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Charlie Munger says BYD is far ahead of Tesla in China

Charlie Munger claimed on Wednesday that Tesla pales in contrast to BYD in China, naming BYD his favourite 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 Munger, Warren Buffett’s longtime investment partner.

Berkshire Hathaway has made a profitable investment on BYD since purchasing around 220 million shares in September 2008. In the last decade, the stock has increased more than 600% due to the tremendous boom in electric cars. Berkshire has been reducing its BYD position over the last year as the stock has gotten more expensive.

“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, attributed his introduction to BYD to Li Lu, founder of Seattle-based asset manager Himalaya Capital. Munger also described BYD CEO Wang Chuanfu as a genius and a workaholic.

When asked whether he would rather invest in Tesla or BYD, Munger replied the decision is simple.

“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 has stated that it anticipates a record adjusted annual profit of 16.3 billion yuan ($2.4 billion) in 2022, which is almost 1,200% more than in 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.”

Tesla CEO Elon Musk was described as “brilliant” and “unusual” by the longstanding investor. He previously described Musk’s achievements in the automobile industry as a “little miracle.”

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

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