Tesla TSLA Bull Ron Baron Sees 3-5x Return Over Next 10 Years, Expects it to Become World’s Largest Company

Photo: Manny Becerra/unsplash

The legendary Ron Baron has been an investor in Elon Musk's companies, SpaceX and Tesla, for many years. He says he admires the fact that Elon Musk built all his companies without advertising, while his competitors spend millions of dollars on it. Baron joined CNBC on Thursday, where he said he increased his investment in SpaceX by adding $100 million to his stake in the company.

Baron also spoke about his expectations of Tesla, in which he has a solid stake. He believes that in the future the company can achieve even greater growth and even become the largest company in the world. The investor said that for eight years he invested in Tesla, he already earned about $6-7 billion, with an initial investment of $380 million. But over the next 10 years, he expects to be able to earn 3x to 5x his money again. Baron believes Tesla will become the largest company in the world during this period, and face competition from SpaceX, 10 years after that.

“I love Tesla. We’ve been investing in Tesla for eight years now, since 2014. We’ve made about 20 times our money, made “about six or seven billion dollars on a $380 million investment. I think we’re gonna make 3x to 5x our money again over the next ten years. I am so excited. I think in the next ten years, Tesla is going to be the largest company in the world, and in the ten years after that, it will be challenged by SpaceX,” the investor said.

“I love @Tesla. We've been investing in Tesla for 8 years now. We've made about 20 times our money,” says Ron Baron. “I think in the next 10 years $TSLA is going to be the largest company in the world and in the 10 years after that it will be challenged by @SpaceX.” pic.twitter.com/Rbm3cdB12M

— Squawk Box (@SquawkCNBC) August 25, 2022

Baron once again highlighted Musk's brilliant strategy to generate profits by using factories wisely. He said that each new Tesla factory costs about 7 billion dollars, and has a high production capacity of 1 million cars a year. The high gross margin per car milks the opportunity to earn $15 billion a year from each factory.

“What he [Elon Musk] is doing that other people can’t possibly do is that he is investing now in a plant that makes a million cars per year, about $7 billion. Every time he puts up one of these million car plants, it’s costing him $7 billion. When they have that plant that produces a million cars, the gross profit per car is about $15,000 — they’re selling something for $50,000 but it costs them $35,000. That means that every time he spends $7 billion, he’s making $15 billion a year,” the investor said.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.