Warren Buffett: Why I'd Bet Against Tesla (UNBELIEVABLE)

Well, it's an important change. But if you guessed on the penetration of electric cars, let's say we say 17 million or something a year in 2030 when I'll be 100, I'd be surprised if more than a third of those would be electric, so of total vehicles on the road still might be 10% electric tops or something like that worldwide. You can't change this mass of transportation. It is changing, it should change, but in terms of just the math of replacing, if we said we're going to jump all the cars we have, the economy would stop. I mean we can't produce, we couldn't replace it.

Well, I think you're trying to make me a lot. I don't know. You say no, no, and no, or yes. It's got some remarkable things, okay.

Oh yeah, he's he, uh, he joined the Giving Pledge some years ago. I've only met him once or twice, but I've talked with him, not for quite a while. And would you invest in Tesla? No.

Actually, General Motors had a company for a long time called Motors Insurance Company. Various companies have tried. The success of the auto companies getting in the insurance business are probably about as likely as the success of the insurance companies getting into the auto business. I worry much more about Progressive than all of the auto company possibilities that I could see in terms of getting insurance business. It's not an easy business. I would bet against any company in the auto business being any kind of an unusual success. The idea of using telematics in terms of studying people's driving, that's spreading quite widely. It is important to have data on how people drive, how hard they brake, how much they swerve, all kinds of things. So I don't doubt the value of the data, but I don't think the auto companies will have any advantage to that. I don't think they'll make money in the insurance business. Using the internet to shop for cars is like using it for shopping for everything. It's another competitor. People will look for better ways. Now the gross margin on new cars is about 6% or so. They're not lots of room in the game, but that will be a method and that will sell some cars. And it's another competitor, but I don't think it destroys the auto dealer who takes good care of the customers. It's not an overwhelming threat, but it's obviously something that's going to be around and we'll sell some cars. If you look at the leading candy bars for the last 50 years, I think you'll find Snickers on top and then you've got M&Ms, you got two types. So they don't combine the peanits with that ones, but I think they're numbered two and four. And Hershey's in their number three or something in the store. I can't take them on, you know, I don't think Eli can take them on. They have mulch. When you go into a drugstore, 7-Eleven or something and you say I would like a Snickers bar, the owner says oh I've got something the mulch bar at 10 cents off the Snickers bar. You say give me the Snickers. And if he doesn't give you the Snickers, you go across the street and buy the Snickers. He brands. Brands are moats. I mean obviously this product is selling to hundreds of millions of people who want Coca-Cola. If you say I'll sell you something for two cents less or I've got some celebrity's name on it. Richard Branson tried Virgin Cola in the United States about 15 or 20 years ago. Million others have been tried. So I don't really have the same urge to produce automobiles that he apparently has to produce candy. But I don't suggest that he take on Snickers.

Yes, well actually Andrew just read some headlines where it looked like they may be Tesla maybe going back to market to pick up some additional financing. I'm not entirely sure. All I heard was the headline. That's what I call the counter revelation, because I think it was just a few days ago they said they wouldn't need financing. You know, he's trying something to improve a product, and I I salute him for that. And the American public will decide whether it's a success. It's not easy. It's probably easier to develop a new car this could be with Snickers, but some products have terrific moats. Probably Elmer's Glue does, you know. WD-40. There's just certain things that you are not much inclined to be dissatisfied with. And I would say that incidentally that the iPhone has a terrific moat. People that have an iPhone or maybe have some other phone, but they want to continue with a product that they've got. They want the new version. It's just easier for them. They learn how to do everything and their life's built around it. And all of that moats are very useful. Costco has a moat in people's mind. Amazon can raise the price of Prime 20. You can't do that unless you've built something within that image of the Amazon Prime just based on reality that you're going to get a lot for your money and you're going to want to use it. And then you can raise prices $20. But if you're selling some commodity product, you can't do that. You need a moat.

Elon says a conventional moat is quaint. And that's true of a bottle of water. And he says that the best moat would be to have a big competitive position that is also right. It's ridiculous. One does not intend to build an actual moat even though acquant yeah. Certainly a great number of businesses has always been true. But it does seem like it the pace is accelerated and so on in recent years. Been more moats that have been susceptible to invasion that seem to be the case earlier, but there's always been the attempt to do it here and there. There are probably places where the moat is as strong as ever. But certainly should be working at improving your own moat and defending your own moat all the time. Elon may turn things upside down in some areas. I don't think he'd want to take us on any candy. You can look at something like for animals out there in the other room and it won't be technology that takes away the business and and granibles. It may be something else that catches the young kid's fantasy or something. But being the low-cost producer for example is a terribly important well. That's something like Geico. Technology is really not brought down the cost that much. And a couple of companies that have cost as low as ours, but among big companies we are a low-cost producer. And that is not bad when you're selling them an essential item.

Because but I think it would be a very poor idea to go into the auto business. It's not an easy business. Incidentally, the auto business is different than some. But if you're a premier with Google on search or you're premier movies on Netflix, whatever, there's a huge first mover and size network effect and all that working for you. You can win an autos one year and you lose the next. I mean, you've got a dozen big companies out there with resources. They're going to keep coming. They copy what you do. People move from one year to another. You don't worry about the fact that your whole life is on the iPhone as opposed to you know what your whole life into being one car. It does not give you a permanent advantage.

If you misspeak, you correct it immediately. And if you've got a stock that's trading like crazy, you can come on three minutes later and don't say I misspoke when I said lending security. I meant to say I really think I can get funding. Bitcoin, you and Charlie have told Fox Business and made news calling it rat poison, rat poison squared. Has anything changed to make you take a second look?