Tesla CEO Elon Musk is a nice guy who doesn’t know how to run a car company, Bob Lutz, former vice chairman of General Motors, told CNBC on Tuesday.
“They will never make money on the Model 3 because the cost is way too high. He’s got 9,000 people in that assembly plant producing less than 150,000 cars a year. The whole thing just doesn’t compute. It’s an automobile company that is headed for the graveyard,” he said on “Closing Bell.”
Lutz’s comments come after news of a criminal probe into Tesla, as well as a new competitor hitting the market in the form of Audi’s new electric car.
“The jaws are tightening and I think in another year or two we’ll see a movie called ‘Who Killed Tesla,’ a conspiracy movie starring Leonardo DiCaprio,” Lutz added.
Earlier in the day, Tesla said the Justice Department requested documents last month relating to Musk’s tweets about taking the company private. Tesla has since shelved such plans.
The acknowledgement followed a report by Bloomberg that the federal agency has opened a criminal investigation into Musk’s comments.
Telsa shares sank as much as 7.1 percent on the news, ultimately closing down more than 3 percent.
Lutz said Tesla is “hemorrhaging cash” and because of the federal investigation, the SEC will not let it make a capital raise.
He also said there is competition coming from not only Audi but Mercedes, BMW and Porsche. And those auto manufacturers can sell their cars at a loss and make up for it on sales of internal combustion vehicles.
“Tesla has no … tech advantage, no software advantage, no battery advantage. No advantages whatsoever,” he said.
Tesla did not immediately respond to a request for comment on Lutz’s remarks.
The former GM executive has been a frequent critic of Musk and has said the CEO should step aside. This also not the first time he has predicted the demise of Tesla.
An ‘annoying footnote’
Tesla shareholder Ross Gerber doesn’t think the Justice Department probe is anything to be concerned about.
“We all know what happened. I mean, Elon made a mistake,” the CEO and president of Gerber Kawasaki told “Closing Bell.” “I don’t know if that’s a crime.”
He admitted it has been a tough year for Tesla, but he thinks the worst is over.
“This is an exciting time for the company. So this just another annoying footnote in what will be the long-term track record of Tesla and we’re very confident over the next 12 months,” Gerber said.
Oppenheimer analyst Colin Rusch is also focusing on the fundamentals since there will likely not be a resolution anytime soon by the feds.
And he told “Closing Bell” those are looking good.
“If the fundamentals are going well we think the long-term story starts to feel intact, even if Elon Musk isn’t there,” he said, pointing to Apple’s success after Steve Jobs left as CEO.
He also disputed Lutz’s contention that the SEC will not allow Tesla to raise more money, calling it “purely speculation.”
Rusch has a buy rating and a $385 price target on Tesla.