Ron Baron on Tesla: $2,000/share by 2030

Ron Baron of Baron Capital Management is a long time shareholder of Tesla. Baron invested $357 million in Tesla in 2014. And today his 1.63 million shares is worth more than $1.3 billion.

Here’s a summary of the interview:

  • Thinks it will be a $2 trillion company over the next 8-10 years, or $2,000/share.
  • Autonomous driving could be worth $500 billion to $1 trillion
  • The car business is worth $600-$700 million in revenue per year in the short term, but could be worth $200 billion revenue per year in 10 years. This alone is where he derives the $2 trillion value. And that’s just the car business.
  • The battery business could be as big as the car business.
  • Capital spend on new factories is now $4,000/car (new factory in China), down from $17,000/car (original factory in California).
  • The factory in China that produces 250,000 cars/year cost $1 billion to build, but is generating $2.5 billion in revenue per year.
  • From 2014 to 2016, Baron bought all the TSLA stock he could buy for all the funds that he manages at Baron Capital. In this thought process, he could afford to lose $50 million, but could not afford to lose $1 billion. So far he thinks TSLA could return 3X over the next 10 years.
  • As long as the 10-20 year business fundamentals remain in tact, stay with it. And don’t worry about the price in the meantime. He thinks Tesla will grow faster than the stock price over the next 10 years.

Read more about Tesla’s 2020 full-year earnings in my January 30 update.