Warren Buffett Missed Out by Not Investing in Tesla Early

  • Warren Buffett missed out on a monster return by not betting on Tesla early on, Elon Musk says.
  • The investor could have bought into the EV Maker at less than 0.1% of its current market value.
  • Buffett’s company still made a fortune on Apple, Bank of America, Coca-Cola and other stocks.

Warren Buffett has grown his company’s stock portfolio from $15 billion in 1994 to about $300 billion today, thanks to winning wagers on the likes of Apple, Bank of America, and Coca-Cola. The famed investor and Berkshire Hathaway CEO could have achieved a similar result by simply betting on Tesla early on, Elon Musk says.

“Or he could have just invested in Tesla at $200M market cap when he had the opportunity to do so,” the Tesla, Twitter, and SpaceX CEO tweeted on Sunday. He was commenting on a video clip showing how Berkshire’s stock portfolio has changed over the last three decades or so.

Buffett’s business partner, Charlie Munger, turned down the chance to invest in Tesla at a $200 million valuation in 2008, Musk disclosed in late February. The electric-vehicle company went public at a roughly $2 billion valuation in 2010, and its market capitalization surged as high as $1.2 trillion in November 2021.

Tesla’s value has halved since then to just under $600 billion as of Friday’s close. Even so, Berkshire still had the chance to buy in at less than 0.1% of the automaker’s current value, according to Musk.

Musk’s comment suggests that Buffett and Munger could have bought, say, a 10% stake in Tesla for $20 million in 2008. Ignoring any dilution, that position would have been worth about $120 billion at the stock’s peak, and nearly $60 billion today — an almost 3,000% return on paper.

Buffett won’t be kicking himself too hard, given Berkshire’s stock portfolio ballooned in value by more than 20-fold between 1994 and the end of 2022. During that period, its American Express position mushroomed in value from around $800 million to over $22 billion, while its Coca-Cola shares soared from $5.2 billion to $25 billion.

Berkshire also swapped out holdings such as Wells Fargo, Gillette, and The Washington Post Company for a $119 billion stake in Apple, a $34 billion position in Bank of America, and $30 billion worth of Chevron shares as of December 31 last year.

Buffett and Munger might have made more money on Tesla stock, but they were never likely to join the ranks of Musk’s shareholders. The pair famously stick to dominant, profitable companies in industries they understand. In contrast, Tesla was losing money in 2008, trying to disrupt industry titans including GM and Ford, and attempting to revolutionize transportation with battery technology.

Moreover, the Berkshire duo invested in BYD, a rival EV maker, later in 2008. They’re also famous for sniffing out bargains and steering clear of aggressively valued companies run by erratic bosses, meaning Tesla didn’t fit the mold of a Berkshire holding.