One of the longest tenured bulls on electric vehicle (EV) company Tesla (TSLA 3.46%) is an investor named Ron Baron. Baron is mutual fund manager and longtime supporter of Tesla CEO Elon Musk.

Earlier this month, Baron sat down with CNBC's Andrew Ross Sorkin for an interview to discuss all things Tesla and rocket company SpaceX, two of Baron's investments. During the discussion, Baron made one of his most bullish calls yet. The investor believes that Tesla's self-driving technology will be worth $1 trillion.

Baron isn't the only one with a positive outlook on Tesla's autonomous driving capabilities. Let's dig into why this could be such a big catalyst for Tesla and assess if now is a good time to buy the stock.

What is autonomous driving?

Autonomous driving means that a vehicle does not need a human in order to operate. Self-driving cars are able to steer, change lanes, brake, and do more entirely on their own. Essentially, this is yet another use case for artificial intelligence (AI). By using cameras, sensors, and sophisticated programming, vehicles can capture high-resolution images of roads, neighborhoods, and cities and can learn how to best navigate around different areas in a variety of situations which could include traffic, weather, and more. At its core, machine learning powers autonomous driving.

People working on a car assembly line.

Image source: Getty Images.

Why is Tesla in the lead?

There are several companies experimenting with autonomous driving. For example, ride-hailing company Uber Technologies is working closely with Waymo, the self-driving car subsidiary of Alphabet. Another player in autonomous driving (and EVs) is General Motors. GM's autonomous driving unit is called Cruise. But unfortunately, very much like its EV business, GM has struggled to gain momentum in self-driving vehicles, and the state of Cruise is, for now, very much in jeopardy.

Whether it's Cathie Wood or Ron Baron, the general consensus is that Tesla is in the lead when it comes to autonomous driving. According to Wood, Tesla's vehicles are collecting more driver data than any other car manufacturer. This is important because Tesla feeds this data into its homegrown supercomputer, Dojo, which effectively serves as the neural network of Tesla's self-driving operation. It's this breakthrough that has Wood calling Tesla the biggest AI opportunity in the world.

Should you invest in Tesla stock?

The estimates for how big Dojo and autonomous driving can be are all over the place. Morgan Stanley forecasts that Dojo could add $500 billion of enterprise value to Tesla. Meanwhile, Baron told Sorkin that he thinks Tesla will be able to charge between $2,000 and $3,000 a year for its self-driving technology. Should Tesla hit its long-term goal of 20 million cars by 2030 and license its autonomous driving technology to other rival manufacturers, Baron believes this could be $100 billion revenue opportunity per year.

GOOG PE Ratio (Forward) Chart
GOOG PE Ratio (Forward) data by YCharts.

The chart above illustrates the forward price-to-earnings (P/E) for Tesla stock benchmarked against a cohort of mega-cap tech companies collectively referred to as the "Magnificent Seven." Tesla's forward P/E of 78 is by far the highest among comparable sized enterprises, and well above the S&P 500's forward P/E of about 20.

TSLA Price to Free Cash Flow Chart
TSLA Price to Free Cash Flow data by YCharts.

It's not entirely surprising to see such disparity between Tesla and the remainder of big tech. For much of its history as a public company, Tesla has traded in its own orbit. The retail investing community has been loyal to Tesla for many years, cheering the myriad businesses that Musk looks to disrupt via Tesla. Wall Street, on the other hand, has been a bit more polarizing. Some analysts seem to believe in the long-term picture of Tesla -- from EVs, lithium refining, robotics, autonomous driving, batteries, solar panels, and more. Others have kept a bearish stance from the get-go.

Nevertheless, Tesla is currently trading 60% off from its five-year highs on a price-to-free cash flow basis. To me, this is a more eye-opening picture. Tesla is a massively profitable operation, generating positive unit economics on each vehicle it produces. Moreover, the company has been able to reinvest these profits into several growth areas, including autonomous driving. I think Tesla stock is deserving of its premium valuation compared to its peers and the broader markets. The company is a relentless innovator and some of its biggest, and long-standing supporters, seem to believe that self-driving is in the not too distant future. I think now is a fantastic time to dollar-cost average into Tesla stock for long-term investors, before autonomous driving is fully commercialized.