Ron Baron, the billionaire founder of Baron Capital, was on CNBC this morning to discuss his latest favorite investment: Tesla Motors (TSLA). The mutual fund manager said that he sees Tesla becoming one of the largest companies in the world and he sees his fund holding it stock for the next 10 to 20 years.
Baron said that his investment in Tesla is now worth around $300 million and it’s taken the fund three years to amass the stake at an average cost of $210 per share. Tesla’s stock closed at $220 yesterday.
During the CNBC interview, Baron said:
“I think this could be one of the largest companies in the United States and the whole world,”
He added that he visits the factory almost every quarter to see how things are going. He now estimates that the competition is not anywhere close to Tesla and that incumbent automakers might have been a problem “4 or 5 years ago”, but that at this point, they “can’t catch up”.
Using GM as an example, he said that in order to compete in the electric vehicle market, you need to secure a strong battery supply chain, like Tesla with the Gigafactory. He then explained that it would be extremely difficult for someone like GM CEO Mary Barra, a 54-year-old executive at the prime of her career, to go to her board and propose a $5 billion investment in a battery factory that will ultimately make all the company’s internal combustion engine plants obsolete.
Baron also said that he is investing in the people at Tesla and especially CEO Elon Musk. The billionaire investor seems to share similar views on economics with Musk. The two sat down for an interesting talk at the Baron Investment Conference last year:
We will update with the Baron interview about Tesla when the video becomes available.
Update: You can watch a clip of the interview below. Baron said that he expects to make $6-7B on his $300 million TSLA investment in the next 10-15 years: