Investor's Corner
Ron Baron discusses Tesla, SpaceX, and a curious move by GM
Renowned mutual fund manager and investment icon Ron Baron of Baron Capital is well-known for his conservative, long-term approach to stock picking over his 46 year career. He’s been compared to Warren Buffett (both for his investing style and outstanding track record) and recently created a bit of a stir when he predicted Tesla stock could hit $1,000 by 2020.
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Elon Musk being interviewed by Ron Baron at the 2015 Baron Capital conference (Image: Baron Funds)
Baron Funds second quarter commentary (via Valuewalk) includes a letter from Ron Baron highlighting some fascinating insights surrounding Tesla. To understand businesses, Baron notes the importance of, “the individuals who lead those businesses; and of the character and talent of the individuals… In the end, we think it’s all about people.” Baron cites an unnamed Tesla executive who told him, “It is amazing to me how little most people know about Tesla.”
Baron explains, “Few institutional investors have met with Elon and JB. Fewer still, we’re guessing, have met with the co-founder’s teaching instructor at Stanford. We believe fewer and fewer in the investment industry are performing even the most basic research on businesses… Our meeting with Dr. Yadigaroglu is one example of Baron Funds’ differentiated primary research approach.”
Above: Tesla co-founders, CEO Elon Musk and CTO JB Straubel, in the early days driving Tesla’s Roadster “P1” (Images: Tesla)
Furthermore, it turns out that, “while at Stanford, Ion was the teaching instructor for JB Straubel, Tesla’s CTO and chief engineer. Ion believes JB and his team are better at battery technology than anyone else. It was lucky for Ion that he met both Elon and JB. Ion invested in Tesla when it was just beginning, and so far has made a lot more than he did in eBay. After meeting Ion, we concluded it was lucky for Elon and JB they met Ion as well.”So who is Dr. Yadigaroglu? Baron elaborates, “As part of our ongoing effort to gain further insight into Tesla’s prospects, we recently met with Dr. Ion Yadigaroglu, a venture capitalist. Ion is an engineer with a doctorate in physics from Stanford. Ion has been programming since he was eight years old! Ion’s dad is a prominent nuclear scientist. So much for Ion’s creds. When Ion studied at Stanford graduate school, his roommate founded eBay. Ion’s $1,300 investment in the eBay startup became worth millions. In 1992, at the dawn of the Internet, Ion met Elon Musk. Elon had come to Palo Alto to research battery technologies in Stanford’s labs.”
In studying Tesla, Baron also points out parallels with SpaceX. SpaceX, as Musk had originally envisioned it, has been able to reinvent the aerospace industry by reducing costs and, ultimately, saving millions with it’s reusable rockets. Baron reminds us, “Elon Musk’s SpaceX were [also] awarded contracts to design, build, and fly new spacecraft to ferry U.S. astronauts to the International Space Station (ISS)… The cost of commercial flights to the ISS will be a fraction of the cost of previous government flights, in part because rockets will be reusable.”
Similar to SpaceX, Musk’s emphasis on driving down costs remains mission critical at Tesla. Baron notes, “Despite Tesla’s requirements [for] functional design resulting in minimal waste, it often obtains better pricing for outsourced parts than its competitors. We believe its parts vendors try to accommodate this unique and fast growing company because they think Tesla’s engineering skills and designs will make them better suppliers! Further, since Tesla can insource production, it has the advantage of knowing exactly what a product should cost and how to produce it.”
-->And, according to Baron, GM is now following Tesla’s lead on this front. He notes that, “Mary T. Barra, General Motors’ CEO who has been trained as an engineer, has instructed her supply chain to ‘use Tesla suppliers…even if they cost more!’ Her rationale is that despite incurring higher costs to build a car, maintenance and warranty costs will be lower; car safety will be improved; and GM’s reputation will be enhanced.” That said, it might be worth pondering whether or not this move was executed strictly for reasons Baron stated in his letter — after all, GM has a tense, and sometimes adversarial, history with Tesla.
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Note: Article originally published on evannex.com, by Matt Pressman
Source: Valuewalk via Baron Funds
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Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
-->Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
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