Stockman is a former US Budget Director and presumably a “smart guy”, but when you label yourself a contra, you’re forced to forage for material, often at the bottom of the barrel to justify the moniker, and sometimes, nay most times, the conventional wisdom is just right, simply because it’s conventional, which is a commodity you would expect budget directors should be familiar with.
Average cost of 2014 new car =$31.25K.
2014 total unit sales = 16.9M.
Total value of US new auto market = $525B.
US population is forecast to grow by 100M or 30% over the next 35 years. Presuming the auto market grows in tandem, the 2025 market should be worth $580B + inflation, say $600B.
If at that time Tesla has a 5% US share alone, (that’s maybe a bit high), at a 25% margin it will be throwing off GP of $7.25B a year just from the US auto biz, to say nothing of other countries, plus home/storage batteries etc. Might even double that. All of a sudden a $75B bid by Apple doesn’t look so crazy. Rather its Stockman who seems crazy.
Ford and GM typically post gross profit margins in the 10-15% range. Tesla has said from the beginning that it’s long term GP goal is in the 25% range, and has actually started to achieve that, see here.
my.teslamotors.com/fr_CA/forum/f … -1000-2020
Granted, it’s not dispositive, but it’s certainly not pie-in-the-sky either.