Billionaire long-term investor Ron Baron said Tuesday that Tesla Motors (TSLA) could be a stock he owns for the next 10 to 20 years. "I think in this one investment we can make $6 or $7 billion" over that time period, he said.

"I think this could be one of the largest companies in the United States and the whole world," Baron told CNBC's " Squawk Box ." In a wide-ranging interview, he also said the overall stock market is cheap at current levels.

Baron said it's taken three years to amass a $300 million stake in Tesla, with an average cost per share of $210. "So we've made very little so far. But often times it takes us a very long time to [make money]."

Tesla shares closed Monday at just over $220 per share.

"I go there every three or four months. I look at the factory and see how much is changing," said the chairman and CEO of Baron Capital, which has $21 billion in assets under management.

Baron said he's investing in Tesla CEO Elon Musk and the 14,000 workers at the electric-car maker. "The competition is not anywhere. They could have caught him four or five years ago. But they can't catch him now. he's too far ahead."

Last month, Tesla raised $1.46 billion in fresh capital from the sale of its 6.8 million new common stock offering, according to the Thomson Reuters-owned market research firm International Financing Review. The pricing was lower than its previous sale price at $242 per shares in August, and below a year high of $286 hit in July. Tesla is seeking to help finance a plan to expand production to 500,000 vehicles per year by 2018, including a major rollout of the less expensive Model 3 sedan.

"I don't think [Musk] is going to be back to the market for quite a while, if he's ever going to be back to market for equity again," Baron said. "Throughout his whole operation, he has the opportunities to invest small amounts of capital and have high rates of return."

Baron expects Tesla to continue to grow rapidly. "They're going to be $20 billion in sales next year, $20 billion. This year, they're doing $8 or $9 billion. Last year they did $5 or $6 [billion]."

Pointing to Tesla's upcoming $5 billion mega-battery factory, which has an investment from Panasonic, Baron predicted: "They can do as much sales in batteries ultimately as they can in cars."

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