Background Information
Warren Buffett is an American business magnate and investor who has been called the “Oracle of Omaha” for his investing prowess and success in the stock market. His fortune is estimated to be around $97.9 billion, making him the sixth wealthiest person in the world. As of April 2020, Buffett owns shares in a few electric car companies. The most notable of these is BYD, a Chinese-founded multinational company focusing on green-energy technologies. Buffett has also expressed an interest in Tesla, and some speculate he may be quietly building a position in the company’s stock.
BYD
BYD, or Build Your Dreams, is a Chinese-owned electric car company founded in 1995. The company’s electric products are developed and manufactured in China, Japan, the United States, France, and the United Kingdom. BYD produces four electric vehicle models, including two SUV models, a four-door sedan, and a miniature urban electric transporter. In addition to its vehicles, the company produces a wide range of electronic products, including solar panels, electric bicycles, and smartphones. BYD also produces energy storage solutions, LED lighting solutions, and other related products. Since 2009, Warren Buffett has held shares in the company, although the current size of his ownership is not known.
Industry Prospects
The electric vehicle market is growing rapidly, with sales expected to reach around €140 billion in 2025. BYD is well positioned to capitalize on this growth and is working to expand into the international markets, particularly the United States. This is where the company’s performance could be bolstered the most, given the immense potential for growth in the electric car sector. Additionally, given the current trend for governments to offer incentives for electric vehicle purchases, it may be a better time than ever for companies such as BYD to expand their reach and capitalize on the growth of the market.
The Residential Energy Market
BYD is also making strides in the residential energy storage market. The company has released an energy storage system called the BYD Battery Box, which is designed to help homes generate their own clean energy and store it to be used at a later date. The system can be connected to a solar energy system, allowing homes to store their solar-generated energy and use it even when the sun is not shining. This could be a useful investment for households that want to reduce their energy bills.
BYD and Warren Buffett
As noted previously, Buffett has held shares in BYD for about 11 years now. Although the size of his ownership is not currently known, it is worth noting that this could be an indication of his faith in the company’s prospects. His investments in BYD follow his strategy of buying shares in long-term projects, something he has spoken about on numerous occasions. Buffett’s views on investing in electric vehicles have been positive, and as a result, he has expressed an interest in investing in electric car companies and their technologies.
BYD and Tesla
Buffett’s interest in electric vehicles has also piqued speculation about his interest in Tesla. Prior to his investment in BYD, he was one of the first investors in the company’s electric cars and has expressed admiration for the company’s growth. It is possible that he could take a similar approach to Tesla with a long-term investment. As of April 2020, Buffett has not officially expressed an interest in Tesla’s stock, but some analysts believe he may be slowly building a position in the company’s stock.
A Comparative Look at BYD and Tesla
When comparing BYD and Tesla, there are a number of factors to consider. BYD is a multi-national company with its electric vehicles developed and manufactured in China, Japan, the United States, France, and the United Kingdom. The company is also investing heavily in the residential energy storage market, with its BYD Battery Box product. Tesla, on the other hand, is a U.S.-based company focused solely on electric vehicles. Tesla has received much of the praise for its innovation in the electric vehicle market, but BYD’s presence in the market is still growing and could prove to be a formidable competitor in the future.
The market share of BYD and Tesla in the global electric vehicle market is also worth noting. According to data from 2019, Tesla had the largest market share of electric vehicles worldwide at 28.8%. BYD had a much smaller share at 1.2%, but this still amounts to a significant number of vehicles. BYD is focusing its efforts on its international markets, though, and its presence in the U.S. is expected to grow significantly over the next few years. It is possible that BYD could overtake Tesla in the global market share depending upon the success of its expansion.
Economic Factors
Economic factors are another important issue to consider with electric vehicle companies. BYD’s electric vehicles are generally more affordable than Tesla’s, making them more accessible to the average consumer. This could be a key factor in BYD’s success in the U.S. as many people are drawn to the cost savings of electric cars. Additionally, BYD’s ability to produce cars in multiple countries could also allow them to produce cars with more competitive costs than Tesla.
Environmental Concerns
Finally, environmental concerns are becoming increasingly important when choosing an electric car company. BYD and Tesla generally have similar carbon footprints, but Tesla’s vehicles are a bit more efficient in terms of energy utilization. Additionally, Tesla’s vehicles are able to travel further on a single charge than those of BYD, making them more practical for long-distance travel than BYD’s electric cars. Both companies also emphasize their commitment to reducing emissions and have taken steps to ensure their vehicles are produced with the least environmental impact possible.
