Warren Buffett and Elon Musk have spared back and forth many times. With Musk calling Buffett simply a master allocator of capital and not an innovator of businesses or technology.
“I’m not Warren Buffett’s biggest fan, frankly,” Musk said in an interview. “He sits there and reads all these annual reports, which are super boring.”
“Does anybody want that job?” Musk asked. “I think most people do not. I don’t want that job.”
“But he’s not engaged in insane, conspicuous consumption,” Musk continued. “So you have to say, ‘Sure, he’s got a high net worth, but he’s doing a useful job for the economy, and he’s very skilled at it and should probably keep doing it.'”[1]
Musk labeled Buffett’s idea of economic moats — or enduring competitive advantages such as a beloved brand or patented technology — as “lame” on an earnings call in 2018. He argued that a company’s pace of innovation is the key determinant of its competitiveness instead.
Warren Buffett comments on Tesla
Buffett believed initially that Tesla going against the other major car makers was a terrible business model as the existing companies have durable moats in their brands and business models. He thought it was impossible to beat General Motors, Ford, and Toyota in the car business and likened it to if his company See’s Candies tried to compete with Hershey’s directly.
“People like his car and everything,” he said in the 2018 interview. “He’s trying something to improve a product… And I salute him for that, and the American public will decide whether it’s a success. And it’s not easy.”[2]
Charlie Rose asked Buffett about Musk in a 2022 interview, and Buffett praised his accomplishments at Tesla.
“I mean, Elon, didn’t–he’s taking on General Motors, Ford, Toyota, all these people who’ve got all the stuff, and he’s got an idea. And he’s winning. That’s America. You can’t dream it up. It’s astounding,” Buffett said.[3]
Warren Buffett on investing in Tesla
When asked whether Buffett would invest in Tesla stock, during a Yahoo Finance interview in 2020 with the editor-in-chief Andy Serwer, Buffett said “No”. Buffett said he would not invest in Tesla, even though he thought Musk has done some “remarkable things.”
Warren Buffett has always been a value investor looking to get a good price on a stock to buy its future cash flows and growth with a margin of safety and Telsa has always been wildly overvalued for its real world profits and balance sheet based on Buffett’s method.
When Buffett was asked whether he thought Apple investing in Tesla would be a good move he said:
“I’d support whatever Tim Cook does, but I think it’d be a very poor idea to get in the auto business.”
“Selling cars is not an easy business, with plenty of competition, no first-mover advantage, and you win one year and lose the next.” “It does not give you a permanent advantage.” Buffett continued.[4]
Buffett on Elon Musk getting Tesla into the car insurance business
Musk told analysts in an earnings conference call in April 2019 that Tesla would be launching its own insurance product later in May. Musk said that Tesla has “direct knowledge” of a person’s risk profile “based on the car,” which gives it an “information arbitrage opportunity.”
“It’s not an easy business,” Buffett told shareholders at the Berkshire Hathaway annual meeting. “The success of the auto companies getting into the insurance business is probably as likely as the success of the insurance companies getting into the auto business.” “I’d bet against any company in the auto business getting into insurance,” he said. “I worry much more about Progressive.”[5]
Does Warren Buffett own Tesla stock?
No, Warren Buffett doesn’t own any shares of Tesla stock in his Berkshire-Hathaway portfolio.
Berkshire-Hathaway has never invested in Tesla stock, but the company held $6.1 billion of Chinese electric vehicle stock BYD Company (ADR BYDDY) and $2.2 billion of General Motors Company (GM stock) at the end of 2021.
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