Musk vs. Buffett
Elon Musk is nothing if not consistent, missing Model 3 production goals by a mile in Q3. Instead of cranking out the promised 1,500 Model 3s, only 260 could be pieced together. Musk blamed “production bottlenecks.” You suppose?
“It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,” Tesla said in a statement. “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.”
The market loved the news and Tesla stock was up $6.61 or nearly 2%.
Meanwhile, Warren Buffett is betting humans will be driving trucks for a long time to come. He bought 38.6% of Knoxville, Tenn.-based family-owned Pilot Travel Centers LLC. Pilot Flying J and plans to boost ownership to 80 percent in 2023. Pilot has 750 locations in the U.S. and Canada where flesh and blood truckers and drivers buy gas, diesel fuel, and convenience goods, Flying J offers trucks more than 70,000 parking spaces and 5,000 diesel lanes.
The Oracle of Omaha is putting his money where his mouth is. “There will be more goods moving to more people as the years go by in the United States—that I would bet a lot of money on,” Mr. Buffett, Berkshire’s chairman and chief executive, said in an interview.
It’s a bit of an anti-Musk move. Nicole Friedman writes, for the Wall Street Journal,
The deal runs counter to the massive projected growth in electric vehicles and self-driving cars and trucks expected by some analysts. Belief in those businesses has helped Elon Musk’s Tesla Inc., for example, post a more than 60% stock-price jump in the past year.
”We personally believe—and we spend a lot of time talking to both truck and car manufacturers—that it will be a long time before there’s not a person in the truck,” says Pilot CEO Jimmy Haslam said. “I think diesel fuel will power trucks for a long time to come, and there will be a person in that truck for a long time to come.”
After two deals fell through this year, Buffett’s Berkshire Hathaway had $100 billion burning a hole in Warren’s pocket on June 30th and he has no interest in, say, bitcoin. "Stay away from it. It's a mirage, basically...The idea that it has some huge intrinsic value is a joke in my view," Buffett told CNBC a while back.
Buffett famously invests in things he understands and doesn’t think much of gold either. "Gold gets dug out of the ground in Africa, or someplace,” he says. “Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
Berkshire owns more than 90 businesses including Geico insurance, Dairy Queen ice cream, several utilities, and has big investments in such companies as Coca-Cola, Apple Inc, Bank of America Corp and Wells Fargo & Co .
The new boy wonder, Musk, owns money losing companies like Tesla (which absorbed money hemorrhaging Solarcity) and SpaceX.
Buffett would rather finance the making and selling of banana splits and diesel fuel than trips to Mars and failed production schedules.
Maybe the future isn’t arriving as fast as Wall Street thinks.