Within the funding world, Charlie Munger is properly often called Warren Buffett’s extremely profitable right-hand man. The 2 are legends within the monetary funding trade. However, naturally, Buffett will get the majority of the reward and a spotlight. There was one large funding that was reportedly exterior the conventional course of for the duo, and that was Munger convincing Buffett to take an opportunity and spend money on BYD when it was simply getting rolling on its transition to EVs. After all, BYD had a helpful base as a battery producer, however many battery producers from that period have gone underneath or guess on the improper expertise, and BYD’s early EV fashions have been nothing to write down dwelling about. The linchpin was that Munger was extraordinarily impressed by the founder, CEO, and chairman of BYD, Wang Chuanfu, and satisfied Buffett that it was price taking a danger on him. (We additionally interviewed Wang Chuanfu — in 2016 and 2018 — and have lengthy been deeply impressed with what he’s performed at BYD, however maybe with rather less conviction than Munger had early on about the place he would take BYD subsequent.)
Initially, Berkshire Hathaway invested $270 million into BYD. Munger says that’s price about $8 billion or $9 billion in the present day. “That’s a reasonably good charge of return,” he added. Sure, I suppose so. In reality, Munger thinks that is the most important single contribution to Berkshire Hathaway that he’s ever made. “I’ve by no means helped do something at Berkshire that was nearly as good as BYD,” he stated earlier this 12 months.
That’s all properly and good, and may deliver no arguments or controversy, however Munger has additionally supplied some fightin’ phrases up for Elon Musk and Tesla followers. Listed below are a pair extra statements from Munger that deliver the favored US EV model and its head honcho into the dialogue:
- “He can do issues you’ll be able to’t do,” Munger stated a few weeks in the past on the podcast Acquired. “He’s a fanatic that is aware of find out how to truly make issues along with his palms. He’s nearer to floor zero in different phrases. The man at BYD is best at truly making issues than Elon is.”
- “BYD is a lot forward of Tesla in China. It’s virtually ridiculous,” Munger stated earlier this 12 months.
Unsurprisingly, there’s additionally a historical past there. Buffett and Munger have been invited to spend money on Tesla at about the identical time that they invested in BYD. They declined. Elon Musk tweeted in February 2023 that they may have had lots of success with Tesla as properly in the event that they hadn’t declined. “Munger might’ve invested in Tesla at ~$200M valuation after I had lunch with him in late 2008.” Tesla’s market cap proper now’s $672.6 billion. “That’s a reasonably good charge of return” is certainly one thing Munger might have repeated about investing in Tesla if that they had performed so.
Whereas it’s widespread to speak about Tesla vs. BYD, I feel it’s extra applicable to see them as free complementary companions (for now). Collectively, they’ve pushed many of the transition to electrical vehicles. They’ve come at it from completely different angles, and are overlapping increasingly more as they develop and mature, however they’ve succeeded to a really related diploma. The world must be completely satisfied that we have now them each.
Notably, Wang Chuanfu has his personal spectacular origin story. He’s the son of rice farmers however was orphaned as a toddler. He rose out of utmost poverty to grow to be probably the most influential and profitable individuals of our age. “The man was a genius,” Munger stated on the current podcast. “He had a Ph.D. in engineering and he might have a look at any individual’s half within the morning…and within the afternoon he might make it. I’ve by no means seen anyone like that. He can do something. He’s a pure engineer and a get-it-done-type manufacturing govt, and that’s an enormous expertise to have in a single place.”
We frequently discuss Tesla once we discuss vertical integration, however BYD takes vertical integration to a different stage. It began out as a battery firm. Now, it produces batteries, electrical vehicles, semiconductor chips, and rather more.
BYD is by far the world chief in plugin automobile gross sales, and it’s now neck and neck with Tesla when it comes to 100% electrical automobile (BEV) gross sales.
Construct your goals, they stated, and Wang Chuanfu did.
