By on November 30, 2009

Wang Chuanfu, of BYD, sugar daddy Warren Buffett, and a scale model of the F6. Picture courtesy southcn.com
Hidden deep down in a story written by the Houston Chronicle about Rice Business School students visiting Warren Buffett, there is a startling prediction by the Oracle of Omaha.

Jan Goetgeluk, president of the business school’s Finance Club, asked what Buffett thought of the peak oil theory.

Reports the Houston Chronicle, to the dismay of the many oilmen amongst its readers: “Buffett told him that in 20 years, he believes all the cars on the road will be electric. He’s already invested in a Chinese company working on the technology to make it happen.”

That company of course is BYD, the Chinese automaker in which Berkshire Hathaway owns 10 percent, so Warren might be driven by a bit of self-interest. A BYD car, the F3, has been a chart topper in China. However, it is powered by a conventional ICE.

Gurufocus.com, the website that follows Warren Buffett to a degree that borders on stalking, says Buffett’s prediction “explains another reason why Burlington Northern Santa Fe would be attractive to Buffett.” Nah, it’s not because people will take the train.

“All those electric cars will need to be recharged,” says Gurufocus, “and the electricity that will enable that will be mostly created by coal, at least for the foreseeable future. Burlington’s tracks run right through the coal-rich Powder River Basin in Montana and Wyoming, meaning BNSF will be hauling coal to meet the nation’s increased electrical needs.”

Still, Buffett may be engaged in a little hedging. He recently plunked down $100m on Exxon Mobile. Gurufocus has an explanation for that: “Exxon does much more than produce oil.”

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40 Comments on “Warren Buffett: All Cars Will Be Electric. In 20 Years...”


  • avatar
    Alexdi

    I think he’s optimistic. The electric car is where it was a hundred years ago: without the battery technology or infrastructure to be a viable alternative to gasoline. Every year, it’s only five more years until we see that battery. I would expect hybrid variants to comprise as much as half of all sales by then, however.

    • 0 avatar
      Tosh

      If you can park your car near an electrical outlet then that covers the ‘infrastructure.’ And Nissan will soon start selling the Leaf, that if I understand Ghosn (in Charlie Rose interview) correctly, will permit updating the battery as technology improves. (Ghosn also says Li-Ion batteries are good enough….)

  • avatar
    no_slushbox

    Buying XOM for the things it does other than pump and refine and retail oil would be like buying a house for the dishwasher.  If we are all driving electric cars in 20 years it won’t be because of government policy, or because we all decided to be green, it will be because oil became prohibitively expensive for general use in automobiles.  On the way to “prohibitively expensive” there will be some nice oil profits.  The mobilization of India and China makes XOM a pretty good bet.  Especially since the US oil companies have strong footholds in the oil rich US colony of Iraq.

    People wonder why Iran is developing nuclear weapons?  It would be stupid of Iran not to, otherwise it will likely end up as either a US or possibly further out a Chinese colony.  Hell, Iran is already a theocracy instead of a constitutional democracy only because of a previous US overthrow of Iran’s government launched from the US embassy (the symbolic reason that hostages were later taken from the US embassy during the revolution that overthrew Iran’s US installed dictator).  I kind of hope that Iran succeeds; otherwise my taxes will be footing the bill to keep hundreds of thousands of poor white trash and mercenaries in that country also. Sure Iran’s president plays to a right wing base of people full of ethnic hatred, but so many US politicians.

    • 0 avatar
      Mark out West

      Uh, if you mean an integrated oil company cannot produce environmentally friendly technology, I suggest you Google “ARCO Solar”.  About 90 percent of the solar cell technology the world uses was developed by these guys back in the 70s and 80s, who happened to work for an, uh, oil company.

      XOM also has some of the best technology resources for secondary and tertiary recovery around.  But libs like you don’t understand those big fancy words, now do you?

  • avatar
    threeer

    by “poor white trash” and “mercenaries” I hope to God you aren’t refering to our military.  You most certainly are entitled to your opinions, but to violently slander the folks that have volunteered to go where I’m sure you’d never dare is beyond belief…and if TTAC is up for this kind of hateful discussion, then maybe I’ve thought a little too highly of the integrity of this site and need to move on…

    • 0 avatar
      alex_rashev

      I think he was referring to security contractors (the new way to fight guerrilla wars, it seems).
      It does seem to me like a great number of people join those organizations not because they want to, but because it’s the only high-paying job they can get. With that in mind, I think we’d be better off (both short term and long term) sending them into college and having them design, build, and service battery factories and power plants, but what do I know.

  • avatar
    Lord Bodak

    It’s no secret how unstable the American power grid is.  Can you imagine if 50% of Americans came home at 6:00 in the evening and all plugged their cars in?  The result would be catastrophic.  If we had been investing in power infrastructure over the last 30 years, maybe this would work, but it’s going to take a lot more than 20 years for America to be in a position where widescale adoption of electric cars is feasible.

    • 0 avatar
      nonce

      If the Volt charges as stupidly as possible, this might happen. But we already have the charging software to spread out the charge for the purely selfish reasons of extending battery life.

  • avatar
    fredtal

    Back to the subject at hand…I read that Warren Buffet doesn’t invest in technology (ie computer companies) because he didn’t understand them. So either he knows something now or he is senile.

  • avatar

    Dr n_slshbx
    Prd t b Hll f Fm sshl?

    [Next time, Billy Bobb, you’re banned.–Mod. Staff]

  • avatar
    segfault

    Is that Lloyd from Entourage standing next to Warren Buffett?

  • avatar
    autobahner44

    To put this very mildly, the interactions we’ve had with the BYD team are not indicative of their success in China being repeated on our shores.

  • avatar
    50merc

    Not all cars. I have no intention of converting my Model A or Studebaker. But I’m pretty sure Warren Buffet will no longer be around to see whether he was right.
     
    Congratulations, no_slushbox, for squeezing into only two paragraphs all the wheezy slogans of the It’s All America’s Fault crowd.

  • avatar
    stars9texashockey

    @ no_slushbox:  your liberal talking points are tired, played out and false.  Where is this alleged oil bonanza from Iraq that we are allegedly fighting for? 

  • avatar
    Daanii2

    Predictions like this are worthless. Go back 10 years and see how accurate people were with their guesses about the future. Not even Warren Buffett has a crystal ball that is worth a damn.

    • 0 avatar
      alex_rashev

      1+

      We can’t even predict completion date of projects that we personally are working on, let alone do so for the whole society. Either way, gas as fuel is sooo not going away completely – it’s still cheaper than soda water, and massive vehicle electrification will only make it cheaper. Unless some miracle happens (like cold fusion discovery or a Goldfinger-style attack somehow rendering all the oil in the world useless), gas is here to stay, and we know how well we can predict miracles. In short, Warren Buffett is full of shit.

    • 0 avatar
      gslippy

      I agree.  We heard the same predictions in 1970.  Warren Buffet is wrong.

  • avatar
    Lokki

    “hundreds of thousands of poor white trash and mercenaries in that country “

    Editors?  I think this type of ad hominim attack  on our military is a little flip and un-called for to say the least.  How about a “snip”.  He doesn’t need to be insulting to make his point.

    I also believe that no-slushbox’ view of Iran is a bit naive.  If we wanted to control oil, there’s plenty that’s easier to get to than Iran’s.  Can you say “Venezuela, no-slushbox?  No, I didn’t expect that you could, really. However,  it would be easier and cheaper to take over that country and the supply chain would be much shorter. 

    I sure that the Mullah’s locking up their opponents and freezing access to the Noble Peace Prize funds and pension from one of their citizens
    http://www.reuters.com/article/latestCrisis/idUSGEE5AR07K 
    is just for the purposes of internal politics too.   Yup these people really need nuclear weapons to protect them from the United States.  We might be mean to them….

    As for Warren Buffet…. he’s a smart man, and he’s quite often right, but the ICE is going to remain the primary means of running cars for quite a long time.  Given the number of companies currently producing electric cars, and the lifespan of the current fleet of vehicles, it’s almost statistically impossible for him to be right on this.  Still if such remarks drive up the value of his investments, why should he not speculate?  

  • avatar
    PeteMoran

    Over the past 15 years I’d suggest Mr Buffett’s activities have been more along the lines of a mountain that creates it’s own weather. He says something and the market follows to his advantage.
     
    I don’t follow him closely, but I don’t believe he’s put any of his fortune into innovative future business or ideas for quite sometime. In that respect he’s become just like any other wealthy landowner, letting the peasants slave for his fat-of-the-land.

    • 0 avatar
      don1967

      I don’t follow him closely, but
       
      You should have stopped there.  Warren Buffett’s company owns 10% of an electric car battery developer, he supported Barrack Obama in the election, and the majority of his massive estate is bequeathed to charity.

    • 0 avatar
      PeteMoran

      @ don1967
       
      Is he beyond criticism because he donates to charity????  He owns 10% of an already established battery technology company.
       
      He could ,and in my view should, like many other wealth aggregators (not creators) be investing in innovation more like a venture capitalist rather than the owner of a sure thing.

    • 0 avatar
      don1967

      Criticizing Warren Buffett – or anybody else – is fair game, as long as it is based in fact rather than tired old Marxist cliches.
       
      As for your contention that he should “invest in innovation” – venture capital – keep in mind that this is a notoriously risky, money-losing proposition.   That’s fine for armchair quarterbacks who would like to throw other people’s money at cool new ideas, but how do you justify it to Berkshire shareholders who depend on the reliable dividend stream, or the working families who depend on Berkshire-owned companies for jobs?    “The sure thing” is exactly what Warren owes these people.

    • 0 avatar
      PeteMoran

      @ don1967
       
      tired old Marxist cliches
       
      Because the near-ruin of capitalist clichés have worked so well? Geez.

      As for your contention that he should “invest in innovation” – venture capital – keep in mind that this is a notoriously risky, money-losing proposition.
       
      Is it your contention that the US economy can survive “as is” without the reform necessary from new ideas and innovation? WHO is going to power that along? In the previous 10 years most of the creativity has occurred in how to trade more often and with more bizarre financial instruments.
       
      In my current role I work with ideas people wanting to bring their future product to manufacture/market (mostly in energy related areas). Invariably we waste our time (their time) by bothering the USofA. These people need capital. We help them raise it, we run their trials, we audit their data, we send them to Asia or South America (or Europe). The wealthiest in the USofA are interested in hanging onto their stolen wealth, not kick starting the future US industries that will provide for the future.

      justify it to Berkshire shareholders
       
      I’m not referring to his responsibilities to Berkshire, but using his personal wealth and influence rather than just acquiring more of it.
       
      Buffett has become a caricature; he talks, the market moves. Pump and dump.

  • avatar
    Carlson Fan

    “All those electric cars will need to be recharged,” says Gurufocus, “and the electricity that will enable that will be mostly created by coal, at least for the foreseeable future. Burlington’s tracks run right through the coal-rich Powder River Basin in Montana and Wyoming, meaning BNSF will be hauling coal to meet the nation’s increased electrical needs.”

    Don’t bet on that. The increased demand will come from more households not electric cars. Homes will be considerably more energy efficient in 20 years. Even with the addition of 2 electric cars being plugged in every night,  the average household  will use less power every month than they do in 2009.

  • avatar
    jmo

    Would it be fair to say that in 20 years all cars will feature some form of regenerative braking?

    • 0 avatar
      Steven02

      For this to be true, every car would need to be a hybrid of sorts.  Whether that be battery hybrid, flywheel storage, or some other means, part of the car would need to be electric to allow for the storage/release of the energy.

  • avatar

    I think Buffett is either dreaming or spinning. But if the Gurufocus theory described by Carlson Fan, directly above, is accurate, from a greenhouse gas mitigation point of view, it’s counterproductive.
    As for Iran, from the few Iranians I know, I have a lot of respect for the people of that country. I hope and suspect they will get out from under the theocrats in the not too distant future, and once they do that I think they will be a stabilizing presence. Because of that, I’m not nearly as worried about their getting a nuke as, say, North Korea. And I think Iran might have gotten rid of the theocrats already if they hadn’t been lumped into Bush’s “axis of evil.”
    Finally, while I’m not sure whether I agree with Lokki that the comment about our military should have  been moderated, I would like to see more respect for our military.

  • avatar
    mtymsi

    I think Buffet is wrong this time. There will probably be a lot more electric cars on the road in 20 years but nowhere near all of them. To say that all will be electric he is dismissing fuel cell technology completely.

  • avatar
    porschespeed

    At the risk of throwing gasoline on the fire…

    It would appear that no-slushbox was being a bit flip, but I’m not sure that one could directly translate that into disrespect for the military.

    Fact is, that in an all-volunteer environment, the middle and upper-middle class disproportionally avoid the military. Avoid it in droves.

    Recruiters are disproportionally located in economically depressed areas.  Despite some MSM statements to the contrary, recruiting standards were constantly being lowered or excepted just to get the recruit in the uniform. (The double-speak was always amazing.)

    Yes, recruiting has changed now that the economy is trashed and will be for the forseeable future. 

    So, no_slushbox should’ve said economically disadvantaged. (Though I haven’t gone through the stats lately), I would also wager disproportionally ‘minority’.

    This does not disparage in any way, shape, or form the bravery or committment of our fighting forces.  But it is the statistical analysis of the make-up of the forces.

    Rather, it should be a slap in the face to the social classes of America who avoid all the ugliness of war by having the less fortunate make the sacrifice for them.

    • 0 avatar
      jimmy2x

      I really have no idea where some people get their view of the members of the military – New York Times perhaps.  This whole idea of it being manned by a bunch of losers who cannot get any other job is one of the great myths of the era, and no matter how it is expressed, it is an insult to all of us who served.  20 Year USN vet.

  • avatar

    Snds lk Bfftt s smply pmpng p th vl f hs nvstmnt…. n mr, n lss.  Wll, h’s ls lbrl, s prhps thr s sm p-n-th-sky hpy thngs gng n s wll, bt h’s bsnssmn frst.

  • avatar
    threeer

    Sorry…one more comment before checking out of here for good…my son is currently halfway through his first semester at the United States Air Force Academy.  We are solidly middle class (annual income just over $100k).  He graduated top 5% of his class in high school, scored over 1500 on his SAT (with a perfect 800 in math) and had offers from just about every college/university in this country.  His choice?  To voluntarily agree to four years of an intense and most difficult collegiate experience so that he can serve his country.  Nobody forced him, and he didn’t run from the challenge.  I do agree that our military would be better served if it truly included a proportionate sampling of all demographics, but to say that middle class folk avoid the military in “droves” is not entirely accurate.

    Apologies for my rant.  It just grates me that slushboxes comments were as mean-spirited as they were.  I guess that’s the price of freedom to speak as one wishes (thank a Vet for that).

    As for all-electric vehicles in 20 years, I’ll believe it when I see it…

  • avatar
    don1967

    If anything qualifies Warren Buffett to predict the future of electric cars, it is his experience owning transportation companies, and his intuitive sense of probability.   He is a very sharp mind, not some old-school dinosaur as the ignorant masses like to portray him every time something with bright lights and loud noises captures their fleeting attention.
     
    Beyond that, I wouldn’t infer too much meaning from this story.  Buffett is an investor, not a fortune teller, and to ask about his future predictions is bad journalism…  rather like asking Superman to rate a movie.    I also wouldn’t weave complex theories about why he would invest in Exxon, BYD and Burlington.   Aside from a little hedging, as Bertel suggests, he probably owns them simply because they are profitable businesses which he understands and was able to acquire at attractive prices.   That’s what Warren does.

  • avatar
    no_slushbox

    re: Electric cars in 20 years.  It’s either that or no cars.  The US has less than 400,000 people but uses more than 24% of the world’s oil.  As India and China, with about 3 billion people, motorize something is going to give.  The Chinese will buy more new cars than people in the US will this year.  If electric cars cannot work because nuke plants are too expensive or the grid can’t handle it then there will a lot of walking and public transport.

    re: Venezuela – The actual sanctions starved Iraqi/Baath government fell, predictably, very quickly (the Bush administration was too naive or dishonest with itself to expect the insurgency).  Also, although invasions of Venezuela have been modeled, as a Catholic country that hasn’t attacked any of its neighbors even the US wouldn’t have the international ability to invade it. 

    re: poor white trash – Joining the military is an intelligent choice for someone poor or middle class.  It pays for college, it qualifies people for very good jobs like suburban police officers and private security contractors, and there is a lot of job stability.  That said, it’s not something people volunteer to do, it is something that people are paid rather well to do, when all the benefits are considered, compared to what most enlistees other opportunities would be.  I’m just calling out this make believe world where the modern US military is protecting US freedom.  It isn’t, it’s a government jobs program for the poor and middle class, and the jobs could be created a lot less expensively in the US.

    re: threeer – Your son going into the Air Force is a smart choice.  It is a big regret of mine that I didn’t join the military to pay for college and put respected experience on my resume, all while getting room and board and a bit of pay.  I will encourage my kids to join the military (at least if they are male, the rate of sexual assault of women in the military is very high).  That said, he’s doing it for himself, for a good job and free tuition, not for the country.  I will thank a vet from WWII or earlier, or Supreme Court Justice, or a civil rights lawyer for my freedom of speech, thank a taxpayer for providing your son college and a good job.

    re: Iran – What the US and UK did to that country, the first democracy in the Middle East, was shamful, and karma has been a bitch.

  • avatar
    50merc

    Thank you for clarifying that referring to our military as “poor white trash and mercenaries” was not meant pejoratively.
     

  • avatar
    no_slushbox

    I never said that our military are mercenaries; the US is contracting for over 100,000 actual, mercenary by definition, armed private contractors in both Iraq and Afghanistan.  Their use has been heavily lobbied for by private contractors like Xe, its politically convenient because it keeps deaths off the news, and unfortunately it is possibly necessary because the US military is not authorized to directly pay experienced people enough to keep them.

    The use of private contractor mercenaries, which is spreading to domestic US security, is a huge threat to democracy.

    With poor white trash I was calling out the disdain that is given to other government employees. Like any generalization it is not true for every individual, and the military is a good career and educational decision for people well into the middle class.  If only because there are not a lot of other job opportunities.

  • avatar
    dolorean23

    re: poor white trash – Joining the military is an intelligent choice for someone poor or middle class.  It pays for college, it qualifies people for very good jobs like suburban police officers and private security contractors, and there is a lot of job stability.  That said, it’s not something people volunteer to do, it is something that people are paid rather well to do, when all the benefits are considered, compared to what most enlistees other opportunities would be.  I’m just calling out this make believe world where the modern US military is protecting US freedom.  It isn’t, it’s a government jobs program for the poor and middle class, and the jobs could be created a lot less expensively in the US.

    Having been in the Army 18 yrs this month, I have to say that I resemble this remark. A child of a single mom who thankfully found employment in the digital sector selling flash memory from the earliest beginnings, I had no means to go to college. I joined simply for the funds and the opportunity to see the world when I was still young. I found the military to be a career I never thought I would want and to those of you who have never felt the joy of true comradery and the self-sacrifice you and your Soldiers have for one another, then I truly feel sorry for you. The Army gave me the money and the time to go to college for my BA and Master’s degree and in return it’s seen fit to promote me again to Major. I’ve deployed four times now and hate being away from my wife and kids, but relish being with my Soldiers, whom I trained, know, and would gladly die for. I’m no pro-American right winger as I prefer to get my news from NPR and the Kansas City Star than Fox.
    Still, I am by definition white trash. I take no offense to this remark as I and many others have served to let people say whatever they want. I would prefere to stick to cars which is my passion as well as yours otherwise you wouldn’t be reading this.

  • avatar
    don1967

    I see that a new thread has been opened specifically for political discussion, and I respectfully suggest that rants about white trash, military mercenaries, Iran, Iraq, and peasant slaves would be more appropriate there.    Let’s give the moderators a freakin’ break.

  • avatar

    As one who has been driving a fully electric Toyota RAV4 EV for 7 years, and charging it with a solar PV system, I can speak to the question of whether this technology is ready.
    My little SUV will out accelerate the gas version of the car and hit a top speed of 80 mph, plenty fast enough for me. The car emits zero pollution, well-to-wheels and is as quiet as a bicycle.
    I’ve got 76,000 miles on the car, all of them driven on kWh generated by the sunlight falling on my roof. I haven’t been to a gas station in 7 years and my electric bill is a measly $100 per year, for both the house and car!
    I mostly charge at home while I’m sleeping, but there are lots of public chargers around the LA area that I can use for free. For instance, when I’m shopping at the grocery store, getting a haircut or going out for dinner and a movie, my car is charging for free courtesy of the grocery store or the city of Santa Monica. New charging infrastructure is being deployed up and down the west coast next year in the tens of thousands to get ready for the thousands of new EVs that will be coming to market.
    This technology is indeed ready for prime time. While the last round of EVs were the victim of an attempted murder (see “Who Killed the Electric Car?”), a few hundred survived the crushers and are still running perfectly well 7-10 years later.
    LiIon batteries are significantly better than the NiMH batteries in my RAV. Those of us in the EV movement are eagerly awaiting the Nissan Leaf and Chevy Volt, both of which will be in showrooms next fall.
    If you don’t like giving your money to the oil companies, or to the terrorists, an EV will allow you to keep all of your money domestic. If you don’t want to pollute your kid’s air, then an EV is the vehicle for you.


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