Berkshire Hathaway vice chairman Charlie Munger has praised Tesla’s CEO Elon Musk and termed Tesla as a “minor miracle” in the automotive industry.
Speaking with CNBC, Munger said, “I was certainly surprised that Tesla did as well as it did,” He added, “I do not equate Tesla with bitcoin. Tesla has made some real contributions to this civilization. Elon Musk has done some good things that others couldn’t do.”
Notably, both Munger and Berkshire Hathaway chairman Warren Buffett are dismissive of cryptocurrencies. Buffett once termed bitcoin as “rat poison squared.” However, many analysts see cryptocurrencies as an attractive asset class. We have a guide on how beginners can buy bitcoins.
Coming back to Munger, he was all praise for Musk. He said, “We haven’t had a successful new auto company in a long, long time. What Tesla has done in the car business is a minor miracle.”
Notably, last year, Tesla’s market cap surpassed $1 trillion and it became the first automaker ever to achieve that feat. While Tesla’s market cap has since slumped to around $600 billion, it is still 2.5x that of Toyota Motors.
Meanwhile, while Munger has praised Musk, the world’s richest person does not share a good relationship with Buffett. In 2019, Buffett said that Musk has “room for improvement.” Musk also said later that he is not a big fan of Buffett.
Charlie Munger Terms Tesla’s Success as a “Miracle”
Many would say that Tesla’s success is nothing short of a miracle. Not many car manufacturers or analysts believed in the company until about four years ago. Before Q3 2019, Tesla was only profitable in a few quarters. It was delivering very few vehicles, and the market questioned whether the company could grow.
However, it has scaled up production quite fast and the ramp-up at Shanghai Gigafactory puts even the established automakers to shame. Tesla delivered over 900,000 cars last year.
For several quarters now, Tesla has stated that its deliveries would increase at a CAGR of 50% in the coming years. In the third quarter earnings call, the company mentioned that although delivery growth might fall below 50% in some years, it would exceed that figure in others, averaging out to 50% or more.
Tesla’s margins are also better than many other automakers. It also has a strong balance sheet, thanks to the $13 billion stock sale in 2021. Tesla has posted profits in every quarter since Q3 2019 which is commendable as the automotive industry witnessed severe losses in the first half of 2020 due to the COVID-19 lockdowns.
Tesla Stock Has Fallen after Musk Acquired Twitter
Tesla stock has fallen after Musk completed his acquisition of Twitter last month. Musk’s Twitter acquisition was full of drama, as most things associated with the world’s richest person invariably tend to be. While Musk backed out of the deal, he had to eventually agree to buy Twitter amid the legal battle, where most believe he stood little chance anyway.
Even after the acquisition, Musk is invariably in news over Twitter. He has laid off almost half of Twitter employees and mocked those unwilling to pay $8 per month for the blue tick verification.
The fallout is visible in Tesla stock also and even long-time bull Dan Ives removed Tesla from his top ideas list. Ives however maintains a buy rating on Tesla stock.
Musk On EV Competition
Meanwhile, EV competition is heating up globally. Saudi Arabia has announced a joint venture with Foxconn for EV (electric vehicle) production. Both Saudi Arabia and Foxconn see a big opportunity in electric cars as the world economy transitions towards zero-emission cars.
Foxconn also bought the Lordstown Plant from Lordstown Motors where it now makes Endurance pickups for the company. Foxconn has also partnered with Fisker for its second car.
On multiple occasions, Musk has mocked other EV companies as well as legacy automakers. Last year, he took potshots at the massive valuation of Rivian. Rivian stock has since plunged amid the crash in growth shares.
Related stock news and analysis
- How to Invest in Green Energy in 2022
- 9 Most Eco-Friendly Crypto Coins 2022
- Should Fed Pause Its Rates Hikes? Wharton Professor Jeremy Siegel Says Ayes
Dash 2 Trade - New Gate.io Listing
- Also Listed on Bitmart, Changelly, LBank, Uniswap
- Collaborative Trading Platform Token
- Featured in Bitcoinist, Cointelegraph
- Solid Proof Audited, CoinSniper KYC Verified
- Trading Community of 70,000+ Members