Buffett's investment in BYD seems to have broken his first investment commandment: never invest in a company whose business you don't know. Even from 1999 to 2000, when the internet bubble was the worst, Buffett didn't buy any high technology. BYD's battery, mobile phone and electric vehicle business can be said to be complicated and difficult to understand. Buffett admits that he doesn't know anything about these three businesses. Why did he invest illegally?
Because of the recommendation of his two most trusted partners, Munger and Sokol, they know these businesses very well. Buffett thinks Munger is the smartest person in the world. Munger is very demanding and never praises anyone easily. Munger said that BYD CEO Wang Chuanfu is a combination of Edison and Welch. He is like Edison in solving technical problems, but like Welch in completing the tasks that must be completed. So he invited Sokol, chairman of Sino-American Energy, to visit BYD in China. After the inspection, the three men decided to invest $230 million to buy BYD 10% shares. Although the investment scale is not large, they think it is a big deal, because they think BYD is trying to become the world's largest automobile manufacturer by manufacturing and selling electric cars.
In fact, Buffett's investment in BYD has never stopped. His real investment reason is only one: new energy. Buffett not only knows the energy business very well, but also invests a lot of money.
Berkshire owns 84.7% of Sino-American Energy. Sino-American Energy has a number of power companies with a generation capacity of 65,438+0.8 MW, serving 6.2 million power users in the United States and Britain.
In 2008, the total assets of Buffett's energy business were $41.60 billion, accounting for nearly 1/6 of the company's total assets, and the sales profit was nearly $3 billion. Buffett is very optimistic about energy-based public utilities: "Charlie and I are very optimistic about our public utilities business. Last year, our profits set a historical record, and the future prospects will be even more impressive. "
Investing in BYD will expand Buffett's advantages in upstream power generation business to downstream charging business, making Buffett's energy business more promising in the future.
Just as the sales of fuel vehicles depend on the perfection of gas station network, the sales of BYD dual-mode electric vehicles depend on the perfection of a regional charging station network. Electric vehicles are not supported by a large number of charging stations, just as cars are not supported by a large number of gas stations now, so it is impossible to promote them on a large scale. However, the construction of the charging station is not the enterprise's decision, involving many departments, many interests and long coordination time.
Wang Chuanfu said that an important reason for choosing long-term cooperation with Sino-American Energy is that Sino-American Energy's extensive energy network and transmission network in the United States can help BYD build electric vehicle charging station facilities in the United States in the future: "BYD itself is very eager to find a long-term strategic partner, especially in the United States. The commercialization of electric vehicles has always been our dream. Relying on Buffett and his company's prestige in North America and with the help of Sino-American Energy, BYD can realize this dream faster. "
Buffett's approach is not to ask for gold, but to sell water to those who ask for it. What Sokol, chairman of Sino-American Energy, said is worth pondering: What interests us more is BYD's fast charging technology, which can be applied not only to electric vehicles, but also to wind energy and solar energy. There is considerable room for development in the future environmental protection field. The most profitable thing for BYD in the future is not to sell cars, but to sell fast-charging batteries. For Buffett, the most profitable thing is not the car or battery, but the charging station network. BYD took the lead in launching commercial electric vehicles and building a network of charging stations in the United States. For example, oil companies that now have a gas station network in the United States have a monopoly network advantage. It's not just BYD's electric car that will be charged in the future. In the economic stimulus plan signed by the President of the United States in March this year, electric vehicles are regarded as a trump card to reduce dependence on foreign oil and save the automobile industry. The government's funds for the development, production and consumption of electric vehicle technology are as high as 1.4 1 billion dollars, which is unprecedented. How much will Buffett earn if a considerable number of electric vehicles are charged at the charging station of Sino-American Energy? No wonder Buffett said that buying BYD is a big deal. The amount is not big for the time being, but it is of great significance in the long run.
In fact, BYD is just a pawn in Buffett's layout of new energy. Sino-American Energy is expanding its wind power business with huge investment: "The proportion of Sino-American energy wind power generation in total power generation has increased from zero to 20%. In 2008 alone, China and the United States invested $654.38+0.8 billion to develop wind energy. Today it has become the largest wind power company in the United States. "
Buffett also bought two energy stocks, CEG and NRG, which have great advantages in new energy-related businesses such as nuclear energy.
Buffett holds CEG with a market value of $500 million. CEG is the largest power company in the United States, with about 165438+ million power users and 570,000 natural gas users, and has successfully operated three nuclear power plants in the United States. In September 2008, Buffett announced that Sino-American Energy Holding Company had reached an agreement with CEG to invest $654.38+0 billion for acquisition at the price of $26.5 per share. Later, in June+February, 5438, CEG agreed to EDF to acquire 50% of the shares at $45 per share, so Sino-American Energy received high compensation, investing $ 1 billion, but recovering $2 1 billion.
Buffett's market value of holding NRG is $654.38+68 million. NRG has 44 power stations, mainly in the United States, with a production capacity of 24,000 MW, which has great advantages in clean coal power plants. In 2007, he won the Platts Energy Award, the highest honor in the global energy industry. The company plans to spend $1600 million in the next 10 year to build a number of "environmentally responsible" clean coal-fired power plants. In addition, NRG will build the first super nuclear power plant in the United States in 30 years, and its power generation will account for 44% of NRG's total power generation.
Unlike people who only pursue concepts, Buffett's approach to investing in new energy is to invest in energy companies that occupy a huge market share in traditional energy business and actively expand new energy business. The new energy business can be sold quickly and in large quantities through the original channels, and the old and new energy businesses promote each other. Buffett can not only rely on the traditional energy business to obtain stable income, but also get huge growth in the future through the new energy business, with both offensive and defensive capabilities. In fact, BYD's mobile phone battery and traditional car business are excellent. It is these traditional businesses that give the company the channels, funds and technical support to invest in electric vehicles, and also give Buffett great investment confidence.