Earlier this year, Munger gave high praise to Tesla (TSLA -4.95%). He told CNBC's Becky Quick, "What Tesla has done in the car business is a minor miracle." So does the 99-year-old investor like Tesla stock? Nope.
Munger was interviewed recently on the Acquired podcast and was asked about a specific stock of which he acknowledged he's "a big fan." The billionaire thinks one high-flying electric vehicle (EV) stock, in particular, is better than Tesla.
Selling more than Tesla -- and everyone else
In 2008, Munger convinced his long-time business partner, Warren Buffett, to invest some of Berkshire Hathaway's money in Chinese EV maker BYD (BYDD.F -1.10%) (BYDDY -1.47%). That investment has paid off in a huge way.
Munger mentioned on the Acquired podcast that BYD will "sell at least two and a half million cars" this year, with most of them EVs. When asked if that number was more than what Tesla will sell, he replied, "Yeah, more than anybody."
The funny thing about Munger's history with BYD is that he actually advised the company's founder and CEO, Wang Chuanfu, against entering the car business. Munger told him that it would be "a graveyard" for BYD. Wang fortunately didn't heed that advice.
To be sure, BYD did encounter plenty of challenges along the way. Munger said that the company "made lots of mistakes" including creating "the wrong kind" of vehicle. However, he added, "They were lucky to be on the cutting edge of this electric car business." Today, BYD is very successful because its design is simpler and offers a more attractive economic proposition than rivals.
A CEO better than Elon Musk, too
Munger has referred to Tesla CEO Elon Musk in the past as "a very talented man" and "a smart man -- sometimes." However, he doesn't seem to think that Musk matches up with Wang.
In the Acquired interview, Munger was asked to compare Wang with Musk. He replied, "He's a fanatic that knows how to actually make things with his hands if he has to. He's closer to ground zero, in other words. The guy at BYD is better at actually making things than Elon is."
Munger called Wang "a genius." He raved, "I've never seen anybody like that. He could do anything. He is a natural engineer and a get-it-done type production executive, and that's a big thing."
BYD and Tesla, by the numbers
Is BYD really a better EV stock than Tesla? Here's how they compare on several key metrics:
| Metric | BYD | Tesla |
|---|---|---|
| Quarterly revenue growth (yoy) | 38.5% | 8.8% |
| Quarterly earnings growth (yoy) | 82.2% | (43.7%) |
| Forward price-to-earnings | 17.73 | 59.17 |
| Price-to-earnings-to-growth (PEG) ratio | 0.45 | 2.42 |
Data source: Yahoo! Finance. yoy = year over year.
These numbers, however, don't reflect the potential opportunity that Tesla could have in the autonomous ride-hailing market. Cathie Wood's Ark Invest has even projected that Tesla's share price could skyrocket nearly 9x by 2927 to $2,000 primarily because of its robotaxi prospects.
Why Munger is "nervous" about BYD
Should retail investors load up on BYD stock? Not necessarily. Even Munger has reservations despite his excitement about the company and its CEO. He stated in the Acquired podcast that BYD "make[s] me nervous." Munger added that the company's aggressive pace of growth is "dangerous."
Berkshire Hathaway also trimmed its position in BYD earlier this year. Buffett said in the conglomerate's annual shareholder meeting, "We don't want to compete with Elon in a lot of things." Importantly, though, Berkshire still owns 8% of the Chinese EV maker -- and zero shares of Tesla.
