-world continent hidden in-between.
Without a precise way to determine longitude (i.e.: without precise enough clocks), it's hard to tell how much one has travelled west-ward.

Perhaps all the circumference has been traversed, perhaps you've reached an unkown land half-way through.

And when the goal you advertised to your financial supporter was "finding an west route to India", you'd be all too eager to over-estimate the distance you've crossed and think you've reached the goal you've been paid for.