Back in 2008, the clean vehicle world was given an electric jolt when it was revealed that the world’s greatest ever investor, Warren Buffett, had made his own major investment in low emission cars.
Buffett, advised by his legendary partner, Charlie Munger, took a stake in Hong-Kong listed company BYD, a leading Chinese maker of rechargeable batteries that moved into the car industry several years before.
Warren Buffett’s investment company, Berkshire Hathaway, made what was deemed a “significant” investment in the company.
Now this was somewhat out of character. Buffett more usually invests in out-of-favour, run of the mill type companies, where the value has been beaten down to bargain levels. So this was very much a departure. Perhaps the great investing pair saw the future in electric and hybrid cars?
Whatever the reason, the investment initially fared well, but has since faltered badly.
BYD’s shares have fallen from a peak of HK$80 to a recent low of just HK$10. Buffett is still in profit – he paid just HK$8 for the shares, but so far, the investment hasn’t done as well as most of his others.
That may be about to change though. Recently, the shares have rallied to around HK$15 on news that BYD has opened an American headquarters in Los Angeles. This may be because the company is shifting focus into other areas of business – possibly due to advice by the great man himself. Time will tell.
BYD’S F3 compact car was China’s best-selling vehicle during 2009, but sales fell the following year – along with the company’s profits and share price. BYD is now in eighth position in China’s car makers’ league by sales volume. Also, BYD’s plans to sell an all-electric car by the year 2010, the E6, in the USA have suffered various delays and setbacks. The company now says that the vehicle won’t be on sale to American customers for another 18 months or more, due to the country’s lack of recharging infrastructure for electric vehicles.
But Buffett gets very few investments wrong, so BYD’s plans for world electric car dominance will certainly be interesting to monitor.
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