GM makes Warren Buffet a believer . . . that its electric vehicle strategy is a failure?

Photo above - drone's eye view of unsold electric vehicles.
Not Shown - if any affordable EV's are being manufactured somewhere in the USA.

Warren Buffett's firm sheds nearly half its stake in GM (freep.com)

Can you just envision how THIS phone call went? (Full disclosure - all dialogue is imaginary)

“Ring Ring - Hello, this is Warren Buffett, and I'd like to make a trade in my Merry Lynched account.”

“Oh . . .good morning Mr. Buffett! Thanks for being a loyal customer for the past 80 years. What can we do for you today?”

“I want to sell some General Motors shares”

“Very good sir. I can help you with that. How many shares will you be selling today?”

“Um . . . half, I guess.”

“Half . . . ???? As in . . .?”

“Yeppers . . . 20 million shares. As soon as possible. At the market price, which is about is $39 a share. So that should come to about $1 Billion, more or less. Put the proceeds in my CMA cash balance account. I don't really have anything else I'm thinking of buying now. Oh . . . and stand by, I might be calling back about the other half of my GM shares sooner or later . . .”

Stop laughing. Something along these lines actually took place, even if Warren's trade was electronic instead of executed with a phone call. Buffett DID sell half his GM shares last month. (See link above). Why did he do this? According to the Detroit Free Press article, the Sage of Omaha has lost faith in GM's electric car strategy.

But - my loyal readers will ask - Buffett is still an overall believer in 'lectric cars, right? He must own a ton of Tesla. You'd think so, but actually his TLSA share number is zero. Warren is probably kicking himself for not getting in on the Tesla ground floor. And TSLA's share price has gone up 20X just since the pandemic. Their 12 month trailing P/E ratio per share is an astonishing 75. The DJIA seems much more reasonable, at a 25 P/E. Seems so, but that 25 PE is about double the DJIA long term historical average, too. So the entire stock market might be overpriced by about 100%. Anyway, Tesla just announced another round of car price cuts, because inventories of unsold Model 3's are piling up. Maybe everyone who wants an anodyne dork-mobile in black, white or silver already has one? The Model 3 "cool factor" ended at some point in 2022.

Back to GM. What else might spook Warren Buffett? I mean besides that every Chevy Bolt ever built needed its battery replaced? Besides the hilariously huge electron-guzzling Hummer? And the barely better 'lectric Chevy Silverado, which is still MIA from dealers' lots? Well, did you hear about the upcoming UAW strikes? It seems auto workers are demanding a 40% pay raise. Apparently, they want to be paid the same as Teamster Union UPS drivers, who recently scored a $170,000 annual comp deal (including pension rights, health insurance, dental coverage, vision, etc). President Biden tried to take a victory lap and claim credit for this contract, but then wisely backed off.

So what companies DOES Warren Buffett like? Apple, definitely. He owns nearly $120 Billion (with a B) of APPL. Millions and millions of shares. It's not only his number one holding – it's more than all of his other top 10 holdings – COMBINED!

So does Buffet even own ANY electric vehicle stocks? Surprisingly, yes. He owns a chunk of that Chinese automaker called BYD. Which only builds cars in China, and doesn't even sell anything in America – yet. BYD is now the world's mightiest electric car maker. Bigger even than Tesla.

Buy American much, Warren? Sorry. I withdraw that snark. It might come across as political and cultural judgement. Billionaires are allowed to invest anywhere they damn well please. Even in nations like China, where Foxconn's gigafactories make virtually all the Apple phones. Possibly right around the corner from the ginormous BYD assembly lines. So, let's not make this column about uber-patriotism. Let's talk about investment risk, okay?

Sheesh Warren. If you can cast shade on GM because of a few Chevy Bolt battery fires, what do you think is going to happen to companies like Apple and BYD if China makes good on its constant threats to invade Taiwan? I don't see sales numbers going up. Share prices might actually tank. I mention this, Warren, since you're usually focused so clearly on risk. Remember what happened to all those Russian companies in 2022? Or German companies in 1939 . . . ?

I'm just sayin' . . .

(Legally required disclaimer - this writer holds no position in any of the companies mentioned in this article, except as part of S&P 500 index funds. This article is not an endorsement of any S&P index funds, either.)