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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.
"First they ignore you, then they laugh at you, then they fight you, then you win."
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.
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.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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.
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.
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.
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.
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.