Tesla *is* a fringe brand right now. So is Mercedes. So is BMW. So are Porsche and Lamborghini and a host of other high-end luxury car manufacturers. Tesla, like these other companies, builds a product that many would like to own and fairly few can afford.
It seems like what Lutz is saying is "If Tesla wants to meaningfully impact the way the average American gets from Point A to Point B, it needs to build a car that the average American can afford." I don't think there's anything untrue about that statement. I love the Model S and I'd love to *own* a Model S, but there's no foreseeable point in my life when I'll be rich enough to drop $80K on a car. That's why I'm hoping Tesla's midrange offering is a great vehicle with sensible compromises to bring the price down.