Warren Buffett calls it right on EV batteries
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard

Thursday
August 18, 2022

Sign In
Subscribe
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
THURSDAY, AUGUST 18, 2022
Warren Buffett calls it right on EV batteries

Panorama

Anjani Trivedi, Bloomberg
12 August, 2021, 02:30 pm
Last modified: 12 August, 2021, 02:30 pm

Related News

  • Warren Buffett charity lunch fetches winning bid of $19 million
  • Who’s got it right on EVs: Musk or Buffett?
  • CATL planning EV battery production in United States, vetting sites
  • Warren Buffett's Biography
  • Berkshire rejects shareholder call to replace Warren Buffett as chairman

Warren Buffett calls it right on EV batteries

Anjani Trivedi, Bloomberg
12 August, 2021, 02:30 pm
Last modified: 12 August, 2021, 02:30 pm
Billionaire Warren Buffett. Photo: Bloomberg
Billionaire Warren Buffett. Photo: Bloomberg

Warren Buffett gets lots of investments right with his patient and deliberate buy-and-hold strategy. And it's becoming apparent that he's doing it again with electric vehicles. For investors pouring money into the technology, it would be wise to consider how the Sage of Omaha has looked into the future of the sector.

The value of Berkshire Hathaway Inc.'s holdings in BYD Co. Ltd., one of China's oldest makers of cars and automotive batteries, has skyrocketed this year: BYD's share price is up almost 30%. Buffett has backed BYD for over a decade, holding around 22% in the Hong Kong-listed company, which now sits on a market capitalization of over HK$915.6 billion ($117.6 billion). That's more than investor darling Nio Inc., the new-generation Chinese automaker listed in New York.

So how is that different from the rest of the EV universe, which just keeps on surging?

BYD is more than just another upstart trying to take on Tesla Inc. It is getting closer to mastering the right technology for EV batteries — the core of the electric car that accounts for almost 50% of the price and is crucial to widespread EV adoption. And that's what Berkshire has honed in on.

Longtime Buffett partner Charlie Munger had spotted the genius of Wang Chuanfu, the chemist and researcher behind BYD, leading to Berkshire taking a 10% stake for around $230 million in the company in 2008. In a 2009 Fortune magazine cover story, Munger described Wang as "a combination of Thomas Edison and [General Electric's] Jack Welch — something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it."

That's turned out to be quite a prescient call. Wang understands batteries: Getting the chemistry right would determine how well cars equipped with these powertrains would and could do. It's given his company a leg-up as the rest of the sector stumbles through recalls and battery fires. BYD electric cars are clunky and don't carry the techy-coolness of new generation cars like Nio Inc.'s or Tesla's Model X with its falcon wing doors. But it does have the right price and safe battery technology. It's now China's largest EV maker, selling more cars than the competition in the mainland.

BYD has doubled down on making affordable batteries at scale — and has bet on the technology to achieve that goal. At its 2020 annual results, the company said it would stop plans for nickel-cobalt-manganese battery adoption, which most car and battery makers are set on. Instead, BYD has turned all its attention to so-called lithium iron phosphate, or LFPs, for its so-called Blade battery, which was released early last year.

Wang's focus on LFPs is turning out to be a game-changer. It's cheaper and more readily usable. The chemistry is far more stable than the up-and-coming NCM type that promises to take cars hundreds of kilometers further but isn't as safe. Meanwhile, the flat Blade battery takes up less space and reduces the weight of the car, another problem automakers have had to contend with. BYD has managed to bring costs down by almost 30% and reduce the number of parts while also boosting efficiency.

BYD commands almost 15% of the battery market in China, behind Contemporary Amperex Technology Ltd. Globally, it could end up with a 3% share in the electric vehicle market by 2025, according to an estimate by analysts at Goldman Sachs Group Inc. BYD's battery deliveries – for its own cars and external sales – could reach 30% of industry consumption, Goldman notes.

Carmakers too, are realizing this is the way forward. Or at least, until other options can be commercially produced that don't result in frequent battery fires. Tesla is testing BYD's Blade battery for its Model Y, according to reports in Chinese media. The likes of Volkswagen AG, for their part, want to make their own powertrains. Even for one of the world's largest carmakers, that is a challenging task unlikely to yield results any time soon. 

Berkshire's recognition of Wang's expertise and the value of battery chemistry (much more than the rest of the car itself) has turned out to be a win — for now. If Wang and his company can stay ahead of the competition with evolving EV technology, BYD could be a model for investors to keep an eye on. That — more than the fascinating but distant plans of some carmakers — is the kind of realism that caught Buffett's eye. 

Warren Buffett / EV battery

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Eight more banks make unusual gains from forex dealings
    Eight more banks make unusual gains from forex dealings
  • The general view of the city from the top of a hill in Kabul, Afghanistan November 5, 2021. REUTERS/Zohra Bensemra
    Huge explosion hits Kabul mosque, many casualties feared
  • Photo: TBS
    9 arrested over BRT girder crash

MOST VIEWED

  • An operator does not just lift the girder and set it up at will. It is impossible. There is a process at every step. Where is the process?” Photo: TBS
    Blood on their hands
  • On 4 June 2022, a blast occurred at the BM Inland Container Depot in Sitakunda, Chattogram. In the rescue missions, more than 10 firefighters died and at least three are still missing.  Photo: Mohammad Minhaj Uddin/TBS
    Firefighters at the mercy of fires
  • Facebook has been working on BlenderBot 3 for several years as part of its artificial-intelligence research. Photo: Bloomberg
    Facebook does something right for a change
  • Illustration: TBS
    Anwar Group: From comb maker to owner of 20 companies
  • Photo: Mumit M/TBS
    Why artificial oyster reefs are the answer to our coastal embankments problems
  • Perhaps it was the respite while in jail that helped Bangabandhu think about wildlife conservation. Photo: Archive
    The day Bangabandhu surprised Guy Mountfort

Related News

  • Warren Buffett charity lunch fetches winning bid of $19 million
  • Who’s got it right on EVs: Musk or Buffett?
  • CATL planning EV battery production in United States, vetting sites
  • Warren Buffett's Biography
  • Berkshire rejects shareholder call to replace Warren Buffett as chairman

Features

Photo: Collected

Which Nintendo Switch should you switch to?

1d | Brands
Photo: Collected

Welcome to the age of glass facades

1d | Habitat
Photo: Mumit M/TBS

Why artificial oyster reefs are the answer to our coastal embankments problems

1d | Panorama
Illustration: TBS

Anwar Group: From comb maker to owner of 20 companies

1d | Panorama

More Videos from TBS

Vivo to bring new phone with 'special features'

Vivo to bring new phone with 'special features'

5h | Videos
Can Bangladesh buy fuel oil from Russia?

Can Bangladesh buy fuel oil from Russia?

5h | Videos
Sony launches 'Playstation Backbone' for iPhones

Sony launches 'Playstation Backbone' for iPhones

6h | Videos
High cost of baby food a problem for people with limited income

High cost of baby food a problem for people with limited income

6h | Videos

Most Read

1
From left Afzal Karim, Murshedul Kabir and Mohammad Jahangir
Banking

Sonali, Agrani and Rupali banks get new MDs

2
Photo: TBS
Bangladesh

5 crushed to death as BRT girder falls on car in Uttara

3
Dollar price drops by Tk8 in kerb market
Economy

Dollar price drops by Tk8 in kerb market

4
Representational Image. Photo: Collected
Bangladesh

Air passengers should plan extra commute time to airport: DMP

5
Dollar crisis: BB orders removal of 6 banks’ treasury chiefs 
Banking

Dollar crisis: BB orders removal of 6 banks’ treasury chiefs 

6
Ambassador of Switzerland to Bangladesh Nathalie Chuard. Photo: Courtesy
Bangladesh

Bangladesh never asked for particular info from Swiss bank: Ambassador

EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2022
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net