In the realm of investments, Charlie Munger is renowned as Warren Buffett's remarkably successful right-hand man, both being legends in the financial industry. However, the spotlight often falls on Buffett, despite Munger's significant influence. One notable departure from their usual investment process was Munger persuading Buffett to invest in BYD during its early foray into electric vehicles (EVs). Although BYD had a foundation as a battery producer, Munger's confidence in BYD's founder, CEO, and chairman, Wang Chuanfu, played a pivotal role in convincing Buffett to take the risk.
Initially, Berkshire Hathaway invested $270 million in BYD, a move that Munger estimates is now valued at around $8 billion to $9 billion, marking an impressive return. Munger considers this BYD investment as the most substantial contribution he has made to Berkshire Hathaway. He acknowledges that BYD's success surpasses any other endeavor at Berkshire.
Despite acknowledging Tesla's accomplishments, Munger offers some provocative statements in a recent podcast, comparing Elon Musk and BYD's Wang Chuanfu:
- "He can do things you can't do," Munger says about Musk, highlighting Musk's hands-on approach and fanatical dedication. He asserts that the BYD CEO is more adept at practical manufacturing than Elon.
- Munger claims BYD is significantly ahead of Tesla in China, describing the gap as almost ridiculous.
There's a historical context to this comparison, as Buffett and Munger were invited to invest in Tesla around the same time as BYD but declined the offer. Musk later mentioned on Twitter that Munger could have invested in Tesla at a $200 million valuation in 2008, emphasizing Tesla's substantial market cap now.
While the common narrative pits Tesla against BYD, Munger sees them as loosely complementary partners, driving the transition to electric cars from different perspectives. Both companies have played pivotal roles in this shift, contributing significantly to the global electric vehicle market.
Wang Chuanfu's extraordinary journey from the son of rice farmers to a highly successful and influential figure is noteworthy. Munger praises his engineering prowess, describing him as a genius with a unique ability to design and produce components rapidly.
BYD's story goes beyond electric cars; it exemplifies vertical integration by evolving from a battery company to producing batteries, electric cars, semiconductor chips, and more. Currently, BYD holds a dominant position in global plugin vehicle sales and closely rivals Tesla in 100% electric vehicle sales.