Billionaire investor Ron Baron thinks the sky's the limit when it comes to Tesla's (TSLA 0.79%) valuation. He sees the electric vehicle (EV) company growing fivefold over the next decade as its car and battery businesses soar.

In an interview with CNBC on Wednesday morning, the founder of investment firm Baron Capital Management said: "I've said for a long time I thought it was going to be $1 [trillion] to $2 trillion. With what developments have taken place recently, I think $2 trillion is the right number. So I think it's five times from here."

Tesla Model 3

A Tesla Model S. Image source: Tesla.

All revved up

Baron says Tesla's valuation has grown 10 times in the past two to three years, but it's only recently that the stock has caught up. 

He believes car sales will continue to boom, eventually reaching 10 million a year. And he says that the company has an "unbelievable" opportunity in batteries, which he suggests could lead to Tesla generating revenue of anywhere between $750 billion to $1 trillion in the next decade. Its valuation, therefore, could triple or quintuple in that time.

It's an ambitious forecast; last year, the company sold 367,000 Teslas. But Musk himself has set a sales goal of 20 million cars a year by 2027.

Analysts at Deloitte, though, forecast EV sales will reach 31 million in 2030, meaning Tesla would account for one-third to two-thirds of all EVs sold

That seems unrealistic, but if Tesla comes anywhere close to achieving either 10 million or 20 million cars a year, the market could respond in kind. And adding in the battery business, as Baron suggests, could make his valuation-expansion multiples seem not so far afield.