Originally published on Gas2 (videos added).
Ron Baron can rightly be classified as a successful businessman. His company offers a range of mutual funds for savvy investors. Every year, Baron hosts an annual investment conference that allows fund managers and the heads of the companies they invest in to meet in public and share their views.
On November 6, the conference had a surprise guest – Tesla Motors CEO Elon Musk. He told Ron Baron, “We could conceivably go beyond half a million cars there. Long-term, I think we want to try to do several million cars.” When Baron asked him if Tesla could be as big as General Motors or Toyota, Musk replied, “Possibly, it’s not out of the question.” Elon has never been one to hide his light under a bushel.
Baron knows a thing or two about Musk and about Tesla. He and his mutual funds invested in the company 3 years ago, when its stock was selling for around $33 per share. Today, they own 1.3 million shares valued at more than $300,000,000. Baron says he doesn’t invest in companies, he invests in people and he is obviously a very big fan of Elon Musk. According to CNBC, he told investors:
“We ‘question everything.’ Questioning everything is what gives us confidence to ‘invest in people,’ another tenet of our investment process. For example, we have made a significant effort to understand Tesla’s culture by tirelessly questioning its executives. As a result, it is unimaginable to me that if a car part or an assembly process wasn’t exactly ‘right’ and potentially compromised the safety of Tesla passengers, that Elon Musk would lie about it.”
His remarks were a direct jab at Volkswagen, which is involved in a massive emissions cheating scandal.
Musk told the conference that Tesla could build electric cars with 500 miles of range today, but they would be too expensive and would be all battery with very little room for passengers. He thinks more practical 500-mile cars will be possible in about 10 years.
Speaking of the future, Ron Baron remains positive about Tesla’s stock price. According to InsideEVs, he told the conference, “Five hundred thousand cars a year in 2020. That’s a business of $35 billion or $40 billion a year in revenue. Say they make $6 billion of operating profit before they spend to make themselves grow larger. That means that’s probably worth $120 billion (market cap). Now market value is about $30 billion, so it’s quadruple in five years.”
Put him down as bullish on Tesla.
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