Connect with us

Hi, what are you looking for?

Bullish billionaire Ron Baron sees such potential with Tesla that he expects his investment firm Baron Capital to make an absolute killing on TSLA stock.

Autonomous Vehicles

Billionaire Ron Baron Sees Potential To Make “20 Times Our Money” With Tesla [TSLA]

Bullish billionaire Ron Baron sees such potential with Tesla that he expects his investment firm Baron Capital to make an absolute killing on TSLA stock.

Bullish billionaire Ron Baron sees such potential with Tesla that he expects his investment firm Baron Capital to make an absolute killing on TSLA stock.

To back up his optimistic statement, he referred simply to the divide we see within TSLA investors.

On one side: A small, vocal set of stock shorters – or those betting against the stock – constantly flagging the firm’s inability to deliver quarterly profit as a key indicator of its impending failure.

On the opposite side of the table: Those investing for the long haul in TSLA, citing the industry-leading gross margins Tesla makes on each vehicle, offset by monthly capital expenditures that climb further and further, with curves getting steeper and steeper as it continues to push aggressively into new markets. There’s its recently launched Model 3, its recently unveiled Tesla Semi, and its highly anticipated Tesla Model Y compact utility vehicle and Tesla Pickup.

“I think we’re going to make 20 times our money because the opportunity is so enormous,” he said to CNBC’s “Squawk Box.” “People say, ‘Gee, they’re spending a lot of cash.’ Of course, they’re spending a lot of cash. They’re building factories.”

And boy are they building factories. To put that into perspective, Tesla’s Fremont factory in northern California and its Gigafactory 1 just outside Reno, Nevada, are the two largest factories in the world by square footage. The reality is that this is just the beginning. Gigafactory 2 was obtained with Tesla’s $2.6 billion acquisition of SolarCity, and it was already being called the Gigafactory of solar before it became part of the Tesla family.

Gigafactory 2 is currently focused on building Tesla’s solar products, including traditional solar panels and its new solar roof tiles, but is expected to add Tesla battery cell production and even vehicle production in the future. Tesla is expected to announce the locations of 2 more Gigafactories by the end of the year, with a factory in Shanghai, China, all but certain at this point.

Remember, these Gigafactories are the largest factories in the world and Tesla is actively spinning up two of them with two more in the works. The expected price tag for each Gigafactory is in the $5–10 billion range.

Getting back to Ron Baron, his firm manages a vast pool of investments, with $27 billion in assets under management, of which 1.62% is TSLA. A big concern with many institutional investors is Tesla’s endless thirst for capital, fueled by its desire to build more and more Gigafactories around the world. Baron doesn’t expect that Tesla will need to go back to the bond market for more capital … unless “he wants to grow as fast as he hopes.” For anyone that knows Elon and Tesla’s history, Elon surely wants to grow Tesla as fast as possible, but whether or not he will actually raise money in the way Tesla has done in the past to pursue that rapid growth is the real question.

Elon is infamous for operating on “Elon time,” where his vision and goals always far exceed his grasp, leaving Tesla underperforming versus his stated timing at nearly every step of the way. Though, Elon also has a response to that:

Baron puts his own comment into context by noting that he believes Tesla’s focus on streamlining manufacturing through automation will drive reductions in labor spending. That ultimately means less capital expenditure up front, balanced by higher risk of production ramp issues, as have been experienced in the Model S, Model X, and Model 3 production ramps over the last few years.

He’s clearly used to balancing risk and reward and noted that the strategy for finding big rewards doesn’t start with buying safe stocks of established companies. “What we try to do is buy when that development is taking place.”

Ron Baron: We’re going to make 20 times our money on Tesla from CNBC.

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
If you like what we do and want to support us, please chip in a bit monthly via PayPal or Patreon to help our team do what we do! Thank you!
Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.


You May Also Like

Clean Transport

One of the big “gotchas” the anti-EV crowd tries to throw at EVs is that they’d fail you in a hurricane evacuation. I’ve covered...


It seems like most Americans are routinely hounded by annoying, scammy, spam phone calls telling you that you need to buy an extended warranty...


Long distances, oilfields, and low salaries abound south of the Rio Bravo. If you ask me, it’s mainly these three conditions that have marked...


When Tesla switched some of its cars’ steering wheels out for an airplane-style yoke, there was a lot of controversy. Some of it was...

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.