Bob Lutz, the blunt-talking former vice chairman of General Motors GM, +4.32% , said almost two years ago that Tesla was “headed for the graveyard.” Then, earlier this year when the stock was trading at about half where it is right now, he described the rally as “almost a mass psychosis.”
He’s not the hater he once was, but he still has his doubts:
“ ‘The rise in stock price and the fact that Tesla is worth more than Fiat Chrysler, General Motors and Ford combined is worth more than Volkswagen and Toyota has nothing to do with reality.’ ”
That’s Lutz, after years of beating up Elon Musk and Tesla TSLA, -0.90%, explaining to CNBC this week how he’s warming up to the company but not without hesitation.
“Tesla is not a very profitable company that creates a decent return for shareholders,” he continued. “It is always struggling for profitability, yet it has a huge market cap.”
While Lutz did acknowledge Tesla has “very good technology” and Musk has done a “brilliant job,” he pointed out that the other car behemoths have made similar advances that stack up well.
“Tesla may be giants in the electric car business but annually they [make] 300,000 cars compared to 10 million a year for Toyota, about 8 million a year for GM,” he said. “Fiat Chrysler, Ford and GM combined [make] about 20 million a year, so Tesla is not very big.”
Watch the full interview: