One of the largest auto dealers in the country is convinced Tesla CEO Elon Musk is toying with consumers and playing loose with the facts as he works to mass produce inexpensive electric vehicles.
“I think when you’re skimming the Model 3 with a bait-and-switch strategy maybe it works” for a while, Mike Jackson, the outgoing CEO of AutoNation, told CNBC reporters Wednesday night. “But there’s going to be a day of reckoning.”
Musk has only built the Model 3 to sell around $50,000 rather than the $35,000 he promised people last year, Jackson noted. “If you want one at the $35,000 he may never build it for you,” he said. Production on the vehicle has sputtered recently, leading some to question Musk’s intent.
“What the mainline manufacturers are doing is taking the profits from trucks and subsidizing electric vehicles to get through the difficulties,” Jackson said. “Tesla is being subsidized by the shareholders.” (RELATED: Tesla’s Model 3 Production Deliveries Weren’t Enough To Satisfy Wall Street Analysts)
Jackson said he share GM Vice Chairman Bob Lutz’s criticisms of Tesla. Lutz told reporters Tuesday that Tesla is “headed for the graveyard” because it can’t make money on the Model 3.
Larger manufacturers can deliver the kind of products Musk claims he can, according to Jackson. “What the mainline manufacturers are doing is taking the profits from trucks and subsidizing electric vehicles to get through the difficulties,” he said. “Tesla is being subsidized by the shareholders.”
Tesla was turned upside after Musk told his Twitter followers in an Aug. 7 post that he secured “funding” to take the automaker private at $420 per share, far more than the company’s worth. His tweet followed a report suggesting Saudi Arabia became a major Tesla shareholder earlier this year. Musk eventually scuttled the idea but not before it prompted a full-blown federal investigation.
The company struggled to deliver vehicles in June. Tesla hit a one-week production goal of 5,000 Model 3 vehicle for the last week of that month. It still posted 40,740 vehicles versus analysts’ consensus expectation of approximately 51,000.
Tesla shares fell 7.2 percent shortly after the company reported its delivery mark. The sharp decline followed news that the Silicon Valley company shifted employees from Model S to meet crucial deadlines for the Model 3, a vehicle CEO Elon Musk believes will make Tesla a force inside the auto industry.
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