As the electric-vehicle maker’s outlook comes into question — pushing its market valuation below $500 billion this week, a level last seen more than a year ago — David Baron is dispirited by recent reports that Tesla could ditch its goal to bring an affordable car and shift resources to developing a robotaxi instead. 

While that’s far from his base case, and Musk denied a Reuters article that first reported the news, the fund manager warns any reversal in the company’s plan would threaten his eye-catching calls on the stock, without fresh sources of growth. The investor expects the shares to jump to $1,200 over time, an over 680% gain from Wednesday’s close.

“The Model 2 is a crucial piece of our thesis. If they stopped that, that is investment thesis-changing,” Baron, a portfolio manager at Baron Capital Inc. and son of Wall Street veteran Ron Baron, said in an interview.

Tesla shares were down as much as 4.3% to $148.70 on Thursday in New York, wiping out their gains from the past 12 months. Traders have been watching the $150 level closely as key support for the stock.

Baron, who oversees the $1.4 billion Baron Focused Growth Fund, said he will be “very surprised” if Tesla’s Model 2 is taken off the table and said growth will accelerate with the new car. Yet his words underscore growing disquiet among investors who are banking on the production of the mass-market vehicle.

Deutsche Bank AG on Thursday downgraded Tesla’s stock to hold amid chances that the company might delay plans to produce its Model 2. A Barclays Plc analyst a day earlier said Tesla’s first-quarter earnings call is “extra highly anticipated” and expects it to be a negative catalyst for the stock.

“This strategy pivot is a clear net-negative for the Tesla investment thesis, as it casts significant uncertainty on the path ahead for Tesla, making success of the stock dependent on bets with seemingly binary outcomes,” Barclays analyst Dan Levy wrote in a note to clients. Levy also thinks that the Model 2 “is not dead — but rather is being delayed, as Tesla instead focuses on robotaxi/full self driving.”

The company has yet to clarify its plans for the affordable model. While Musk broadly denied the Reuters report, he appeared to confirm a piece of the article that same day when he announced plans to unveil a robotaxi in August. A representative for Tesla didn’t respond to a request for comment.

Baron’s growth fund lists Tesla as its second-largest holding, comprising nearly 8% of the portfolio as of March 31, following Musk’s closely held SpaceX, according to a fact sheet. Tesla’s stock — down almost 40% for the year — is the fund’s worst performer, fueling an almost 4% drop since the beginning of the year. That’s compared to a 0.3% downturn in its benchmark, the Russell 2500 Growth Index, and the S&P 500’s 5% gain.

Despite fundamental questions over demand ahead, Baron remains bullish about Tesla’s prospects. While his fund cannot buy any more Tesla shares since it has reached its allocation limit, Baron isn’t selling either — at least not at current levels.

“There’s too much growth potential in the company,” he said. “The full self-driving is too big a recurring revenue and earnings opportunity to not invest in right now.”