Tesla's Business Model Is 'Upside Down,' Warns Former GM Chairman

Bob Lutz, former General Motors Company (NYSE: GM) chairman, has a few things to say about the electric car revolution, Tesla Motors Inc (NASDAQ: TSLA) in general and the inevitable bottom of Tesla stock prices.

Not only did the former chairman tell CNBC that Tesla's business model is "upside down," but he justified this allegation by saying, "Their costs have always been higher than their revenue."

Lutz elaborated, "They [Tesla] always have to get more capital; then, they burn through it. The whole distribution model with their own dealerships is extremely expensive and consumes capital."

Related Link: Tesla Customer Rents Out Model S At A Profit, Addresses 'Biggest Challenge' With Apple iPhone

Is There Anything Good?

Lutz did admit that the vehicles Tesla produces are "good," but he again emphasized that "the business has always been lousy."

In explaining what has increased the negative outlook toward Tesla, Lutz explained that the generic demand for electric vehicles is down, and because of this future lack of demand, not only will big car manufacturers feel the crunch, but it could be the death knell for Tesla.

"And here's why this is going to kill Tesla; because whether there is consumer demand for electric vehicles out there or not, the major OEMs, like GM, Ford […] they have to build electric cars […] in order to satisfy the requirements in about half of the states," Lutz said.

"The majors are going to accept the losses of electric vehicles as the necessary cost of doing business in order to sell the big gasoline stuff that people really want. Well, Tesla does not have that option."

"If I owned Tesla stock right now, I could not wait to sell before the bottom falls out," Lutz concluded.

At the time of this publication, Tesla was trading down 9.58 percent on the day at $147.02.