Let’s Take A Look At Ron Baron’s Tesla Forecast

OCT 16 2018 BY EVANNEX 23

RON BARON’S TESLA FORECAST THROUGH THE LENS OF GALILEO

Ron Baron is a legend in the investing world – his eponymous fund group has about $30 billion under management. Baron recently gave a meaty interview about Tesla to CNBC. There’s a lot of interesting material here, beyond Baron’s headline prediction that Tesla could earn a trillion dollars in revenue in 2030.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Billionaire investing icon Ron Baron forecasts big things ahead for Tesla (Image: CNBC

The interview’s well worth watching, and for the seasoned Tesla observer, it’s also helpful to watch a highlights video of it (scroll down below) on HyperChange TV, in which maverick analyst and Tesla fan Galileo Russell offers his unique take on Baron’s comments.

Asked about the importance of Elon Musk’s ongoing antics, Baron points out something that I and a few other EV pundits have been saying all along: Tesla’s valuation will continue to depend on two things: how many cars the company sells, and how much of a margin it can earn on each one. Tweets from a colorful CEO may provide endless entertainment, but they’re not the measure of a company’s long-term prospects.

Unlike so many of those who pontificate about Musk’s motivations, Baron seems to understand that Elon is a sensitive human being who’s under tremendous pressure: “How upsetting must it be to an individual like Elon Musk who is working his butt off to try to change the world and get rid of carbon emissions and help the environment, and every day to be criticized because he’s different than most people.”

Above: Looking at the future outlook for Tesla, Galileo Russell weighs in on the predictions of Ron Baron (Youtube: HyperChange TV)

Baron tells the entertaining story of how he invested in Tesla at the beginning, then bailed out when he considered the odds against a startup carmaker, only to jump back in once he fully understood Elon Musk’s vision. Today Baron’s fund owns 1.66 million shares of TSLA.

Baron debunks what Galileo calls the “stagnation fallacy.” The legions of naysayers who harp on the fact that EVs are more expensive than legacy vehicles ignore the trend of rapidly falling battery costs. Once those costs fall below a certain key level (many industry observers put the tipping point at $100 per kilowatt-hour), it will simply no longer make sense to build a vehicle with an internal combustion engine. That day is rapidly approaching, and Tesla will almost certainly be the first company across the finish line.

Of course, Baron’s forte is not in technical world, but the financial, and he sees a steadily improving picture for Tesla in this arena. He believes the company is very close to being self-funding (in other words, it will soon be able to fund its operations from profits, eliminating the ongoing losses that so vex stock market pundits). Baron is confident that Tesla will make $30 billion in sales next year, and he gives the company a 50/50 chance of achieving annual revenue of a trillion dollars by 2030.

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Written by: Charles Morris; Sources: CNBCHyperChange TV

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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23 Comments on "Let’s Take A Look At Ron Baron’s Tesla Forecast"

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Another Euro point of view

I believe all very optimistic scenario regarding the Tsla share do not sufficiently take into account the wild bull market that we had for many years. That and the fact that when a strong bull market takes place in the US it attracts a massive amount of foreign cash which, like the tide, lifts all boats. Result of that is that currently almost the whole list of stocks listed on the US stock exchange is wildly overvalued and just begging for a strong downward correction. This foreign cash can suddenly withdraw in case of market correction. Because of that the movements on the US stock exchanges can be pretty wild when correction starts. Smart money knows this and it makes the large market players currently very nervous, adding to volatility. It is actually called late bull market volatility because typical of a maturing bull market. So likely more huge swings to come in the Tsla stock price.

John

You should give Ron Baron a call, I’m sure he’d appreciate hearing your prediction of continued swings in Tesla stock. He was probably banking on nothing but increase with no downturns in the next 10+ years.

Another Euro point of view

I don’t know his funds specifically, will check if it performs better than the index funds. It is a known fact that a drunk baboon throwing dart at a spinning list of stocks is most of the time not earning himself less cash on the stock exchange than average wall street stock broker. There are countless studies confirming this.

John

Which makes your prediction/stock analysis no more than a dart throw, too, no?

Another Euro point of view

Exactly, me & Baron are two drunk baboons as far as the weight of our opinions regarding stock exchange is concerned. You got it right.

Windbourne

Yes, a man that has made billions on the stock market is equal to you and a drunk baboon.
I am sure that you have billions as well. Yes?

Does this wiki sound like you:
https://en.wikipedia.org/wiki/Ronald_S._Baron

andi_nan

Exactly, therefore a drunk baboons opinion on the tesla stock is on the same level, than yours.

In Europe, especially Germany, people avoid stocks and like to get there money inflated horribly.

Paul Smith

You are assuming Baron and Musk are ‘average’, which up to this point, they are anything but.

chano1

But do drunk baboons drive Teslas?

Windbourne

by the looks of some of the accidents, I would say that no, but they were in the drivers seats.

REXisKing

Bla, bla, bla.
Tesla production has hit the cusp of the S curve.
Massive Production vs All Other Manufacturers.
First to market, with Best in Class product.
Safest product in the market.
Other car manufacturers seeing drop off in car sales.

Loboc

There is no direct correlation between Tesla sales and other manufacturer market share loss. There is a general loss of market in ALL sedans since people are migrating to CUV/SUV instead.

Yeah, Tesla is going to make a some rain eventually, but, being 100k drop in a 70M pond is a pretty small ripple.

TomArt

Loboc, you proved REX’s point for him – sedan sales are down while Tesla’s are up. That’s called gaining market share at the expense of others.

Loboc

Where is the causality? Say bowling balls start selling better than basketballs. This doesn’t mean that bowling balls are taking market share from basketballs. An upturn in one doesn’t necessarily mean that the downturn in the other has direct correlation.

Paul Smith

Tesla is winning and the others are losing. End of analysis. As for the sedan hypothesis, Tesla makes SUVs as well, and soon pickups and semis.

Dave100e

They’re not losing, they’re changing their products to suit the market. Why keep making sedan’s that have a reducing demand when you could change production to SUV’s whose market is massively expanding?

Windbourne

profit margins.

The fact is, that those car makers are dropping ICE based sedans while at the same time they are adding EV sedans would indicate that it si NOT just SUVs.
Volt? Sedan.
Honda Clarity? Sedan.
Nissan Sylphy? Sedan.
https://insideevs.com/nissan-sales-sylphy-zero-emission/
BMW like 530E. Sedan.

Basically, Sedans are not dying. Ppl are smart enough to know that ICE sedans are a HORRIBLE buy. The car makers are switching to ICE SUVs/XUVs, but once Tesla and others hit that market, those will PLUMMET as well.

The issue is not model build. It is the fact that ICE is in there and EVs are just coming to SUV/XUV/Trucks, etc.

Windbourne

Considering that bowling balls are not replacements for basketballs makes that a total red herring.
Comparing lose of sales of well made basketballs to increase sales of cheap basketballs would be a far better comparison . And yeah, I think that it is fair to say that with Tesla Sedans, MS and M3, still growing, while all other luxury sedans dropping quickly, while the not-so-luxury sedans stay flat, would indicate that Tesla is the one eating them for lunch.

chano1

Giants will become ants and one ant has a shot at becoming a giant.

ffbj

In a nutshell.

ffbj

Seems simple enough. EVs are much better in every category.
Performance, Safety, Value, TCTO. Efficiency.
Tesla is the premier ev maker i.e. Tesla should do well.
How well and how quickly is the measure the stock market speculates about.
Currently I think it’s FMV is $335, as the recent difficulties are now behind Tesla.

Whether it goes to 1k a share or higher is a matter of execution.
The other factors are minimal. Though borrowing costs are going up and tariffs are of concern, these are things that are going to effect the entire industry.

Chris O

Russell rather contradicts himself about the importance of Elon Musk for Tesla. At 1:40 he agrees with Baron that it’s about the financials rather than the quircks of the CEO but at 20:35 it’s suddenly about betting on the jockey rather than the horse, now it’s the guy behind the company that’s all important.

I think he was right the second time, a lot of TSLA value was (and still is) based on Musk rather than the financials so let’s hope Musk manages to curb the onslaught in the media against his person.

Pushmi-Pullyu

A rather long-winded way to say “We’re long on Tesla stock”. 😉