In recent years, Elon Musk has been pushing for Warren Buffett’s Berkshire Hathaway to consider investing in Tesla stock. However, despite Musk’s encouragement, it seems unlikely that Buffett will take this advice.
Buffett and his longtime business partner Charlie Munger have previously expressed reservations about investing in the automotive industry. While Berkshire Hathaway did acquire a 10% stake in BYD, an electric vehicle maker, in 2008, Buffett and Munger have been cautious about the industry’s challenges and uncertainties. They believe that the auto industry is highly competitive, with worldwide competitors that are unlikely to disappear. As a result, they find it difficult to predict the long-term prospects of car companies.
At Berkshire Hathaway’s annual shareholder meeting in 2023, Buffett and Munger reiterated their concerns about the automotive industry. They emphasized the significant capital costs and risks associated with electric vehicles, despite their rapid growth. These factors make investing in the auto industry unappealing to Buffett and Munger, who prefer to avoid high capital costs and risks in their investments.
Although Musk has suggested in the past that Berkshire Hathaway should consider investing in Tesla, Buffett’s cautious approach to the auto industry and preference for stable investments make it unlikely that Berkshire Hathaway will acquire Tesla stock. While Musk sees potential in Tesla, Buffett and Munger remain skeptical about the long-term viability and stability of the automotive industry.
