Tesla Pushing Towards Becoming $1 Trillion Company, According To Investor Baron (Video Interview)

4 months ago by Eric Loveday 40

Baron On Tesla’s Future

From $43 billion to $1 trillion and beyond…

Investor Ron Baron says that by 2030, or just 13 years from now, Tesla could become a trillion dollar company. Quoting Baron:

“I think that in 2020 we’re going to make from present [TSLA] prices about four times our money.”

“I think in 2025 we can make another triple, and in 2030 it can be another triple.”

Of course, Baron is a Tesla investor, so his words may be a bit slanted, but Tesla shares have risen rather steadily since going public. Baron adds:

“We have bought shares of Tesla, about 1.6 million shares over a 3½-year period of time. Our average cost is about $208 a share.” 

Baron seems to believe that the recent acquisition of SolarCity will boost Tesla’s value long term:

“Forty percent of the electricity in the United states is used by single-family houses.”

“If you put a [Tesla] car in the garage, that car uses 30 percent of the electricity of the house.”

“In order to sell the [electric] cars you have to … have an increase in power.”

We’re not financial analysts, nor are we investors, so we’ll leave the discussion at that.

Source: CNBC

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40 responses to "Tesla Pushing Towards Becoming $1 Trillion Company, According To Investor Baron (Video Interview)"

  1. tftf says:

    His interview aired right around all-time highs for Tesla stock.

    I call it the Ron Baron high.

    $1T valuation (around $250B more than AAPL, the most valuable public company ever) is simply ludicrous.

    Battery storage, solar panels and cars are all low-margin products.

    1. DangerHV says:

      Apple sells products in the hundreds of dollar range, Tesla sells in the tens of thousands range. You can twist the statistics your way, I’ll stick with my way. I think Tesla will be larger.

      1. tftf says:

        What kind of comparison is that? This analogy doesn’t work at all.

        It’s about all three measurements, not just revenue:

        Average Selling Prices / Unit
        Average Replacement Cycle Period / Unit
        Achievable Operating Margins / Unit

        If you only look at revenue and margins:

        GM, R-N-M, Toyota and VW Group each sell around 10M cars per year.

        Did you have a look at their market cap?

        Did you have a look at Toyota’s market cap especially?

        Name any mass-market car maker with a higher efficiency and oprating margins than Toyota (not just a snapshot, a benchmark over many years)?

        Now compare to Tesla, even assuming a steady state and lots of other revenue (as I mentioned, solar and energy storage are also low-margin sectors).

        1. DangerHV says:

          You are far more into this than I.

    2. ffbj says:

      I wouldn’t call it the Ron Baron high just as I would not call what has happened lately the GS low. You need to have big picture thinking to develop predictive insight. Of course in some ways you either have it or you don’t.

      A trillion in what. Today’s dollars? Seems to be a bit of a stretch. Still Tesla could have as great an impact of everyday human life as Apple did. Maybe 500 billion, though that too seems wildly optimistic, since I am a bit of a pessimist I have to fight that tendency.
      (vp: lower case letter mafia). lclm

  2. Just thought that I have seen that video already a time ago.

    Baron is known for thinking really long term. Hopefully it all happens as he predicts. Buy and hold for eternity, that’s what we are doing as well. 🙂

    1. ffbj says:

      Good Answer. I’t deja vu’ all over again. You have a sharp retentive mind. Once a quarter Ron Baron is trotted out to tout Tesla:
      https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=Ron+Barron+likes+tesla&*

    1. ffbj says:

      Pretty interesting. My view:
      Investor: “Will Tesla go up or down.”
      T.A.:”We think it will go up, if it goes up, or it will down if it goes down. If neither of these occur, we think it will go sideways.

      1. Or – it will wiggle up, and down, and up, and down, actually going no where, except for day traders!

      2. Nix says:

        Investor: “Will Tesla go up or down.”
        T.A.: “Yes. Tesla will go both up or down.”

  3. pjwood1 says:

    It’s a mixed up world. You think of the dent a Tesla puts in home consumption, and might believe “there’s business there” but it isn’t happening. At least promotion is barely happening. The “sell” is easy, on economics, convenience, etc., but many utilities operating in the states where Tesla sells most if its cars are detached from the ordinary model that rewards for increasing the sales of electricity. In some cases, depending upon decoupling rules, they could lose money when an EV plugs in.

    We talk about batteries and solar being low margin businesses. Without good rate design, there can be negative margin. Do we separately meter garages? What next? Do utilities arbitrage away the economics of cheaper auto energy costs, with higher KWh prices? “The people with cars” are often a target of revenue generation, and its state agencies, not the utilities themselves, who decide the “tariff”.

  4. Pushmi-Pullyu says:

    Since Tesla’s stock, TSLA, is such a volatile stock, there is somewhat of a disconnect between performance of TSLA’s selling price, and performance of Tesla Inc., the company.

    Both TSLA “longs” and “shorts” try to use this discrepancy to promote their position… and it’s all B.S. Every bit of it.

    Does Tesla have potential for even bigger, even faster growth than they’re already engaged in? Yes, of course they do. But nobody should confuse that with whether or not it’s advisable to buy TSLA at the moment, or in fact at any given time.

    TSLA’s price peaked recently, and now — inevitably — it’s going back down. Anyone taking stock investment advice from me would be a fool, but even I can see this would be a bad time to make a “long” investment in TSLA. Those considering that should wait until the price comes down below the average selling price over the past three years or so. At the moment, it’s still well above that.

    Sadly, that rather obvious reality isn’t going to prevent so-called “analysts” from pushing their bullish or bearish position regarding TSLA. That reality is understandable. After all, investors and stock brokers are in the business of making money off the rise and fall of TSLA.

    What is far less understandable, at least to this two-headed llama, is why ordinary readers of InsideEVS should, or would, have any interest in such promotions masquerading as “articles”. Sure, one could argue that nobody is putting a gun to my head and forcing me to read these stock promotion “articles”. But that begs the question of whether or not they are diluting the value of reading this website.

    Color me unhappy. 🙁

    1. ffbj says:

      I think it’s an important question and Tesla is the premium ev maker, the leader of the revolution. So how they do as a company, which is reflected in their stock price, is newsworthy, especially at this time.

      I sort of like these articles only a few of which have showed up recently.

      For one it allows me to comment on the stock without getting flamed.

      But from just the perspective of electric vehicles in a purity of essence form, you have a point. The hoopla surrounding the stock is somewhat of a distraction too.
      (an aside)
      I think Ron Baron bought the shares too high anyway. It’s not that these guys are brilliant, it’s that they have a lot of money to begin with.

    2. CDAVIS says:

      @Pu-Pu said: “…What is far less understandable, at least to this two-headed llama, is why ordinary readers of InsideEVS should, or would, have any interest in such promotions masquerading as “articles”…”
      ——

      Tesla has been the torchbearer of the EV revolution. So some of the ordinary readers, myself included, are interested of the opinions expressed by Tesla stakeholders regarding their opinion of the viability and value of Tesla.

      We do get it that stakeholder opinions are going to be biased…but what opinion is not?

    3. ¯\_(ツ)_/¯ sven says:

      Pu-Pu said:
      “Both TSLA ‘longs’ and ‘shorts’ try to use this discrepancy to promote their position… and it’s all B.S. Every bit of it.”

      Pu-Pu said:
      “Anyone taking stock investment advice from me would be a fool, but even I can see this would be a bad time to make a “long” investment in TSLA.”

      Pu-Pu, doesn’t that make you a bullsh*t artist? Last week after the Q4 Earnings report, you were shilling for Tesla, telling us that news of Tesla’s earnings would “almost certainly drive the [stock] price even higher tomorrow.” Instead, the next day Tesla’s stock price dropped like a rock. After Tesla’s stock price dropped like a rock even further yesterday, you do a complete about face and flip-flop today and have the audacity to say “even I can see this would be a bad time to make a “long’ investment in TSLA.” O that’s rich!!! You certainly are full of sh*t!

      Pushmi-Pullyu
      February 22, 2017 at 11:21 pm
      “Dude, are you still trying to short Tesla’s stock, even when the price is quite close to its all-time high, and with this [Q4 earnings] news coming out which will almost certainly drive the price even higher tomorrow? ROTFL!! ? ? ? You must be one of the worst investors in the world!”

      http://insideevs.com/tesla-reports-q42016-earnings-eyes-model-3-news/#comment-1148217

      People who live in glass houses shouldn’t throw stones. 🙁

      Pu-Pu are you a paid shill for Tesla or are you just pumping up Tesla stock for you own “long” position? ¯\_(ツ)_/¯

      1. For your own good says:

        You really need to get a life, rather than obsess over a poster on a green car blog.

        Just saying…

        1. ¯\_(ツ)_/¯ sven says:

          You’re probably right. Life’s too short to argue with an idiot, who will only bring you down to his level and beat you with experience. I do tire of his constant personal insults. I should find other interests. Perhaps I should join a cult. Do you know of any? I prefer one with a charismatic leader who I can worship along side other cult members.

          1. Mister G says:

            You will see the light once you join the TESLA CULT…I have seen the promised land.

          2. Nix says:

            Sven — That’s pretty funny, coming from a H2 Fuel Cell Cult member, like yourself. What color robes do you wear at your cult meetings? What do the funny hats look like?

            ¯\_(ツ)_/¯

      2. Pushmi-Pullyu says:

        @Sven:

        Dude, you need to get a life.

        And don’t think for a minute you’re fooling anyone. Your comments here are just troll bait, nothing more.

        I was quite clear in my comments about what I thought was the very best time for a “short” investment in TSLA — which would have been the day after Tesla’s quarterly report. As it turned out, I was correct — but only if you’d bought in during the early hours, since (according to reports) the price turned down by mid-day.

        And it’s really insulting the intelligence of your readers to suggest nobody noticed that my other comments were about a normal, or “long”, investment in TSLA.

        In those comments which you quoted from me, I was quite clear in distinguishing between “short” and “long” stock investments. Just as it’s clear your comments here are nothing but trolling.

        And since we’re on the subject, let me repeat my disclaimer: Anybody who would make a stock investment based on anonymous Internet comments would be a fool, and in my case doubly a fool since I’m not a “financial guy”.

        So stop embarrassing yourself, dude. And get a life.

  5. MDEV says:

    Tesla business is battery storage in the long run, I see Tesla as big as Apple in 10 years

    1. ¯\_(ツ)_/¯ sven says:

      There is a risk that Tesla with its Gigafactory set up to produce billions (trillions?) of small Lithium-ion battery cells has bet on the wrong battery tech for long-term growth. Just last week, Harvard researchers announced a major breakthrough with regards to flow batteries, which store energy in tanks that hold aqueous solutions, and threatens Li-ion batteries not only in the energy storage market, but also in the EV transportation market.

      The Harvard researchers have developed a new flow battery that stores energy in organic molecules dissolved in neutral pH water. This new chemistry allows for a non-toxic, non-corrosive battery with an exceptionally long lifetime and offers the potential to significantly decrease the costs of production. They claim that the long-lasting flow battery could run for more than a decade with minimum upkeep.

      It’s not hard to see how using large tanks of an aqueous solution in a utility scale energy energy storage system would cost much less than manufacturing millions of small cylindrical Li-ion battery cells that need cooling systems and need assembly into Powerwall cabinets. If the utility later needed more capacity from a flow battery energy storage system, then it would just add additional tanks or install larger tanks to hold more aqueous solution. Smaller tanks could be used at home or at a business to store daytime electricity from solar panels.

      http://www.seas.harvard.edu/news/2017/02/long-lasting-flow-battery-could-run-for-more-than-decade-with-minimum-upkeep

      There is at least one company, nanoFlowcell, working on putting a flow battery into vehicles, which would combine the best of liquid fueling and battery packs. This could significantly reduce the need for li-ion batteries in cars, buses, trucks, trains, airplanes, etc.

      https://transportevolved.com/2017/02/06/in-geneva-nanoflowcell-set-to-debut-186-mph-48-volt-flowcelll-prototype-ev-called-the-quant-48volt/

      1. Ambulator says:

        Flow cells for grid storage I could see, but it seem complex and inconvenient for vehicles. Of course, ICE vehicles are complex, but the simplicity of BEVs is part of why I think they will win.

        I do expect batteries to change, probably by ditching expensive materials like cobalt and nickel. When that will happen is still unknown.

      2. When you see the second Flow Battery Car for – or – more correctly – in production – let us know, we will check in on Tesla’s Sales Numbers to see if it is a threat!

  6. SparkEV says:

    Earlier I predicted Tesla 3 will sell by the billions, and some didn’t believe me. Just you watch!

    1. it might be a while, but it might get help from it’s partner – Model Y!

  7. Get Real says:

    Despite acknowledged Tesla-shorter tftf comments to the contrary, Tesla has amazing growth potential simply not found anywhere else in a large industrial company/conglomerate.

    With 4 or 5 battery GigaFactories, Tesla would probably dominate the world’s lithium battery supply for both automotive/trucking and energy storage.

    Tesla is already uniquely set up to dominate the high-mid range compelling BEV space and with its charging network it has an advantage over every other player.

    Tesla is going to be the first into the autonomous vehicle market and this could be very big for fleet users like taxis and the delivery business.

    Tesla will be bringing out an EV pickup and some kind of (autonomous) transport van/pod.

    Tesla will bring out an (autonomous) Semi Truck and it will be part of a system that includes the energy re-fueling/supply necessary to operate.

    All this along with the Model 3/Y/new roadster, etc.

    And then there is, in a world that ill increasingly be forced to deal with the effects of global warming, Tesla Energy which is being setup to bundle solar roofs plus energy storage along with your Tesla car or separately even.

    And anyone who thinks that Musk/Tesla will stop innovating is simply delusional based on Musk’s track record.

    I could easily see Tesla manufacturing and robotic automation divisions eventually as they push the traditional boundries in manufacturing not to mention hyperloop or tunneling possibilities.

    Will they get to a trillion dollars? I don’t know but they certainly have the potential unlike any other company in the world.

    1. For your own good says:

      The way shorters like twtf are staking out these forums ready to pounce on any article that bears on Tesla’s stock value in what appears to be a desperate attempt to change their luck (does that even work?) is a sign of how vulnerable they know they are.

    2. ¯\_(ツ)_/¯ sven says:

      The way paid shills like Get Real are staking out these forums ready to pounce on and carpet bomb any article that bears on Tesla’s stock value in what appears to be a desperate attempt to pump up and prop up Tesla’s inflated stock price.

      1. Get Real says:

        I see that “alternative facts” sven is in his full Trump mode saying lots of untrue things about others that really only reflect upon his own vast insecurities.

        What a troll.

        1. ¯\_(ツ)_/¯ sven says:

          You fail to give me the validation that I so desperately crave. 🙁

          But I’m glad to see that your small hands where able to type out a response. 😀

  8. Kdawg says:

    Is that a trillion in today’s dollars, or in 2030 dollars?

  9. no comment says:

    the stuff baron is saying is complete nonsense. he is saying that tesla will be 4 times its current price in 3 years. then it will increase by a factor of 3 every 5 years after until 2030.

    anyone who believes this baloney merely proves pt barnum to be right…

    1. NC – the next 22 Months should show if you are right – or if Baron is!

      If Elon & the Tesla Team can move from 78,000 Cars last year to even just 125,000 Cars this year, and to 250,000+ Cars next year, they will be well on their way to being at 4 times their Potential Currently, in 2019!

      Notice they currently only have offered guidance for the first 6 months of Model S & X Production, at about 57,000 units, If I remember right! Even if that drops back a bit in 2nd half, I expect an ending volume equal to about 90% of Tesla’s 5,000 Model 3 Cars per week, or a result of 4,500 per week, quite close to a 250,000 per year next, but they expect to push that up towards and hopefully reach 10,000 per week by year end, so – I expect in excess of 250,000 produced in 2018, and on it’s way to 400,000+ per year by year end, going into 2019!

  10. Nix says:

    One thing I try to keep in mind whenever I hear free stock advice:

    Any time you aren’t paying for financial advice, you are getting either a sales pitch or somebody is promoting their position for their own benefit.

    Ron Baron is promoting Baron Capital Management and Baron Asset Fund. He wants you to believe Baron Capital Management and Baron Asset Fund will make you money if you invest in his investing decisions. Tesla is just the device he is using to promote that.

    He may end up being right. Or wrong. Impossible to tell from what he is presenting.

    1. Anonymous says:

      His considered opinion is that Tesla will have a market cap 6x larger than Toyota 13 years from now? Seriously? He is saying that by 2030 Tesla will capture 100% of the global light vehicle market and that the light vehicle market will substantially increase in size to justify that sort of valuation. Tesla makes very nice cars and may command a reasonable percentage of the global market in 2030, but give me a break.

      Investors don’t care about P/E ratios when companies have the potential for substantial growth. Once Tesla gains market share, earnings are suddenly going to matter and no one is going to buy shares of an established heavy manufacturer at 100x earnings, which is what it would take to support a trillion dollar valuation.

      1. Pushmi-Pullyu says:

        Yeah, even someone with limited financial understanding, namely myself, can see this is B.S. TSLA’s stock price is inflated so far beyond any normal valuation (on an ongoing basis, not just currently) because the market price already has factored in Tesla’s anticipated growth over the next several years.

        Claiming that Tesla’s already significantly inflated stock price will grow almost as fast as Tesla will be growing its production over the next 3-4 years, to 3x or 4x its current value… well, let’s just say that that sounds like a “RAH! RAH!” from a TSLA cheerleader, and that I think it’s extremely unlikely to happen.

        Even Elon has said at least a couple of times, publicly, that TSLA appears to be overvalued. And I don’t think he meant only at those moments, either.

      2. Nix says:

        Anonymous — I think you missed the point of my post. I’m saying he’s making a pitch, and it is silly to treat it the same as if it were financial advice from a fiduciary.

        He is following the ABC’s (Always Be Closing) the same as any late night infomercial salesperson, just smoother. He is not acting in the role of a fiduciary giving out neutral analysis. It is important to know when somebody is trying to sell you.

        He would need to back up his statements with actual data before even attempting to analyze the validity of his claims.

  11. jim stack says:

    20x to 30x returns AND it’s a great company for the environment.

    PS Ron there is lots of excess energy at night Off Peak. Power companies offer it real low price since they can’t store it and dump the excess each night.

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