This is the story of two very savvy investors and the electric vehicle or EV companies they each backed at very early stages, turning million-dollar investments into billion-dollar bonanzas. The EV companies are Tesla of the United State and BYD of China. The investors, household names to many, are Elon Musk and Warren Buffet.

The final chapter here has yet to be written, of course. But the next one will almost certainly be about the race – or the cage match – to dominate the global EV marketplace.

Let’s begin at the beginning.

At about the same time EV startup Tesla Motors was launching the US$109,000 Roadster, its first car under the bold and brash CEO Elon Musk, legendary investor Warren Buffet was sinking US$230 million into budding Chinese carmaker BYD, purchasing 225 million shares of what today is the world’s No. 1 electric car seller, according The Motley Fool.

That was 2008. Two years earlier, in 2006, Musk authored a blog post entitled The Secret Tesla Motors Master Plan (just between you and me). In it, Musk said that Tesla’s purpose “is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy…”

Musk’s epiphany and plan appeared to arrive and evolve like a lightning bolt. In February 2004, Musk joined Tesla as chairman, contributing US$6.5 million to an early Series A venture capital funding round reported to be worth a total of US$7.5 million.

Today, Musk’s initial $6.5 million investment is worth more than $3 billion, based on estimates from Forbes that draw on securities filings when Tesla made its Initial Public Offering in 2010. Not a bad return. Musk is now the richest person in the world, with Forbes estimating a current net worth of $224 billion.

Meanwhile in 2008, Buffet, the Berkshire Hathaway chairman whom Forbes ranks fifth richest at $119 billion, chose to invest in BYD at the urging of company vice-chairman Charlie Munger. Munger to this day believes th e BYD stake remains one of the best investment decisions he has ever made. While Musk from early days talked-up a vision that addressed climate change, neither Munger nor Buffet ventured into making detailed claims about lofty environmental goals.

As Fortune reports, Berkshire Hathaway’s stake in BYD peaked in June 2022 at a value of US$9.5 billion. Just to recap: Berkshire Hathaway saw an investment of a couple of hundred million turn into a nearly US$10 billion stake in the world’s No. 1 EV maker by sales. It took just 14 years.

Buffet is a value investor who seeks big returns from undervalued companies. So, not surprisingly, since 2022, Berkshire has been steadily trimming its stake in BYD from about 21% of the company, to less than 9% today, capturing huge returns as smart value investors do when it’s time to take profits and redeploy cash elsewhere.

What does this say about the EV race? Berkshire Hathaway’s moves suggest that Buffet and Munger now see BYD and Tesla entering into an expensive, difficult, intense and prolonged struggle for dominance in the EV business.

LINKS

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