Former GM Product Czar Says Tesla is on the Fringe

2014 Tesla Model S (Credit: Tesla Motors)

Tesla Motors has been accused of all sorts of things and called a variety of names, including being labeled as a “fringe brand” by Bob Lutz, the former product czar for GM. Lutz was the man that shepherded the Chevy Volt, ensuring that the electric car survived the relentless onslaught from Fox News and the horrors of the automaker’s bankruptcy and subsequent restructuring. Because of this, you could say that Lutz is still highly invested in the model’s success in the marketplace.

One of the threats to the Volt is Tesla, especially if it can successfully launch the Model 3, which will compete in the same market segment as the Chevy. Knowing this background, it shouldn’t be entirely surprising that Lutz used his recent appearance on the CNBC finance show “Squawk Alley” to marginalize Tesla. He called the California automaker’s stock “grossly overvalued.”

Lutz went on to point out that the annual production of Tesla Motors right now doesn’t even total the daily output of GM or Ford. To be fair, that’s actually not true, but the point is still the same: Tesla is a small player. He stated that what has been propping up Tesla’s stock price is “hype” since the company is a “fringe brand” that is still not a real player in the automotive industry.

Do such statements mean that Lutz doesn’t take Tesla seriously? Not entirely. Even though he essentially characterized the company as being on the margin, at the same time he admitted that if Tesla pulls off the Model 3 and creates an affordable battery that can boost range to 200 or 300 miles on a single charge, it has a real chance to catapult into the mainstream automotive market.

Considering that Tesla Motors is yet again struggling to bring another vehicle to market on time (the Model X), some big changes are necessary to ensure that the Model 3 isn’t also delayed significantly. The biggest component is getting the Gigafactory operational by 2017, which is a pretty tall task.