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Former GM Product Czar: Tesla a "Fringe Brand"

Posted by samzenpus on from the get-a-haircut dept.

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.

4 of 267 comments (clear)

  1. Re:How does the quote go...? by MightyMartian · · Score: 5, Informative

    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.."

    --
    The world's burning. Moped Jesus spotted on I50. Details at 11.
  2. Tesla is worth 60% of GM ! by macpacheco · · Score: 4, Informative

    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.

  3. Re: Yeah ... but ... it's true. by tysonedwards · · Score: 5, Informative

    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.

    --
    Thirty four characters live here.
  4. Re: Yeah ... but ... it's true. by Anonymous Coward · · Score: 5, Informative

    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.