Thursday, September 29

Buffet and Munger target EV batteries with significant position

As electric vehicle makers globally faced chip shortages in 2021, Toyota avoided the measure by abandoning its pioneering policy of ultra-efficient manufacturing of “just in time” at the right time or just in time, and accumulated inventories in a timely manner before the global semiconductor deficit left many without sleep.

The auto industry and semiconductor manufacturers have gotten out of sync in their supply and demand calculations and the result has been that they could not make cars and consumers paid the price. EV manufacturers continue to look beyond the cheapest and safest power options, which means their high-risk ventures are rarely a big payoff to investors and their plans are worth taking a closer look at, while batteries are the big bet.

A year earlier, in 2020, several developers and Chinese electric battery suppliers launched innovative battery products and technologies to improve your competitive advantage. Of these, BYD’s so-called blade battery, GAC’s graphene battery, and SVOLT’s gelatin battery have caught the attention of many industry experts. But nevertheless, success will depend on cost competitiveness and improved battery performance and safety.

But China continued their efforts and finally on March 29, 2020 BYD formally launched the “blade battery”, a new kind of lithium iron phosphate battery (LFP battery) intended for mitigate concerns about the safety of batteries in electric vehicles. Its release shows the BYD resolution to resolve NEV weaknesses (new energy vehicles), better able to guide the global battery industry and put an end to spontaneous combustion of EVs, according to BYD President Wang Chuanfu.

But WORLD is not another upstart trying to take on Tesla Inc, but rather you are getting closer to mastering the right technology for electric vehicle batteries: the core of the electric car which represents almost 50% of the price And it’s crucial to the widespread adoption of electric vehicles. And that is what he hasLiked the attention of Warren Buffet AND Berkshire Hathaway.

Buffet’s partner Charlie Munger had long ago discovered Wang Chuanfu’s genius, prompting Berkshire to take a 10% stake, close to $ 230 million, in BYD in 2008 and featured in Fortune magazine in 2009.

While the rest of battery producers continue to encounter battery fires and therefore their withdrawal from the market, VE with BYD, despite not being next-generation cars like Tesla’s, they have a safe battery technology and the right price, in the Buffet partner’s own words. Now BYD is China’s largest EV maker and sells more cars than the competition on the mainland. Controls almost 15% of the battery market in China, behind Contemporary Amperex Technoloby Ltd. According to estimates by Goldman Sachs, globally it could reach a 3% share of the EV market by 2025. Battery deliveries, both for its own cars and for external sales, could reach 30% of consumption, points out Goldman Sachs.

EV sales will reach 70% of the Chinese market by 2030

This is the forecast that BYD chairman Wang noted for a Chinese magazine a few months ago. In his own words, EVs will soon dominate in China. The penetration rate of EVs in new sales during the first half of 2021 increased by 6.4% and “new phenomena never develop at a similar rate, the industry is changing at an even faster rate than imagined” Wang pointed out, saying that he expects new EV sales to account for 70% of the Chinese market by 2030.

While governments around the world are trying to reduce costs to consumers, incentives, subsidies and policy design will need to be reassessed. Meanwhile, without much real competition, China’s industrial companies focused on electric vehicles will continue to advance.

BYD stock hit record highs in November 2021, but the looks and the pocket of the big investors bet on the company, however has risen almost 30% in 2021. According to data available from Reuters Eikon, among the main holders of BYD shares Himalaya Capital Management (25.56 million shares) appear, BlackRock Institutional Trust (301.3 million shares), Vanguard Group (26.04 million shares), Bank of Norway IM (12.33 million) Mirae AM Investments (8.11 million). And recent purchases of it include Schroder IM, HSBC Global AM, Vanguard Group and DWS Investments.

But it is Bershire Hathaway Energy Company owning 20.49% of BYD’s outstanding shares, according to Reuters / eikon data:

Leave a Reply

Your email address will not be published.