Nikola doubts Tesla electric Semi claims; company ‘going out of business,’ Lutz says

Quimby Mug Bayou Florida
Updated Nov 28, 2017
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Walmart, JB Hunt and JK Moving Services are among the big players that have ordered Tesla’s new semi.

And as it turns out, Tesla may need all the help it can get.

First up is the bleak news from auto guru Bob Lutz. The retired vice chairman from GM has long championed electric powertrains before it was as hip and cool as the latest iPhone.

However, Lutz is no fan of Elon Musk who he says is taking Tesla on such a fast trip to insolvency that the company—if it continues with current business practices—will be out of business by next year.

“They’re hemorrhaging cash,” Lutz said during a recent CNBC interview following Musk’s reveal of the Tesla semi and its Roadster. “The company, folks, is going out of business. At this rate they’ll never get to 2019.

“They’re going to have to go for another capital raise and that’s what the Semi—what I would call the semi-fictitious Semi—and the sports car are all about. Whenever they’re in trouble and need a capital raise, he deflects.”

Okay, so that’s an interesting point. You may recall that early last month, just as Musk announced that as he was taking on “production hell” problems with Tesla’s Model 3, he was also ramping up production efforts for hurricane-ravaged Puerto Rico, namely cranking out batteries and solar panels to help with historic power outages in the U.S. territory.

Suddenly, firing off an angry Tweet about waiting on a Model 3 doesn’t sound like such a hot idea. After all, you’d be throwing mud at a man who—at that time—was setting out to turn the lights back on at a children’s hospital. (Musk achieved that goal and, Fortune noted, even personally donated $250,000 towards the effort).

While philanthropy brings on some nice headlines, it’s profitability that makes a business—or at least most businesses anyway. (Hmmm…Tesla the Philosophy vs. Tesla the Business…as nice as it sounds, you can’t pay the light bill with philosophy, though the argument would be the stuff of sitcom legends).

“I get emails saying, ‘Why do you criticize Elon Musk? Don’t you understand that he’s trying to save the planet?’ And save the planet he may be, but meanwhile he’s running a lousy business,” Lutz said later during the interview with CNBC.

Indeed, Bloomberg reported in late summer that Tesla is burning through $6 million every hour and at that rate will exhaust its cash pile by August 6 of next year.

“Tesla’s options are limited,” Bloomberg reported in August. “It’s already drawing down on more of its revolving credit facilities than ever before. And while the bond market is a possible route, it may not be especially welcoming right now. Investors who bought $1.8 billion of debt three months ago remain under water even after the notes recovered a bit from a low of 93.88 cents on the dollar early this month.”

Musk’s performance claims for his Semi are also firing up critics. He said the truck can reach zero to 60 mph in 20 seconds fully loaded (80,000 pounds); climb a 5 percent grade at a steady 65 mph; travel 500 miles on a single charge carrying an 80,000-lb. load; and charge in 30 minutes using Tesla’s new high-speed Megacharger DC charger (expect a range of 400 miles out of fast-charging).

Unless Musk has devised new battery technology—Lutz says he has no ‘secret sauce’ and is using lithium-ion like everyone else—the Tesla Semi would have to “break the laws of batteries,” according to Bloomberg, to achieve those impressive numbers.

“These claims are so far beyond current industry standards for electric vehicles that they would require either advances in battery technology or a new understanding of how batteries are put to use, said Sam Jaffe, battery analyst for Cairn Energy Research in Boulder, Colorado,” Bloomberg reports.

While you can’t rule out the possibility of new battery technology, you also shouldn’t rule out feedback from EV industry players like GM and Nikola, both of which do not put much stock in Musk’s bigger claims.

“@elonmusk @tesla is full of it,” Nikola Motor Company posted in a series of Tweets on the Tesla Semi which have since been deleted (see deleted Tweets posted at the end of the article). “It takes 2.5 to 3.1 kWh/mile to move freight at 65-70 mph at load (flat ground). 500 miles? Would take 1,100-1,550 kWh of storage. Misleading? Batteries weigh 8-10 lbs. per kWh = 11k-15k lbs. Better coefficient drag than supercars…”

After the Tweets were deleted, Nikola posted some more toned-down messages:

On his personal Twitter account, Nikola CEO Trevor Milton later Tweeted:

Last month, GM’s director of autonomous vehicle integration, Scott Miller, didn’t pull any punches when talking to an Australian reporter about Musk’s claim that the Tesla Model 3 has hardware to permit fully autonomous driving.

“I think he’s full of crap,” Miller said, according to smh.com.

Nikola, which originally planned to develop an all-electric big rig, opted later to use a hydrogen fuel cell at the heart of its electric powertrain. Last year, Nikola reported that it had received 7,000 pre-orders for its Class 8 truck prior to its unveiling in December.

By comparison, publicly announced orders for Tesla’s Semi number just 55, according to Electrek. Walmart, JB Hunt and JK Moving Services are among the buyers. Fifty-five is a long way from 7,000 and an even longer way from building some much-needed confidence in a very demanding and competitive industry.

Reddit user clonk3D took a screen shot of these messages Nikola Tweeted before they were deleted following Tesla’s Nov. 16 reveal of its electric Semi

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