Elon Musk Laughed at BYD in 2011, Not Today

Back in 2011 Elon Musk laughed out loud at BYD, nearly three years after Warren Buffett’s Berkshire Hathaway invested in the Chinese electric-vehicle company. Buffett may be the one chuckling now, why? Because Berkshire has notched an almost 40-fold gain on its wager so far

Just over a decade ago, the slightest mention of BYD was enough to provoke a fit of giggles from Tesla CEO Elon Musk. In a Bloomberg interview back then, he mocked BYD by saying:

“Have you seen their car? I don’t think they have a great product. I don’t think it’s particularly attractive, the technology is not very strong. The company [BYD] was in deep trouble in China and should focus on staying in business there.”

BYD has clearly defied the Tesla CEO’s expectations. Its revenues mushroomed by almost 10-fold to 211 billion Chinese yuan ($32 billion) between 2008 and 2021, helping to triple its net income to 3 billion yuan ($450 million) last year. Moreover, the company’s sales of electric and hybrid vehicles soared by 250% to a record 114,000 units in May, lifting its cumulative unit sales past the 2 million mark. In comparison, Tesla generated nearly $54 billion in revenue and $5.5 billion in net income last year, and produced and delivered more than 300,000 vehicles last quarter.

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Berkshire spent $232 million to buy 225 million of BYD’s Hong Kong-listed shares in 2008. BYD’s stock price has soared from the yuan equivalent of $1 to $40 since then, boosting the value of Berkshire’s 7.7% stake to over $9 billion today. BYD has benefited from the intense hype around electric-vehicle companies such as Tesla and Rivian during the pandemic. Investors have sent the Chinese automaker’s shares up more than seven-fold since the start of 2020, and 18% this year alone, raising its market capitalization to $138 billion.

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