Betting on Elon Musk and Tesla has paid off for countless investors.

Tesla shares have gained nearly 40% since the company’s last stock split in Q3 2022.

So it really is no wonder that Tesla investors cast 75% of their votes in favor of CEO Musk’s incentive-laden $1 trillion pay package.

According to the terms, Musk essentially has 10 years to increase Tesla’s valuation from about $1 trillion to $8.5 trillion. 

Tesla performance benchmarks for Elon Musk $1 trillion pay package:

  • 20 million Tesla vehicles delivered
  • 10 million active FSD subscriptions
  • 1 million bots delivered
  • 1 million Robotaxis in commercial operation
  • $400 billion of Adjusted EBITDA over four separate quarters

While Musk has struggled to deliver on his own consumer product timelines, Tesla has consistently delivered on its stock price promises, resulting in a $1.33 trillion market capitalization.

But Tesla shares have fallen more than 10% since Musk’s pay package was approved last week, including a nearly 8% decline in the Nov. 6 and Nov. 7 sessions to end the week.

Ron S. Baron, founder of Baron Capital, went on CNBC Nov. 14 to explain why he still believes in Tesla and why he doesn’t believe he will ever sell a single Tesla share.

Tesla has a $1.3 trillion market capitalization.

Photo by Chris Boland on Unsplash

Ron Baron says he doesn’t expect to sell his Tesla shares “in my lifetime”

Baron Capital has invested in Tesla since 2014, when it bet $400 million on the company. That investment has yielded the fund $8 billion over the past 10+ years, Ron Baron told CNBC Nov. 14.

Since investing in SpaceX in 2017, the fund has generated $4 billion on that bet.

Related: Tesla fatal crash lawsuit takes a wild turn

But his belief in Elon Musk doesn’t stop at Baron Capital.

As reported by CNBC, 65% of Ron Baron’s personal investments are tied to Elon Musk through either Tesla, SpaceX, or xAI.

Baron says over the next decade, he expects his SpaceX return to increase tenfold, while he expects his Tesla return to increase 5x over that same period.

In the past, Baron says he sold some of the stock when his clients balked at how much of the fund was tied up in Elon Musk. But now, Baron says he never expects to sell another share of Tesla or SpaceX in his lifetime.

“I will be the last person out of the stock. So I will not sell a single share of my shares until my clients sell 100% of their shares. And I don’t expect to sell in my lifetime Tesla or SpaceX, either one,” Baron said.

Ron Baron explains his faith in Elon Musk, but critics disagree

Baron has put his money where his faith in Elon Musk lies, and Musk has rewarded him with returns of $12 to $13 billion on his investment.

So it’s no wonder that Baron holds Musk in such high regard. In fact, he holds him in such esteem that he thinks other figures from the past should make room for Musk’s legacy.

Baron explained to CNBC that Musk is so wealthy, he doesn’t need to work tirelessly to build these companies, but does so for a greater purpose.

“Why, when you’re worth that much money, do you do this? You know, think about that. Why is he doing this? Why is he working these crazy hours? Why is he risking his health?” Baron asked rhetorically.

“The way I think about it is that he wants to think about how people will remember him someday, what he’s created, how he’s helped humanity survive.”

However, not everyone believes Musk’s approach is beneficial in the long run.

“Musk may be a genius, but he has spread himself very thin, and he’s not a good manager in most ways,” said Dan Kline, travel expert and co-editor-in-chief at TheStreet.

“Betting against Tesla has historically been a mistake, and lots of other geniuses have been unlikeable, but I have a hard time not seeing Musk implode at some point.”

Elon Musk’s politics have hurt Tesla’s car business

While Tesla appears to have pivoted to a post-EV mindset for the future, in the present, selling cars is what generates revenue for the company, and this business has been harmed, perhaps irreparably, by Musk’s political transformation.

Analysts have pointed to Tesla’s aging vehicle lineup (though Tesla has promised updates for the popular Model Y later this year) and CEO Elon Musk‘s sudden foray into right-wing politics as reasons for the company’s sluggish first-quarter sales.

Musk has publicly endorsed the AfD, a German right-wing party that some view as extremist, and he was accused of doing a Nazi salute on stage.

Related: Rivian ‘copies’ rival Tesla with $4.6 billion move

His political outspokenness may have permanently damaged Tesla’s spot in the European EV hierarchy.

Musk seemingly acknowledged this shift during the Qatar Economic Forum earlier this year when he said that the politically left-leaning Tesla buyers who abandoned the company have been replaced by people who align more with his own politics.

Tesla’s UK car sales were cut in half year over year in October, according to data from New AutoMotive, which showed 495 new UK registrations in the month. Last year, the region registered 1,013 vehicles in the month.

Tesla’s October was even worse in Germany, where the company sold just 750 vehicles. A year ago, it sold 1,607 cars in Germany, according to data from the country’s federal transport agency, KBA.

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