Billionaire Investor and Baron Capital Founder Ron Baron: Now is the Time to Buy Tesla
Billionaire investor and Baron Capital founder Ron Baron stated on CNBC that now is the time to buy Tesla stock. The reason is that fully autonomous driving software is gaining traction and will continue to grow.
He mentioned that approximately 1.4 to 1.48 million people are using the paid FSD, with active subscriptions in Q2 up about 56% year-over-year, and about 55% of new car deliveries in North America opting for the software. He recounted how his Model S drove out of the garage in East Hampton to a restaurant and stopped for a duck crossing the road with six ducklings. Tesla accounted for about 52% of U.S. electric vehicle sales as of August, up from about 43% in the same period last year, while traditional automakers are scaling back their electric plans.
The company holds about $2.5 billion in SpaceX and over $5 billion in Tesla, totaling about $30 billion; approximately $30 billion of the cumulative profit of about $71 billion from clients comes from the Musk ecosystem. Personally, he holds about $5 billion in SpaceX and about $1.5 billion in Tesla, along with additional fund exposure. When asked if he would increase his position, he said, "That's enough." He has been heavily invested since 2014, with early costs far below the current stock price of around $360, estimating returns of over nine times at the fund level, with even higher returns from early batches.
He also stated that both companies are undervalued and has discussed with Musk the pros and cons of SpaceX acquiring or merging with Tesla, publicly stating, "I support whatever you decide is better." Analysts have a target average price of about $377, with a range from about $505 to about $25. Tesla has still recorded double-digit declines in 2026.
In market mechanics, this is a pricing based on software attachment rates, not quarterly sales: buying FSD changes it from an optional feature to a default subscription pool, while selling is treating Tesla as a cyclical stock. Beneficiaries are long-term holders with locked-in low-cost bases; those under pressure are short-term traders chasing high prices before autonomous driving regulations and accident narratives settle. Baron himself is not adding to his position but is encouraging others to buy, effectively transferring the verbal risk budget to the market.
Additionally, he mentioned the East Hampton road test with the duck as a way to productize the safety narrative; SpaceX's position has now surpassed its Nvidia exposure, and merger rumors themselves have become a second pricing factor.
Source: Public Information
ABAB AI Insight
Baron first invested heavily in 2014 after hearing about it during a roadshow in 2010, having briefly exited and then re-entered, exemplifying the typical "people bet, volatility is noise" approach. His early investment of $300-400 million has grown into billions in profit, allowing him to say "buy now" even after a price pullback this year. He is no longer increasing his position, as it has reached personal and company limits, and his call to buy serves the same FSD narrative: once attachment rates exceed half, software begins to be valued separately from the automotive business.
Money is simultaneously piled into SpaceX and Tesla, effectively betting on Musk's timeline rather than a single product cycle. The $30 billion profit from these two indicates that Baron Capital's alpha is highly tied to one person's execution capability. He only discusses merger pros and cons with Musk, avoiding public commentary to prevent the options market from making decisions for him. The story of the duck crossing the road is a way to present the most feared edge cases in regulation as product demonstrations.
In contrast to Baillie Gifford's early long holdings, ARK's high volatility promotion, and traditional automakers retreating from electric to cede market share, the industry phase shows cars are still selling while software is just beginning to be scored on a subscription basis. The 52% share of U.S. electric vehicles has increased amid an overall contraction in the electric market, indicating competitors are retreating rather than the sector expanding.
The structure indicates a shift in pricing power from hardware sales to software penetration. Cars can sell a bit less as long as over half of new vehicles come with FSD, changing the recurring revenue numerator. The mechanism is that the market still prices cars based on deliveries and gross margins, while Baron prices software based on attachment rates and safety anecdotes; when the two are temporarily disconnected, he chooses to stand on the side that has not yet been fully accounted for, using his decision not to increase his position to reduce accusations of "calling others to take over."
ABAB News · Cognitive Law
- Buying advice when your own position is full is narrative, not adding to the position.
- Once software attachment rates exceed half, automakers begin to be valued on a subscription basis.
- Betting on one person’s two companies concentrates profits and risks.