Tesla's Next Decade: Inside Ron Baron's $2,500 Price Target and Why He's Doubling Down

A Legendary Investor’s Unwavering Conviction

Ron Baron, the founder and chairman of Baron Capital—a firm managing $45 billion in assets—recently doubled down on his Tesla thesis during a CNBC interview. His message was clear: he sees Tesla shares climbing to $2,500 within the next decade, and he has zero intention of selling his position. For an investor who has already accumulated an $8 billion windfall from Tesla alone, this level of conviction speaks volumes about his long-term vision.

How Baron Built His Tesla Fortune

Baron’s investment journey with Tesla began in 2010 when he attended the company’s IPO roadshow. Initial enthusiasm was tempered by caution—Tesla was an unproven venture, so Baron kept his investment modest. The real accumulation came between 2014 and 2016, when Baron purchased approximately $400 million worth of TSLA shares after Tesla demonstrated that its Model S could achieve mass-market appeal.

What sets Baron apart from most investors is his ability to weather volatility. Despite Tesla’s dramatic swings—both upward and downward—Baron maintained his full personal position through the ups and downs. This buy-and-hold discipline, applied across his 40-year career managing Baron Capital, has delivered his flagship Baron Partners’ Fund annualized returns of roughly 15%, substantially outpacing the S&P 500’s performance.

The Investment Thesis: Growth Over Current Profits

When asked about Tesla’s strategy of reinvesting heavily rather than maximizing near-term profitability, Baron emphasized that the company is sacrificing current earnings to scale into a much larger enterprise. This perspective reflects his fundamental, long-term approach to investing—prioritizing transformational potential over quarterly metrics.

Notably, Baron recently sold approximately one-third of his clients’ Tesla holdings, yet he maintains roughly 40% of his personal net worth in the stock. This split between client positions and personal conviction reveals the depth of Baron’s belief in Tesla’s future.

Elon Musk: The Irreplaceable Variable

Baron’s bullish stance on Tesla is inextricably linked to his assessment of Elon Musk’s role. He describes Musk as the ultimate embodiment of key-man risk—suggesting that without Musk’s relentless standards and drive, Tesla would not exist as it does today.

Regarding Musk’s compensation structure, Baron notes that the Tesla CEO’s payoff is contingent on the company increasing in value six-fold, meaning his financial incentives are directly aligned with shareholder interests. More philosophically, Baron believes Musk is motivated by legacy rather than wealth accumulation, stating that he’s not building Tesla for a beach house but to shape how he’ll be remembered.

The Optimus Factor and AI-Driven Abundance

Looking beyond automotive production, Baron highlighted Tesla’s humanoid robot initiative, Optimus, as a potential game-changer. He views Optimus and similar labor-saving technologies as pathways to sustainable abundance—a theme that underpins his entire investment thesis for why Tesla could transcend its current market position.

What This Means for Long-Term Investors

Baron’s track record—managing $45 billion, consistently beating market indices, and building transformational positions over decades—lends significant weight to his perspectives. His refusal to sell Tesla shares despite having captured an $8 billion gain, combined with his $2,500 ten-year price target, suggests he sees Tesla’s story as far from over. For investors seeking guidance on how to identify and hold transformational opportunities, Baron’s disciplined approach offers a masterclass in long-term conviction.