Warren Buffet is arguably the greatest investor of our time. He is the co-founder, chairman, and CEO of Berkshire Hathaway, a multinational conglomerate holding company based in the United States. Berkshire Hathaway owns a diverse range of businesses, including insurance, energy, railroads, retail, and manufacturing. Buffet is known for his value investing philosophy, which involves buying great companies at a reasonable price and holding them for the long term.
Warren Buffet in general, adheres to the following investment principles: invest in what you know; focus on quality companies with a strong track record of profitability; buy a wonderful company at a fair price; be patient with focus on the long term; and avoid companies with large debt obligations.
The electric vehicle (EV) revolution is a global shift away from fossil-powered cars to electric vehicles. Governments around the world are driving this shift, with more than 40 countries pledging to phase out internal combustion engine-driven (ICE) vehicles before 2050. Therefore, it’s intuitive that Warren Buffet should look for an appropriate investment for Berkshire’s portfolio.
BYD, an abbreviation for Build Your Dreams is a Chinese multinational conglomerate that produces rechargeable batteries, automobiles, and cell phone components. The company was founded in 1995 by Wang Chuanfu and is headquartered in Shenzhen, China.
In 2021, BYD’s revenues surged to 216 billion yuan ($33.8 billion), up by 38% from the previous year. Moreover, BYD’s sales of electric passenger vehicles grew from around 200,000 cars per year to 1.86 million in 2022. In Q3 2023, BYD sold 431,603 all-electric cars, which is almost as much as Tesla’s 435,059 all-electric cars sold in the same period.
During the first nine months of 2023, Tesla sold more than 1.3 million all-electric cars, while BYD exceeded one million. The Volkswagen Group is at about half of BYD’s volume right now with over 500,000 units sold.
It’s worth noting that BYD far outpaced the other two OEMs in terms of year-over-year growth, but is not expected to catch up with Tesla in 2023 as the difference is too big.
Warren Buffett chose BYD for a good reason and only if it fulfilled Berkshire Hathaway’s investing principles. Notable aspects about BYD include: committed leadership; consistent growth; strong supply chain; a unique position in battery technology as most other car companies rely on third parties; low production costs; high quality cars; with the exception of Tesla way ahead of all other manufacturers of EVs in terms of production to sales infrastructure and driving hours of big data. Collectively this supports another concept called a ‘moat’ as in a barrier of water around a castle which makes it very difficult for other competitors to challenge. Hence, the rest of the Buffet-BYD story is history as they say.
