It’s premature to declare any winners in the electric vehicle competition, Warren Buffett said on Saturday. There’s just too much uncertainty in the sector.
“You will see a change in the vehicles, but you won’t see anyone that owns the market because they changed the vehicles,” Buffett said at Berkshire Hathaway’s (BRK-A, BRK-B) annual meeting.
In recent years, Tesla (TSLA) has dominated the US market for EVs. While Tesla still has a strong hold on the market with 54.3% market share, legacy automakers such as General Motors (GM) and Ford (F) have gradually started adding market share as well.
The competition has intensified as traditional automakers and new startups spend billions on EV production, securing supply chains, and infrastructure. Automakers including Tesla have signaled they are willing to suffer lower margins through price cuts as they vie for market leadership.
Buffett alluded to Ford as a cautionary tale of how unsteady the auto industry can be: “Henry Ford looked like he owned the world with the Model T … and 20 years later they were losing money,” he said.
Berkshire Hathaway does own a dealership group with over 100 franchises representing 27 automakers across 10 states, mainly in Texas and Arizona. The conglomerate, which also owns railroad BNSF, purchased the dealership chain Van Tuyl Group in 2014.
Berkshire also owns roughly 50 million shares in General Motors, worth $1.68 billion as of Dec. 2022, but sold some of its GM stock in the second and third quarters of 2022.
But Buffett and his right-hand man Charlie Munger said they didn’t have an interest in venturing further into the auto business.
“Charlie [Munger] and I long have felt that the auto industry is just too tough,” Buffett said. “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.”
Berkshire Hathway CEO Warren Buffett answers questions at the annual shareholder meeting in Omaha, Neb. on May 6, 2023. (Screenshot/CNBC)
Munger agreed, adding that although EVs are certainly on the rise, that uptick comes with some significant costs.
“The electric vehicle is coming big time, and that’s a very interesting development,” Munger said. “At the moment, it’s imposing huge capital costs and huge risks, and I don’t like huge capital costs and huge risks.”
It’s better to identify opportunities with more certainty, Buffett explained.
“I think I know where Apple’s going to be in 5 or 10 years,” he said, “and I don’t know what the car companies are going to be in 5 or 10 years.”
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
