Charlie Munger, vice president of Berkshire Hathaway convinced Warren Buffett to invest $232 million in this company (it’s not Tesla).
In a rare interview, Charlie Munger, Warren Buffett’s right-hand man and vice president of Berkshire Hathaway, explained why he prefers to avoid the automotive sector, which he calls “extremely challenging”.
Munger recalled how, in 2008, he persuaded Warren Buffett to invest $232 million for a 9.9% stake in BYD, a Chinese battery maker that later became a major player in the electric vehicle industry.
This investment saw a notable increase in value, but Berkshire Hathaway began reducing its position in the Chinese company.
Berkshire originally purchased its BYD stake in 2008 for just $232 million. As of the end of 2021, Berkshire owned about 21% of BYD, according to Hong Kong regulatory filings, which was worth more than $7 billion at its peak last year.
In 2023, Berkshire Hathaway reduced its stake in Chinese electric vehicle maker BYD for the 11th time in less than a year.
Berkshire sold nearly 2 million shares and now owns just under 10% of BYD, which rivals Tesla as the world’s largest electric vehicle maker. Berkshire’s current BYD stake is worth just over $3 billion.
Munger noted how the automotive industry has been revolutionized by the advent of electric vehicles and new capital requirements, as well as the presence of strong unions, making the sector even more complex.
Charlie Munger had previously expressed his appreciation for Elon Musk, recognizing his success in the automotive industry. However, he also suggested that BYD could overtake Tesla in the electric vehicle race, pointing out that even though Musk is a genius in many ways, there are always companies like BYD that do better.
While Tesla is widely recognized as a leader in the electric automotive industry, Munger seems to see the future differently, pointing to BYD as a possible winner in this challenge.
Original article published on Money.it Italy 2023-11-09 06:40:00. Original title: Troppo rischioso. Per il braccio destro di Warren Buffett non conviene investire nel settore auto
