'We Don't Want To Compete With Elon': Warren Buffett Praises Tesla CEO, But These EV Companies — Including One In His Portfolio — Are Still In The Game

Elon Musk and Warren Buffett are talented in their own right. One is a serial entrepreneur who co-founded Tesla Inc., revolutionized the electric car industry and is sending rockets into space. The other is an investing legend who has helped Berkshire Hathaway Inc. shareholders generate extraordinary returns for decades.

At Berkshire’s latest annual shareholders meeting, Buffett spoke highly of the Tesla CEO.

“Elon is a brilliant, brilliant guy,” Buffett said. “He dreams about things, and his dreams have got a foundation.”

Musk is so brilliant that even a magnate like Buffett refrains from entering the same arena as him.

“We don't want to compete with Elon in a lot of things,” the Berkshire CEO said.

Buffett’s right-hand man Charlie Munger quickly agreed, adding “We don’t want that much failure.”

Although Tesla is a dominant player in the global electric vehicle (EV) industry, other are companies competing in this arena. Here’s a look at three of them — including one that Buffett has a stake in.

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BYD Co. Ltd. BYDDY

Buffett’s praise for Musk came at an interesting time as Berkshire had just downsized its interest in Chinese EV maker BYD.

According to a stock exchange filing, Buffett’s company sold 1,961,000 shares of BYD on May 2. Berkshire now owns 108,340,642 shares of BYD, or 9.87% of the company.

Tesla has been making big moves in the Chinese EV market, but BYD is growing its presence as well.

In the first quarter of 2023, BYD sold 547,917 passenger vehicles, representing a 92% increase from the year-ago period. This included 264,647 battery electric vehicles (BEVs), up 85% year over year, and 283,270 plug-in hybrid electric vehicles (PHEVs), up 100% year over year.

Although BYD has built a solid presence in the global EV market, its shares are not listed on U.S. stock exchanges. Investors who want to own a stake in the company must look for brokers that allow them to buy and sell over-the-counter stocks.

Ford Motor Co. F

Being one of Detroit’s Big Three, Ford has consistently commanded a formidable presence in the automotive industry. And as the industry shifts from internal combustion engines to electric power, the company is also transitioning its lineup.

For instance, the Ford F-150 has long been America’s best-selling pickup truck. The company introduced an all-electric version of the truck, the F-150 Lightning, in 2021.

Ford also sells the Mustang Mach-E, a fully electric SUV that brings the company’s iconic Mustang name into the realm of electric mobility.

Ford has grouped its EV operations into a division called Model e, which it says “operates like a startup.”

While the segment has strong potential, it may not be immune to something that many startups face: losing money. Ford says that it expects “a full-year loss of about $3 billion” for Model e in 2023.

But the overall company still delivered a solid report this earnings season. In the first quarter, Ford’s revenue grew 20% year over year to $41.5 billion, while its adjusted earnings per share increased 66% to 63 cents.

NIO Inc. NIO 

Chinese EV manufacturer NIO gained a lot of investor attention when its stock price skyrocketed to over $60 during the meme stock frenzy in early 2021.

But shares weren’t able to maintain that upward momentum. Today, NIO trades at just under $8 per share.

But business is still heading in the right direction. The company delivered 31,041 vehicles in the first quarter of 2023, marking a 20.5% increase year over year.

NIO offers a unique battery swap system that allows for quick and convenient battery replacement, addressing one of the main concerns with EV adoption. As of March 31, the company has deployed 1,339 Power Swap stations.

Although the stock still seems to be in the doldrums, Morgan Stanley analyst Tim Hsiao sees better days ahead. The analyst has an Overweight rating on NIO and a price target of $12, implying a potential upside of 51% from the current levels.

The Bottom Line

No doubt, EV stocks are volatile. But they still warrant investor attention as the world transitions toward cleaner energy and reduced reliance on fossil fuels.

There are many ways to capitalize on this trend. You can invest in sustainable energy startups, including one that could revolutionize the way energy to power our planet is stored.

You also can gain exposure to the segment through exchange-traded funds (ETFs) like the Sprott Energy Transition Materials ETF SETM, which provides access to a range of critical minerals necessary for the global clean energy transition.

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