Charlie Munger says BYD is far ahead of Tesla in China

Charlie Munger said Wednesday that Tesla pales in comparison to BYD in China, calling the Chinese electric vehicle maker his favorite stock ever.

“I have never helped do anything at Berkshire [Hathaway] that was as good as BYD and I only did it once,” the 99-year-old investor said at the Daily Journal’s virtual annual meeting Wednesday. Berkshire initial investment is now “worth about $8 billion or maybe $9 [billion]. That’s a pretty good rate of return,” said Warren Buffett’s longtime investment partner.

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BYD has been a lucrative bet for Berkshire , which first bought about 220 million shares in September 2008. The stock has jumped more than 600% in the past 10 years amid the massive growth in electric vehicles. Berkshire has actually been trimming its BYD stake in the past year as the stock has become increasingly pricey.

“At the current price of BYD stock, little BYD is worth more than the entire Mercedes corporation. It’s not a cheap stock, but on the other hand, it’s a very remarkable company,” Munger said.

Munger, Berkshire’s vice chairman and a Daily Journal board member, credited Li Lu, founder of Seattle-based asset manager Himalaya Capital, for introducing him to BYD. Munger also said BYD CEO Wang Chuanfu is unusual, calling him a genius and a workaholic.

Asked if he would prefer Tesla or BYD as an investment, Munger said the answer is easy.

“Tesla last year reduced its prices in China twice. BYD increased its prices. We are direct competitors. BYD is so much ahead of Tesla in China … it’s almost ridiculous,” Munger said.

BYD recently said it expects record adjusted annual profit for 2022 of 16.3 billion yuan ($2.4 billion), about 1,200% above 2021.

“BYD last year made more than $2 billion after taxes in the auto business in China. It’s incredible what’s happened,” Munger said. “If you count all the manufacturing space they have in China to make cars, it would amount to a big percentage of the Manhattan island, and nobody had ever heard of them a few years ago.”

The longtime investor called Tesla CEO Elon Musk talented — and peculiar. He previously said what Musk achieved in the car business was a “minor miracle.”

“I don’t buy him, and I don’t short him,” Munger said Wednesday.