The man you’ve never heard of is expected to beat Musk
Some say his company is already Number One
The race is on to produce electric vehicles (EVs). The major carmakers and some start-ups are pouring billions of dollars into new vehicle and battery factories. Something happened in the last couple weeks highlighting that sprint.
No one has been running as fast as Elon Musk. He said he was going to produce EVs at scale. He slept in the factory to make it happen and it did. Musk, the hare, won the first leg of the race by making Tesla the number one maker of EVs. As the transition to EVs is accelerating, others are starting to catch Tesla.
BYD platform for a line of its electric vehicles. (Credit: BYD)
The report a week and a half ago said Tesla has lost the title of number one EV producer in the world. The report says that BYD is now the number one producer of EVs. That conclusion is a result of counting BYD’s EVs and hybrid vehicles. Tesla only makes EVs, leading some to say the comparison is unfair. It does, however, point out that BYD is on the ascendancy.
BUFFETT'S BIG BET
BYD- have you ever heard of this company? Warren Buffett has. He invested $232 million nearly a decade and a half ago. Buffet still hasn’t invested in Tesla.
Wang Chuanfu and Warren Buffett. (Credit: BYD)
BYD is China’s leading EV manufacturer. Buffett will invest because he likes a company, often, he is investing in people. In this case he invested in Wang Chuanfu. The CEO of BYD has a remarkable backstory. His parents, poor farmers in the southern province of Shenzhen, died before he was in high school. Wang was raised by an older sister and brother.
THE 8TH SON
As Buffett’s partner Charlie Munger tells the story, the older brother knew his younger sibling was “a genius. So, the older brother and sister sacrificed so Chuanfu could go to college. He got a chemistry degree and was interested in batteries. At the time China was importing batteries from Japan and they were expensive. Mr. Wang started a company to produce batteries and later bought a government-owned auto manufacturer.
BYD vehicle assembly line in southern China. (Credit: BYD)
BYD now makes batteries for Apple and others. It has a line of buses, electrified work vehicles, and is working on a monorail. Its automobile line is growing and grabbing market share.
BUILD YOUR DREAMS
BYD are the initials of the company’s name in Chinese. But the company has evolved it into an English phrase: Build Your Dreams. Much like Elon Musk, Wang is driven by sustainable energy and vehicles that pollute less. BYD’s mission statement says it wants to, “change the world by creating a complete, zero-emission ecosystem powered by clean energy that reduces the world's reliance on petroleum.”
A few years ago Wang won the Zayed Prize from the UAE and outlined his philosophy. “If humans want to live for another 25 million years… we must change the way we consume energy. Otherwise, there are only 250 years left for us,” he said in a video produced for the award.
BYD CEO Wang Chaunfu explains his position on the future and energy use. (Credit: Zayed Future Energy Prize)
Wang is soft-spoken and committed to keeping costs down and outworking the competition. Those are traits that attracted the “Oracle of Omaha.”
REAL PLEASURE
While Buffett and Berkshire Hathaway now own 8% of BYD valued at $7.7 billion, it was partner Charlie Munger who wanted to make the investment. “I am terribly impressed with BYD. It has been one of the real pleasures of my life,” Munger said at the Daily Journal investor meeting in 2019. He added, “it’s been a wonderful investment. And it’s been a very admirable company.”
“Wang Chuanfu is the 8th son of a peasant,” he said, adding, “That older brother of Wang Chuanfu is a hero… What Wang Chuanfu has done is a miracle.“
Charlie Munger talks about BYD CEO Wang Chaunfu at 2019 annual meeting of the Daily Journal . (Credit: CNBC)
While Munger and Buffett’s bet on Wang and BYD has paid off, they still have not invested in Tesla. Munger calls Musk peculiar and Buffett has ruled out investing in Tesla.
Charlie Munger responding to a question about Elon Musk at the 2020 Daily Journal annual meeting. (Credit: CNBC)
STILL INVESTED?
Just last week the rumor mill cranked up when 225 million shares of BYD showed up on a Hong Kong stock clearing house site. Did someone sell those shares? It just happens to be the amount of shares Buffett and Munger bought in 2008.
We are in a decade of Transportation Transformation. That's what Full Throttle explores. The newsletter will be delivered twice a week for free once you subscribe here. Follow me on Twitter, Instagram, and Linkedin.
(Cover photo credit: BYD)