• Baron Capital has invested in Tesla since 2014 – with great success
• Ron Baron: Tesla is “the most profitable company in the whole world”
• Baron: Tesla will be the world’s largest company in ten years – with SpaceX as the new challenger
Fund manager Ron Baron has never hidden his enthusiasm for the electric car maker Tesla in the past. As early as 2018, the US investor with a long-term focus said that he expected the investment in the group from Elon Musk Earn twenty times the money you put in. Baron has apparently already achieved this goal, as he said in an interview with “CNBC” at the end of August. “We’ve been investing in Tesla for eight years now, since 2014. We’ve made about twenty times our money,” said the founder of Baron Capital. Specifically, he “made about $6 or $7 billion with an investment of $380 million.” However, the potential for his Tesla investment is far from exhausted.
Baron: Thanks to gigafactories, Tesla is more profitable than anyone else
He loves Tesla, and the e-car pioneer is “the most profitable company in the whole world,” enthused Ron Baron on “CNBC”. He is therefore assuming “in the next ten years again 3 to 5 times our money [zu] earn”. To support these assumptions, the fund manager made a simple calculation to show that nobody can currently produce electric cars as profitably as Tesla. Building each new factory would cost Tesla a whopping seven billion US dollars , but under normal operating conditions each site would then produce one million vehicles per year, each giving Tesla a gross profit of $15,000, given that the average selling price is $50,000 for a production cost of just $35,000, which means loud Baron that Tesla can make a profit of $ 15 billion per year with each running production facility.The group around Elon Musk currently operates car factories in Fremont, Shanghai, Grünheide and Austin, not all of which are running at full capacity.
Looking ahead to Tesla, Baron said he’s really excited about this. “I think that Tesla will be the largest company in the world in the next ten years,” said the investor in the “CNBC” interview – despite the currently increasing competition in electric cars. However, the investor also believes that everyone will have an electric car in the future, so demand will be significantly higher than it is currently. However, Baron believes that Tesla will not be able to get too comfortable once the company has conquered the throne. Because the investor has already identified a challenger who could challenge Tesla to become the world’s largest company again in the 2040s. And his investment company Baron Capital is also invested there.
Will SpaceX become a Tesla scare?
Ironically, another company owned by Elon Musk, namely the space company SpaceX, will develop into a serious competitor for Tesla in the race for the rank of the largest company in the world 20 years from now, according to Ron Baron. According to “Teslamag”, the investor in SpaceX particularly likes that it is building the Internet for the entire world. Accordingly, he recently increased his investment in the private company, he revealed to “CNBC”. “The two biggest investments I’ve made in the last few months are SpaceX, where we added another $100 million, and FIGS, the Lululemon of healthcare,” said the founder of Baron Capital.
Incidentally, the US investor is not so concerned about the currently somewhat difficult situation on the stock markets due to fears of interest rates, inflation and recession. In any case, he relies on companies that would grow faster than the economy. “We invest in growth companies, so growth companies are our hedge against inflation,” Baron said. Apparently Tesla and SpaceX are also among these companies that offer him protection against inflation – provided his optimistic assumptions actually come true.
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