Monday, April 13, 2009

Better Batteries: General Electric, A123 and the Power Grid. Plus Warren Buffett Does a Drive-by (Charlie too!)

From Environmental Capital:
General Electric is pouring another $15 million into battery maker A123 Systems, the seventh time GE has put money into the MIT offshoot. The investment, part of a spate of recent activity by GE Energy Financial Services, has as much to do with the future of electricity as with the future of automation.

A123 has been in the news lately because it makes batteries for hybrid and electric cars—Chrysler, for instance, just picked A123 as its battery supplier for its slate of electric vehicles. The $69 million invested by GE and others will let A123 expand factories to ramp up production of auto batteries....
...The quest for energy-storage solutions is one reason that Warren Buffet invested $230 million last year in Chinese battery maker BYD; the investment was made by MidAmerican Energy Holdings, a power company in the Berkshire Hathaway stable....MORE
Here's Fortune on Mr. Buffett and BYD:
Warren Buffett takes charge
Warren Buffett hasn't just seen the car of the future, he's sitting in the driver's seat. Why he's banking on an obscure Chinese electric car company and a CEO who - no joke - drinks his own battery fluid.

Warren Buffett with BYD's E6.
The car came straight to Omaha from the Detroit auto show.

Warren Buffett is famous for his rules of investing: When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact. You should invest in a business that even a fool can run, because someday a fool will. And perhaps most famously, Never invest in a business you cannot understand.

So when Buffett's friend and longtime partner in Berkshire Hathaway (BRKB), Charlie Munger, suggested early last year that they invest in BYD, an obscure Chinese battery, mobile phone, and electric car company, one might have predicted Buffett would cite rule No. 3 above. He is, after all, a man who shunned the booming U.S. tech industry during the 1990s.

But Buffett, who is 78, was intrigued by Munger's description of the entrepreneur behind BYD, a man named Wang Chuan-Fu, whom he had met through a mutual friend. "This guy," Munger tells Fortune, "is a combination of Thomas Edison and Jack Welch - something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it.">>>MORE

That is high praise from Mr. Munger. We are fans. From a post on Berkshire's investment in Goldman:

...In the meantime, use of the 'Search Blog' box for Buffett or Berkshire is good fun. Possibly rewarding too.
Or try 'Munger', not nearly as many results but not bad. The first hit is:

The 5 a.m. Buffett Breakfast Club
They’re rich. They’re cheerful. They’re morning people.
a few results later, the best senior management 'all purpose turn-around' I've ever seen:
"Think about it a little more and you will agree with me because you're smart and I'm right."
-Charlie Munger, Vice-Chairman, Berkshire Hathaway