How desperate is Tesla's Elon Musk?
Quite a lot, judging by his almost plea-like call for Warren Buffett to buy Tesla shares after Berkshire Hathaway's annual meeting on Saturday.
Musk actually wants Buffett to sell out of Apple completely and buy Tesla.
He was reacting to the news that Berkshire has quietly sold around $US20 billion of Apple shares in the March quarter.
"It's an Obvious Move." Chairman Warren Buffett: Buy Tesla stock. Musk tweeted on Saturday night. "Buffett should take a position in Tesla. It's an obvious move," he added.
News of the tweet saw Tesla shares rise almost 2% on Monday. They are still down more than 25% year to date in 2024, which is perhaps why he is tarting himself and Tesla to the world’s most famous investor.
Berkshire shares are up 11.7% so far this year – Buffett doesn’t need a Tesla stake.
Berkshire – under Buffett and his late Vice chair, Charlie Munger, spotted the electric vehicle boom before anyone else. In 2008, Berkshire invested $US230 million for 20.49% of BYD, riding a boom in recent years as EV adoption became more widespread. Tesla turned out its first EV – the Roadster in 2008 when Musk was an investor.
Berkshire has slowly reduced that stake to less than 10% as BYD’s value has soared. It was worth $US90 billion last week but has been a lot higher.
But, apart from a portfolio holding in General Motors (Buffett is a fan of CEO Mary Barra), Buffett has stayed clear of the auto industry, as he and Munger told the 2023 Berkshire annual meeting (Munger’s last).
"Charlie and I for long have felt that the auto industry is just too tough. It's just a business where you've got a lot of worldwide competitors they're not going to go away. And it looks like there are winners at any given time, but it doesn't get you a permanent place," Buffett said 12 months ago.
"I think I know where Apple's going to be in five or ten years… I don't know what the car companies are going to be in five or ten years," Buffett added.
Those sentiments were backed up by Munger (who drove the BYD investment all those years ago when the Chinese company was primarily a battery maker), who said that while electric vehicles are experiencing wild growth, they also come with huge capital costs and risks.
"It's imposing huge capital costs and huge risks, and I don't like huge capital costs and huge risks," Munger said. Nor does Buffett, but not Musk judging by his plunge into rockets, transport, satellites, AI, neurology, social media, and more.
It’s not the first time that Musk has trailed his coat in front of Buffett. Last November he taunted that Buffett could have bought shares in Tesla when it was worth 0.1% of its then value.
"Too bad he didn't invest in Tesla when it was 0.1% of today's value lol," Musk said in a tweet on his loss-making X platform (formerly Twitter) in late November.
When Musk made that jab, Tesla’s market cap was $US682 billion.
At Monday's close, it was worth $US579 billion and was under $US500 billion earlier in the year.
