Warren Buffett’s Investment in BYD: A Lesson in Early-Stage Technology Investing
Warren Buffett’s investment in Chinese electric vehicle startup BYD 16 years ago was initially met with skepticism, as Berkshire Hathaway unveiled a $230 million stake in the company. However, this bet has turned out to be one of Berkshire’s most profitable investments, with the stake growing to $8 billion at BYD’s peak as the electric vehicle market took off in China and beyond.
What made this investment so successful? One key factor was the influence of Charlie Munger, Buffett’s late business partner, who was instrumental in convincing Buffett to invest in BYD. Despite Buffett’s reputation as a technology skeptic, Munger saw the potential in BYD’s founder and CEO, Wang Chuanfu, who he admired for his rise from humble beginnings to prominence in the engineering and automotive industries.
Munger described BYD as a “damn miracle,” highlighting the company’s journey from making batteries for mobile phones to becoming the top car brand in China and a major producer of electric vehicle batteries. He emphasized BYD’s rapid growth and success in the face of stiff competition from established players in the auto industry.
In 2023, BYD surpassed Tesla as the world’s top electric vehicle maker, a testament to the company’s innovation and strategic vision. This success was not only a financial win for Berkshire Hathaway, but also a validation of Munger’s foresight and belief in the potential of early-stage technology investments.
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