Tesla will become a $2 trillion company, says billionaire Tesla shareholder Ron Baron

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Billionaire investor Ron Baron believes Tesla, whose shares have surged more than 400% this year, will be a $2 trillion company.

Baron, a longstanding Tesla shareholder, said Wednesday morning on CNBC’s “Squawk Box” that he believes Tesla’s vehicle sales will grow 50% annually in the coming years. Tesla’s current market cap is $416.2 billion.

“We’re very excited about that,” he said.

His investment firm Baron Capital, with $39.9 billion in assets under management, held more than 7.3 million Tesla shares as of Sept. 30. They were purchased at an average cost per share of $43.07, according to the firm. It has made about 10 times its money in investing in the electric auto maker.

“I’ve said for a long time, I thought it was going to be $1 [trillion] to $2 trillion. With what developments have taken place recently, I think $2 trillion is the right number. So I think it’s five times from here,” Baron said.

If Tesla can achieve a $1 trillion valuation, it would join well-known technology companies such as Amazon, Microsoft and Google-parent Alphabet. Apple’s market cap is already about $2.1 trillion.

Shares of Tesla are up more than 400% this year through Tuesday’s close. The stock begin trading on a split-adjusted basis on Aug. 31 following a 5-for-1 stock split.

Tesla shares have been volatile since Baron invested in the automaker. He described it as going “up and down like a yo-yo.”

At Tesla’s 2020 shareholder’s meeting last month, Tesla CEO Elon Musk said the company’s vehicle deliveries in 2020 would be up 30% to 40% from last year, a range consistent with its previous prediction of 500,000 cars delivered this year.

Musk also predicted the company will be able to make a $25,000 full self-driving car within three years.

The annual meeting occurred with Tesla’s highly anticipated “Battery Day” on Sept. 22. Many on the Street were left disappointed by the multiyear timeline for the improvements to be realized in the company’s batteries, as well as the lack of concrete goals.

Baron Capital also owns about 1.3 million shares of Musk’s SpaceX, which it first purchased in September 2017. The firm most recently increased that stake in August. Other major holdings include Hyatt Hotels, Amazon and Charles Schwab. The firm has more than 400 investments in its portfolio.

“This year happens to be an exceptional year for us,” he said. “This is probably the best year we’ve ever had.”

— CNBC’s Lora Kolodny and Pippa Stevens contributed to this report.

Correction: This story has been updated to reflect Tesla’s market cap is $416.2 billion.

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