Within the funding world, Charlie Munger is properly generally known as Warren Buffett’s extremely profitable right-hand man. The 2 are legends within the monetary funding business. However, naturally, Buffett will get the majority of the reward and a spotlight. There was one massive funding that was reportedly outdoors the traditional course of for the duo, and that was Munger convincing Buffett to take an opportunity and put money into BYD when it was simply getting rolling on its transition to EVs. In fact, BYD had a helpful base as a battery producer, however many battery producers from that period have gone beneath or guess on the improper know-how, and BYD’s early EV fashions have been nothing to write down residence 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 threat on him. (We additionally interviewed Wang Chuanfu — in 2016 and 2018 — and have lengthy been deeply impressed with what he’s completed 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 at this time. “That’s a reasonably good fee of return,” he added. Sure, I assume so. In truth, 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 mentioned earlier this yr.
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 possibly can’t do,” Munger mentioned a few weeks in the past on the podcast Acquired. “He’s a fanatic that is aware of the best way to really make issues along with his arms. He’s nearer to floor zero in different phrases. The man at BYD is best at really making issues than Elon is.”
- “BYD is a lot forward of Tesla in China. It’s nearly ridiculous,” Munger mentioned earlier this yr.
Unsurprisingly, there’s additionally a historical past there. Buffett and Munger have been invited to put money into Tesla at about the identical time that they invested in BYD. They declined. Elon Musk tweeted in February 2023 that they might 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 once I had lunch with him in late 2008.” Tesla’s market cap proper now’s $672.6 billion. “That’s a reasonably good fee of return” is certainly one thing Munger might have repeated about investing in Tesla if that they had completed so.
Whereas it’s frequent to speak about Tesla vs. BYD, I believe it’s extra acceptable to see them as unfastened 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 comparable diploma. The world must be completely happy 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 maximum poverty to develop into one of the influential and profitable folks of our age. “The man was a genius,” Munger mentioned on the latest podcast. “He had a Ph.D. in engineering and he might have a look at any person’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 regularly discuss Tesla once we discuss vertical integration, however BYD takes vertical integration to a different degree. It began out as a battery firm. Now, it produces batteries, electrical vehicles, semiconductor chips, and way 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 mentioned, and Wang Chuanfu did.
