Baron Capital CEO Says Time to Buy Tesla Stock Is Now
Baron cites rising Full Self-Driving subscriptions and a 55% attach rate on new North American deliveries as key drivers.
Ron Baron, founder and CEO of Baron Capital, urged investors to buy Tesla stock immediately during a Wednesday appearance on CNBC Squawk Box, citing accelerating adoption of the company’s Full Self-Driving (FSD) software.
What Happened
Baron stated that the current moment represents the optimal entry point for Tesla shares, emphasizing that FSD usage is expanding rapidly. He noted that approximately 55% of new Tesla buyers are purchasing vehicles with FSD enabled. According to Baron, this trend signals that the software is transitioning from an enthusiast add-on to a default expectation for customers. He further characterized the technology as becoming "bigger and bigger" and safer over time.
Why It Matters
The investment thesis highlights a shift in valuation drivers from pure vehicle volume to software integration. Tesla reported 1.48 million active FSD subscriptions in the second quarter, a 56% year-over-year increase, aligning with Baron’s focus on software revenue potential. Baron Capital’s conviction is backed by significant exposure, holding roughly $5 billion in Tesla and $25 billion in SpaceX. The firm’s investments in Elon Musk-led companies have generated approximately $30 billion of its $71 billion in total client profits. Baron also addressed speculation regarding a potential combination of SpaceX and Tesla, stating he supports whatever decision Musk makes without detailing specific arguments discussed privately.
The Bottom Line
Baron Capital remains a major institutional supporter of Tesla, with Baron personally holding about $1.5 billion in Tesla stock and additional exposure through firm funds. He recently purchased the final edition of the Model S, which Tesla is sunsetting this year, describing it as his favorite car.
