Elon Musk paid respects to a Tesla rival yesterday. But it was in response to 2011 video of him laughing at its vehicle quality.
The Tesla CEO responded Friday to a Bloomberg interview in which he derided Chinas BYD. As the interviewer mentions the Chinese company as a competitor and notes Berkshire Hathaways 10% stake, Musk cant stop laughing. When asked why hes chortling, he responds, Have you seen their car? He then admits he doesnt see BYD as a competitor.
Hes no longer laughing.
In April, BYD reported that its profits had surged over 400% in the first quarter from a year earlier, and that its vehicle sales had nearly doubled to 550,000 globally in the quarter. The EV maker has ousted Volkswagen as the best-selling brand among automakers in Chinaa key market for Teslaand its pushing into Europe, Latin America, and Asian markets. Its also dominating Tesla in China.
That was many years ago, Musk said of the video clip, posted by Tesla Owners Silicon Valley. Their cars are highly competitive these days.
Others agree.
BYD is very, very strong, Volkswagen CEO Oliver Blume said in Shanghai last month.
And this week, Ford CEO Jim Farley mentioned BYD while explaining that Fords main EV rivals are Chinese companies, not GM or Toyota. The Chinese are going to be the powerhouse, he said at the Morgan Stanley Sustainable Finance Summit.
BYD is so much ahead of Tesla in China, its almost ridiculous, Berkshire Hathaway vice chairman Charlie Munger said earlier this year. Warren Buffetts right-hand man added, I have never helped do anything at Berkshire that was as good as BYD. Munger was behind the conglomerates decision to invest in the fledgling Chinese carmaker in 2008.
That same year, Musk had lunch with Munger, saying Berkshire Hathaway should invest in Tesla. Munger declined, and indeed Berkshire has largely steered clear of automakers over the decades.
Charlie and I for long have felt that the auto industry is just too tough, Buffett explained earlier this month at Berkshire Hathaways annual conference. But they placed a bet on BYD.
In the first quarter, BYD had nearly 40% of the market among new energy vehicle makers in China, according to Bloomberg, compared to just over 10% for Telsa, a distant second. Tesla earlier this year initiated a price war against BYD in China.
Musk was laughing about BYD three years after Mungers investment.
I dont think they have a great product, Musk continues in a longer version of the 2011 Bloomberg interview posted on YouTube. I dont think its particularly attractive. The technology is not very strong. And BYD as a company has pretty severe problems in their home turf in China. So I think their focus is, and rightly should be, on making sure they dont die in China.
Its safe to say that BYD did not die.
