Billionaire investor Ron Baron: Expect Tesla's stock to go up 'huge' now

Summary

The transcript discusses the remarkable growth of an unnamed business, which has expanded from producing 40,000 cars annually to 1.8 million, representing a threefold increase in size. The speaker reflects on a past decision to sell a significant stake in a company due to concerns about portfolio diversification. Despite this, they express optimism about SpaceX's potential returns over the next 15 years. The conversation then shifts to the future of the automotive industry, with a strong belief that electric cars will dominate the market, phasing out hybrids as well. The speaker also addresses concerns about the company's stock performance, attributing recent declines to market apprehension over the company's strategic direction, particularly regarding low-cost cars and robotaxis. They highlight Tesla's competitive edge in manufacturing and data collection, emphasizing the importance of continuous innovation and cost reduction. The discussion concludes with an anecdote about the impressive capabilities of Tesla's autonomous driving technology, showcasing its ability to navigate complex traffic scenarios and interact with pedestrians, reinforcing the company's leading position in the electric vehicle market.

Takeaways

• 🚗 The company's production has grown significantly, from 40,000 cars a year to 1.8 million, making the business three times larger.
• 📈 There was a concern about the portfolio being too heavily invested in one stock, which was sold when its value increased by 20 times.
• 💰 The current portfolio is around $3.5 to $4 billion, and there's an awareness of not letting a single investment become too dominant.
• 🚀 SpaceX is expected to grow substantially, with the belief that the investment could increase by 20 times over the next 15 years.
• 📉 Despite a disappointing quarter with the worst cash flow in the company's history, the stock price went up by 12% due to future projections and announcements.
• 🔋 A strong belief in the future of electric cars, with hybrids seen as a temporary solution before the full transition to electric vehicles.
• 📉 The stock price is down 35% year-to-date but up by 1% over the last year, which is underwhelming given the strong market.
• 🤔 Concerns about the company potentially abandoning the low-cost car market to focus on robotaxis influenced the stock's performance.
• 🏭 There are plans to produce low-cost cars, with an existing facility potentially being used to manufacture an extra 3 million cars without additional capital.
• 🚖 The future value of the company is heavily reliant on the success of robotaxis, which are seen as a key innovation for the future.
• 🕵️‍♂️ Autonomous driving technology is advancing, with Tesla using vast amounts of data and compute power to improve its AI systems.
• 🌟 Tesla's competitive advantage includes having sold millions of cars, many of which are collecting valuable data to improve their autonomous driving technology.

Q & A

What was the company's production capacity in terms of cars per year at two different points in time mentioned in the transcript?

The company's production capacity increased from 40,000 cars a year to 600,000 cars a year, and is now producing 1.8 million cars a year.

Why was the stake in a particular stock sold a few years ago according to the speaker?

The stake was sold because the speaker was worried about the portfolio being too heavily invested in one particular stock.

What is the current estimated value of the investment in SpaceX mentioned in the transcript?

The current estimated value of the investment in SpaceX is around $3.5 to $4 billion.

What is the speaker's prediction for SpaceX's growth over the next 15 years?

The speaker predicts that the investment in SpaceX is going to grow 20 times over the next 15 years.

Why does the speaker believe that the company's stock price increased by 12% despite a disappointing quarter?

The stock price increased because Elon Musk started talking about the future plans, including bringing out cheaper cars.

What is the speaker's opinion on the future of cars in terms of being electric?

The speaker believes that all cars will be electric in 10 to 15 years from now, and that hybrids are just a temporary solution.

What is the speaker's view on the current situation of the stock price and its future?

The speaker believes that the stock price is currently at the bottom and is going to go up significantly, especially with the company's shift towards robotaxis and low-cost cars.

What is the speaker's perspective on the automotive industry's approach to innovation?

The speaker criticizes the automotive industry for being entrenched in traditional ways and not constantly seeking to make things better, cheaper, and faster.

How does the speaker describe the advantage Tesla has in terms of data collection for autonomous driving?

Tesla has sold 6 million cars, with 3.5 to 4 million of them collecting data, which is valuable and is doubling the amount of compute every 90 days.

What is the speaker's view on the timing of introducing robotaxis into the market?

The speaker believes that Tesla is on the verge of introducing autonomous driving and that it will happen sooner rather than later, as demonstrated by their recent progress.

What is the speaker's opinion on the feasibility of relying solely on cameras for robotaxis instead of other sensors like radar or LiDAR?

The speaker does not directly comment on the feasibility of relying solely on cameras, but mentions that competitors like Waymo use expensive sensors which significantly increase the cost of their cars.

How does the speaker describe the recent advancements in Tesla's autonomous driving technology?

The speaker describes a hands-on experience where a Tesla car with autonomous driving technology successfully navigated through a parking lot, entered a road with traffic, made turns, stopped at stop signs, and even responded to a pedestrian, all without human intervention.