Investing

Tesla could be a $1 trillion company by 2030, predicts major shareholder Ron Baron

Key Points
  • The billionaire founder of Baron Capital says the electric automaker could be a $1 trillion company in revenue by 2030.
  • "I think it could be a $500 billion battery business, $500 billion car business. I give that better than 50-50 chance," he said.
  • Baron also says Tesla investors would benefit if CEO Elon Musk were to tweet less.
Billionaire Ron Baron predicts Tesla will have $1 trillion in revenue
VIDEO1:4101:41
Billionaire Ron Baron predicts Tesla will have $1 trillion in revenue

Major Tesla shareholder Ron Baron told CNBC on Tuesday the electric car maker could be a $1 trillion company in revenue by 2030.

"I think it could be a $500 billion battery business, $500 billion car business. I give that better than 50-50 chance," the billionaire buy-and-hold investor said.

"The fact that it could be a $60 billion company in three years, I give that maybe 80 percent chance," he added.

Baron also said Tesla, with full-year 2017 revenue of $11.75 billion, is close to self funding. In 2016, the company had $7 billion in revenue.

"I think this is going to be the biggest car company. I think they're going to have 10 million cars, 15 million cars" sold per year eventually, predicted Baron.

Three experts on the future of Tesla after Elon Musk settled with SEC
VIDEO1:3501:35
Three experts on the future of Tesla after Elon Musk settled with SEC

Tesla announced on Tuesday it produced 80,142 vehicles in the third quarter. That's a 50 percent more than the prior all-time high in Q2.

The breakdown included 53,239 Model 3 sedans — squarely within Tesla's goal of 50,000 to 55,000 of its less-expensive car aimed at the mass market auto buyer.

Third-quarter deliveries totaled 83,500 vehicles, including 55,840 Model 3s.

Baron appeared on "Squawk Box" for the first time since Elon Musk's erratic behavior over the summer culminated in a weekend settlement with the SEC over the CEO's aborted bid to take the company private.

Shares of Tesla have been all over the map since that now-infamous take-private tweet on Aug. 7. Since then, the stock lost about 18 percent as of Monday's close.

Tesla opened up 1 percent on Wall Street on Tuesday.

The price of Tesla stock depends on selling cars, making cars and growing the battery business, said Baron, whose average cost of buying Tesla since 2014 is $219.70 per share.

The stock closed Monday at $310.70, valuing Baron's Tesla stake at about $440 million.

As bullish as Baron and other investors are, Tesla is one of the most shorted stocks. When traders short a stock, they're betting it will go lower.

The founder of Baron Capital, with $28.3 billion in assets under management, also told CNBC that Tesla investors would be better off if Musk tweeted less. "Investors would benefit if there were less communications."

Last week, the Securities and Exchange Commission charged Musk with making false and misleading statements in the Aug. 7 tweet about potentially taking Tesla private with "funding secured." The take-private idea was abandoned on Aug. 24.

"I assumed that he thought he had financing," Baron said, adding he told Musk when going private was being considered that he would "prefer that the company remain public." Baron also said he does not want to be on Tesla's board.

As part of Saturday's settlement, Musk will personally pay a $20 million fine, and Tesla will also pay $20 million. The billionaire entrepreneur will step down as chairman of the board for at least three years but was allowed to retain his role as CEO. Tesla will to appoint two new independent directors to the board and monitor Musk's tweets and other communications.

On Sunday, Musk sent emails to Tesla staff, saying "ignore all distractions" and "we are very close to achieving profitability and proving the naysayers wrong." Musk has been dealing with production problems on the Model 3.