Wondering what people's thoughts are here. I was thinking about Elon's comment about being AAPL market cap size in the decade. AAPL is just about ~700B in market cap size as a point of reference.
Toyota is ~220B Market Cap
Honda is ~57B Market Cap
What do you guys think?
The general business dynamic that I find most fascinating is the disruption of an established industry by a new innovator, and the inability of incumbents to react and defend their "turf". The incentives that have worked so well for BMW, Toyota, Honda, GM, Ford, Volkswagen, etc.. have turned upside down on them and are now working against them. I'm not talking about government incentives or something like that - I'm talking about economic incentives that play out in the little decisions they make every day. What new features to put into the 5-series BMW this year, and next year? What ideas will bubble up from the engineer's and designer's heads, make it through middle management, and eventually get a hearing and the possibility of becoming a change in a car that gets sold.
At that level of detail, what I see is a car industry made up of Tesla, a couple of also-rans that won't be driven all the way out of business (Nissan, BMW), and a bunch of Walking Dead. The biggest question in my mind is how does Tesla take advantage of all those factories and trained resources most effectively to help with their own volume ramp. My current guess is it'll be buying plants without labor contracts out of bankruptcy court, with workers at the plants receiving the opportunity to interview for a position (and reform a union afterwards if they elect to do so).
To answer the question - I see Apple at $183B revenue in 2014, with 70B gross income. That's 70/183 or 38% gross margins.
As a point of comparison, Tesla is definitely lower for gross margin. I think about the most optimistic assumption to be made for a well established Model 3 and beyond future is 1/2 of Apples gross margin - let's say 20% for a round number. Out of the $1T worldwide market, I'm starting to think its going to be half Tesla's if the rest of the world hasn't already gotten a move on. $500B revenue and 20% margins would be $100B gross income instead of $70B. I don't have an estimate for the stationary storage market beyond "it's bigger" than the auto and transportation market.
So here's one estimate for 50% larger than Apple's market cap. I guess that puts me down for $1T market cap compared to Apples $700B market cap today. And I'm simultaneously disbelieving how big the number is, and thinking I'm low by a factor of 2 or more. Big numbers. Probably not 2025 timeframe though - say 2030 or 2035, because things are going to start happening REALLY fast (in an extraordinarily big and slow changing market).
It's so huge that I don't really believe it, and yet I continue to see failure of anybody to seriously tackle the underlying problem that volume in this market necessitates. And I think that competitors have no idea of how fast their business is going to collapse on them when Tesla hits real volume.