Apple should not buy Tesla, according to Warren Buffett

In the wake of some legal trouble for Tesla CEO and Chairman Elon Musk, some analysts and investors have suggested that Apple merge with the electric-car maker  – but don’t count Berkshire Hathaway Chairman and CEO Warren Buffett among them.

The Oracle of Omaha, who is the second-largest holder of Apple shares with a stake worth about $56 billion, said he’d support with CEO Tim Cook does, but that it would a “very poor idea” to enter the auto business.

And the billionaire investor would know: Along with his friend and longtime Berkshire partner Charlie Munger, Buffett invested heavily in BYD, one of China’s largest manufacturers of electric cars. Berkshire owns about 8 percent of BYD.

“It’s not an easy business,” Buffett said. “You can win in auto one year and lose the next. You’ve got a dozen big companies out there with resources. They’re going to keep coming. They’re going to copy what you do.”

Apple has already been investing in its own self-driving car project, dubbed “Project Titan,” for years. The project, which reportedly launched in 2014, grew to include more than 1,000 engineers -- many of whom it hired from Tesla.

Ticker Security Last Change Change %
AAPL APPLE INC. 190.29 +0.30 +0.16%
TSLA TESLA INC. 176.19 -0.56 -0.32%
BRK.A BERKSHIRE HATHAWAY INC. 608,816.00 -184.00 -0.03%

Tesla has presented a number of challenges for Musk: The company routinely loses money and is burning through cash as it ramps up production of its Model 3 sedan, a less-expensive electric car it hopes appeals to the mass market. A large number of investors known as short-sellers have also bet against the company.

In a blog post, venture capitalist Gene Munster wrote that if Tesla fails to reach profitability next year, Apple will gain the upper hand and become the most likely investor or buyer. But, Munster acknowledged an outright sale is unlikely to occur unless 83 percent of Tesla’s shareholders -- which excludes Musk -- vote for a sale.

It’s fun to talk about Apple buying Tesla, but we don’t think Tesla is for sale,” he wrote.