Warren Buffett of Berkshire Hathaway was the richest man in the world in the first half of 2008, with an estimated net worth of $62 billion. He didn’t get there by making foolish investment decisions. That’s why it was so intriguing that he decided to invest $230 million in a Chinese battery company, acquiring a 10 percent share.
BYD is the world’s largest maker of both nickel-metal and lithium-ion batteries for cell phones, and supplies Nokia and Samsung among others. But that’s not what sparked Buffett’s interest, according to a Greentech Media report. BYD recently bought the Chinese Tsinchuan Automobile Company, which has big plans to get into the electric car business. BYD is only the 19th largest carmaker in China, with sales of 93,000 vehicles in 2007, but it wants to get much larger. Unlikely as it may seem, founder and chairman Wang Chuanfu says he wants to be the world’s largest automaker by 2025.
“We are thrilled to be partners with BYD and the people of China,” Buffett said back in September when the deal was announced. “Wang Chuanfu has an extraordinary managerial record, and we welcome the opportunity to work with him.”
At the Detroit auto show earlier this year, BYD showed off the F6DM, what it called a “dual mode” electric car that can run on either its gas motor or its ferrous (iron) battery pack. The car can recharge in nine hours from a standard outlet.
BYD has talked about bringing its Chinese hybrids to the U.S., but that may be some time off—no Chinese carmaker has been able to establish a beachhead here.
The BYD batteries also have applications for storing electricity from wind and solar facilities, which is a critical step in establishing a smart grid for renewable energy. The problem with solar and wind is that they’re intermittent, and powerful batteries have the capacity to store electricity for when it’s needed most.
So maybe this is one of the smartest investments Warren Buffett ever made!