While many investors hold great respect for Warren Buffett, they may also view him as more of a traditional investor. But the Oracle of Omaha is not afraid to buy trendy technology and artificial intelligence stocks if he thinks they meet his well-known criteria of being wonderful companies at fair prices. Consumer tech giant Apple is still the largest holding in Berkshire Hathaway's massive equities portfolio, and the conglomerate owns stakes in other innovative companies as well. In fact, one of those companies is starting to eat Tesla's lunch.
Cruising in China
Tesla has been a pioneer in the electric vehicle (EV) industry, and has maintained a large market share in the space for many years. But recently, the company has struggled. CEO Elon Musk's forays into politics and government affairs have taken a toll on the brand, driving potential buyers away from Teslas and reportedly inducing a noticeable number of Tesla owners to trade in or sell their vehicles.
The China Passenger Car Association recently reported that Tesla's sales in China for the first two months of 2025 fell by nearly 29% year over year.
By contrast, Chinese EV maker BYD (OTC: BYDD.F) is on the rise.
Last year, it reported revenue of more than $107 billion, compared to Tesla at just under $98 billion. Furthermore, BYD reported 1.76 million EV sales last year, while Tesla had 1.79 million. When including its hybrid models as well, BYD's total vehicle deliveries were 4.27 million. BYD had a 32% share of the EV market in China in 2024, while Tesla's was slightly above 6%.
BYD isn't just winning because Tesla is losing. The company boasts better prices and performance among its vehicles. Moreover, BYD recently announced that it had developed a new charging technology that could power 250 miles of driving range in just five minutes; currently, Tesla's Supercharger technology can charge a car for 200 miles of travel in about 15 minutes. BYD also offers less costly vehicles: It recently launched an EV that's comparable to Tesla's Model 3 in terms of features and styling, but that sells at about half the price, starting around $16,517.
Berkshire Hathaway first purchased shares of BYD back in 2008, and although it has sold shares in recent years, the conglomerate has made an absolute killing on the position. BYD shares are up by more than 2,000% since it opened its position. Still, the future looks bright. Management recently said it thinks it can double its sales outside of China and sees promise in Britain, a market they believe is open to Chinese products priced competitively.
Will BYD overtake Tesla?
With a roughly $164 billion market cap, BYD is still small in comparison to Tesla, which, even after the sell-off this year, is still valued at over $825 billion (as of March 29). BYD has already begun to overtake Tesla in certain markets but currently has no plans to sell EVs in the U.S.
Much of Tesla's valuation right now hinges less on EVs and more on the company's plans for robotaxis and robots, which Musk and many investors believe will be material drivers of revenue in the future. Tesla is aiming to build 10,000 of its new Optimus robots this year -- devices that can handle household chores. The company is also planning to launch a paid self-driving service in Austin later this year as well. BYD's vehicles have self-driving capabilities as well, and the company is planning to invest heavily in the technology, although it does not yet have unsupervised self-driving capabilities.
While the battle in the EV will rage for many years before an ultimate winner is crowned, BYD at slightly under 27 times earnings is a good deal cheaper than Tesla, which trades at 129 times earnings. Given its recent successes and Tesla's struggles, BYD looks to have a more favorable setup right now.
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*Stock Advisor returns as of April 1, 2025
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
