Tesla's lack of pricing power is going to lead to its demise, Bob Lutz, former vice chairman of General Motors, told CNBC, two days after the electric automaker briefly topped GM's market capitalization as the nation's most valuable vehicle manufacturer.

But Lutz, a well-known Tesla skeptic, said Wednesday on "Squawk Alley" that "I think they're doomed."

"Their upside on pricing is limited. Everybody else sells electric vehicles at a loss," he said. "The puts a ceiling on your possible pricing."

Since Tesla, co-founded and led by billionaire entrepreneur Elon Musk, can't make money on the high-end Model S sedan or Model X sport utility vehicle, "how in the world is he going to make money on a $35,000 small car?" asked Lutz, referring to the more affordable, upcoming Model 3 sedan. "The cost of a car does not come down proportionally to price."

Shares of Tesla have backed off their all-time closing high of $312.39 on Monday. And according to FactSet midday on Wednesday, Tesla's market capitalization of $49.4 billion is just shy of GM, but still well above Ford's $44.7 billion. Tesla passed Ford in market cap last week.

"Somehow it's levitating. Elon Musk is the greatest salesman in the world. He paints this vision of an unlimited future, aided and abetted by some analysts," Lutz said. "It's like Elon Musk has been beamed down from another planet to show us mortals how to run a company."

But Lutz said real numbers don't lie. "It's a constant cash drag. They're highly dependent on federal government and state incentives for money." He added, "They have capital raises all the time."

Tesla is also facing competition from established automakers. "Mercedes, BWM, Volkswagen, GM, Audi and Porsche are all coming out with 300-mile [range] electric luxuries," Lutz said.

Tesla did not immediately respond to a request for comment.