Robert Lutz, former vice chairman of General Motors Company (GM) and car designer at three automakers, has stated that electric car maker Tesla Inc. (TSLA) is a "losing enterprise" that will "never get to 2019" "at this rate," he told CNBC on Friday, November 17. (For more, see also: The Top 4 Tesla Shareholders.)
The company is plagued with various problems, including inefficient manufacturing, fixed costs that are too high and no dealership network, Lutz said during CNBC's "Power Lunch." In case that wasn't enough, Tesla doesn't bring anything to the table that competitors can't replicate, he argued, noting that the company uses the exact same Lithium ion batteries everyone else does.
Tesla shares have done very well over the last several years, generating robust returns since the company held its initial public offering in 2010. After entering the market for $17 apiece, these securities rose to more than $380 earlier this year, according to Google Finance. These shares have returned roughly 870% over the last five years, and more than 1,500% since inception.
Recent Earnings Disappoint
However, the company's stock has run into trouble lately, falling below $300 earlier this month and entering bear market territory after the electric car maker reported disappointing earnings. Data provided by financial analytics firm S3 Partners showed that right around that time, Tesla became the biggest short in America. (For more, see also: The Case Against Tesla.)
"They are hemorrhaging cash," Lutz told CNBC, adding that "They're going to have to go for another capital raise."