Warren Buffett doubts the prospects of Tesla or other electric vehicle manufacturers in the US

“You’re going to see a change in vehicles, but you’re not going to see anyone who owns the market because they changed the vehicle,” Buffett said at this weekend’s Berkshire Hathaway annual conference. The investment legend and his partner, Vice Chairman Charlie Munger, shared their thoughts about electric vehicles and the car industry in general during a Q&A session.

“The electric vehicle is on the rise, and that’s a very interesting development,” said Munger. But, he added, “right now, it comes with a huge cost of capital and a huge risk — and I don’t like a huge cost of capital and a huge risk.”

“Charlie and I have long felt that the auto industry is just too tough,” Buffett said. “It’s just a business where there are many global competitors who aren’t going away. And it seems like there are always winners, but it doesn’t get you a permanent spot.”

In February, Musk replied a Twitter the user’s question of what Berkshire Hathaway should invest in, Write“Begins with a T…”

musk added“Munger could have invested Tesla valued at ~$200 million when I had lunch with him in late 2008.” Tesla’s market cap is now approximately $530 billion.

The Berkshire Hathaway conglomerate includes all kinds of companies — Duracell, Dairy Queen, and Fruit of the Loom are among the brands under its umbrella — but Buffett and Munger have never been particularly fond of automakers. It owns General Motors stocks and one of the largest auto dealerships in the US, Berkshire Hathaway Automotive.

And in China, Berkshire Hathaway has invested in Tesla rival BYD. Earlier this year, Munger said it was “almost ridiculous” how much BYD beat Tesla in China, and he called BYD his best investment in Berkshire Hathaway. has musk unleashed a price war in China.

Musk has also slashed Tesla prices in the US, forcing competitors to follow suit. Ford, for example, this week announced price cuts for the Mustang Mach-E, the best-selling non-Tesla EV last year. That marked the for the second time this year that Ford will cut costs after Tesla has done so.

Musk warned on April 19 Result call that it might be willing to accept zero profit per vehicle sold, drawing a quick backlash from investors worried about a damaging race to the bottom.

Buffett expressed confidence in an automaker this weekend. “I would say Ferrari is in a special place but they only sell 11,000 or 12,000 cars a year,” he said. According to Reuters, the Italian luxury sports car manufacturer reached 13,221 deliveries in a strong 2022.

“I think I know where Apple will be in 5 or 10 years,” Buffett added, but “I don’t know what automakers will be in 5 or 10 years.”