There's only one way for Elon Musk to realize his game-changing vision
Lutz loves Tesla's cars, and why wouldn't he? A car guy to the core, he appreciated them at the level of design, engineering, and raw speed.
But he hates Tesla's business, and he hasn't been reticent about saying why.
When I saw him at the Detroit Auto Show last month and asked about a new entrant to the automotive space, Faraday Future, he recycled his negative views on Tesla right away.
More recently, on CNBC, he disparaged Tesla's prospects, but also offered a dire prognosis for electric cars in general.
Electric cars are bad business
The thing is, Lutz's comments characterize the difficulty of Tesla's current position. There really isn't much of an electric-car market right now. And even when gas was more expensive, the EV market wasn't that strong. Honda, Nissan, Ford, GM - there are plenty automakers selling electric cars, but a very small number of people seem to want them. Less than half a million EVs have been sold in the US since 2008; in 2015 alone, over 17 million conventional cars were sold.
Tesla's success in this context is remarkable. Even more remarkable when you consider that most of the EV startups that appeared at about the same time Tesla did have either gone bankrupt or vanished.
But Lutz's analysis of what EVs actually do for big, traditional automakers must be taken seriously. You do the EV program so you can achieve higher fuel-economy standards established by the government and continue to sell a lot of big trucks and SUVs, which are enjoying a big comeback right now - and generating massive profits for carmakers.
Tesla, of course, doesn't do gas-powered cars, so it's relying on EVs becoming more popular over time.
If Lutz is right, though, and the tiny EV market will soon be flooded with money-losing electric cars from the traditional car companies, Tesla really won't have a choice about where it has to go. Because the company is on a mission. I've written about this many times, but Tesla is a means to an end, and that end isn't being a large automaker. That end is rather to realize CEO Elon Musk's goal of accelerating a transition away from the fossil-fuel era.
Can't do the 'smart' thing
So the bottom line is that Tesla is stuck. Musk doesn't want to be a niche luxury-vehicle player, an electric Ferrari. He has to drive the company toward the introduction of a lower-priced, higher-volume vehicle, the Model 3. That's the only way he turns Tesla from a 50,000-a-year carmaker into one that builds 500,000.
Retreat, in the face of Lutz's analysis, isn't an option, even though over time a Tesla that sells $100,000-and-up cars, but not a whole lot of them, could be very much a going concern - in fact, a highly lucrative business, given that its current gross margins of around 20% are comparable with BMW's.
But Musk didn't take every penny he got from the sale of PayPal to eBay and sink it into Tesla (and SpaceX) to play safe.
Investors might not like it, and Lutz might be dismayed, but being stuck in its current position is Tesla's destiny. And as long as Musk is running the show, that destiny isn't subject to debate.