Despite Tesla stock going below 200 dollars, investors and analysts still stressed that it is a long-term investment, which explains why we cannot judge its growth with short time inconsistency. These experts remain solid on Tesla’s growth as we head into the future. However, a company like Tesla in the growing EV market can only be with the competition. A new company Warren Buffett believes in is making a wave and pacing up to become a major player in the EV industry and a strong competitor to Tesla. What company does that sound like? How are they getting a good share of the market? Will they take over Tesla? You will find the answers as you proceed in this blog. So, ensure you read to the end.
In the 2022 interview with Charlie Rose, Warren Buffett was asked some questions concerning Elon Musk and Tesla. Buffett commended Musk’s achievement and went further to recognize his wins. “He’s done some remarkable things”, he said.
However, Buffett’s admiration and praise for Elon Musk don’t seem to go beyond words. His action says something different from complete belief, as he has never invested in Tesla. When he was asked in an interview with yahoofinance whether he might later consider adding Tesla to his portfolio, he gave a short and straight answer. “NO, the savant of the investment world declared.”
Who is Buffett, and why do his words and actions seem to fly with feathers of importance when it comes to investing? Warren Buffett is the CEO of Berkshire Hathaway, a conglomerate of more than sixty-five companies including popular brands like GEICO, Duracell, and Fruit of the loom.
According to Bloomberg, his net worth sits at 108 billion dollars, entitling him to the sixth position in the rank of the world’s wealthiest men. Owing to his achievement in the investment world, he’s regarded as the greatest investor of all time.
Why Warren Buffett Backed Tesla New Competitor?
Buffett, through his company Berkshire Hathaway, made a move in 2008. Berkshire invested millions of dollars in a Chinese EV company. This company today is scaling through the electric automobile market and gaining a forefront position among other automakers. The company name is BYD, a shortened form for Build your dream.
Established in 1995, BYD has been long known for making gas-powered vehicles. However, the company took a big move this April, announcing that it will become a full EV automaker.
BYD seems to have special qualities that drove Buffett interest in the company. The automaker’s move to EV has proven to be a wise one over time. In the first half of 2022, the now full-time EV company made a sales record of 641,000 cars. This stood as the highest sales record of any automobile company throughout the world, the second of which is Tesla at 564,000 sales. The Chinese company, through this achievement, became the third largest car maker by market value.
There must be something behind a feat like this from this company. You’re right. BYD has a strong competitive advantage in battery innovation and production. The electric automaker makes its own battery which helps it to cut through supply chain issues and speed up production.
The battery innovation even took a better turn. An executive from BYD mentioned that the company is set to soon supply blade batteries to Tesla. This shows the extent of its battery innovation that calls for the biggest EV market to make a deal. If things work out right, BYD will be on its way to being one of the most valuable EV and battery companies in the world.
Despite all odds and obstacles, BYD has been able to sail through supply chain issues akin to its strong relationship with suppliers and deliver its cars and batteries to customers. On the other hand, Musk and Tesla are struggling to bring home its 4680 batteries.
BYD is selling, even though its vehicle might not be as superb as that of Tesla. The sales have some credit for the lower price point of BYD vehicles, among other factors. Buffet’s bet on this Chinese electric company is once more proving him to be a genius of investing. As of the time of this video, Berkshire’s 232 million dollars investment in 2008 has grown to 7.5 billion dollars.
As with every stock in the stock market, Tesla stock has experienced red and green seasons. And today, it’s one of the most controversial and difficult stocks to predict. We should note that Buffett’s decision to invest or not invest in a company does not determine the growth of its potential growth. This stands to be the truth, considering he’s never invested in companies like Alphabet and NetFlix.
More companies will move to the EV market, and the competition will be saturated. Maybe some days, other companies will meet up with Tesla in the race for superb cars that customers admire. But till then, Tesla still remains the major player leading the pack in the EV industry.
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Recommended books for further reading:
- Intelligent Investor: The Definitive Book on Value Investing – A Book of Practical Counsel
- Stock Market Investing For Beginners: The Investment Guide – How to benefit from the crisis, invest in stocks and generate long-term passive income incl. ETF and Stock Picking Checklist
- The Financial Times Guide to Investing:The Definitive Companion to Investment and the Financial Markets: The Definitive Companion to Investment and the Financial Markets
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
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