3 Reasons Warren Buffett Doesn’t Own Tesla Stock

3 Reasons Warren Buffett Doesn’t Own Tesla Stock — Should You Invest?

Chris Ozarowski

Sat, Mar 22, 2025, 5:01 AM 4 min read

Warren Buffett, through Berkshire Hathaway, has favored certain types of investments for decades. Despite Tesla’s high profile, the billionaire investor has shown little interest in holding shares of Elon Musk’s electric carmaker. Tesla, meanwhile, has made headlines in 2025 for a range of developments, including price cuts, Chinese competition and questions about its long-term direction.

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Buffett’s approach to value investing and Tesla’s unique risks might help explain why Berkshire does not have a stake in the automaker.

Warren Buffett vs. Tesla Stock

The “Oracle of Omaha” often cites a few key qualities when evaluating stocks: a durable competitive advantage, reliable and capable leadership, and consistent returns on invested capital. The Tesla brand has had a loyal following, though that has declined somewhat recently. The company also faces intensifying competition that may threaten its long-term advantage. Meanwhile, Musk’s leadership style is seen by many as unpredictable, and the company’s returns on invested capital have varied, noted NBC News.

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Musk has publicly suggested that Buffett should invest in Tesla, and while Buffett has not commented on Musk’s invitation, he has indicated in the past that auto manufacturing is a difficult industry with global competition. In 2024, according to MarketWatch, he noted that Berkshire “only swings at pitches we like.”

Berkshire has shown some willingness to invest in electric vehicles, but mainly overseas. In 2008, it took a position in Chinese EV maker BYD, and it still holds a portion of that stake, according to Reuters. BYD’s market success and cost advantages in Asia may match Buffett’s emphasis on strong fundamentals.

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Tesla Stock Has Had a Rough Year

Tesla’s stock has had a turbulent 2025. While it remains up over the past 12 months, it is down significantly year to date. Some analysts attribute that drop to increased competition, particularly from Chinese rivals such as BYD, which has expanded in Europe. Others point to rising concerns about Tesla’s brand amid Musk’s political statements and public ties to the current White House administration under President Donald Trump.

Sales data reveals that Tesla’s deliveries in China decreased in recent months, possibly due to changing consumer sentiment and a growing presence of domestic EV makers. In Europe, Tesla’s sales have also softened. The company has responded by lowering prices on certain models in multiple regions, with such tactics sparking talk of a “price war” in electric vehicles.

Tesla is attempting to broaden its capabilities in areas like autonomous driving and energy storage. Some analysts claim that these initiatives justify a premium valuation, while skeptics question whether self-driving technology or battery-scale projects can deliver near-term results. Meanwhile, concerns exist that Tesla’s heavy spending on new products and factories could weigh on profitability if sales growth slows.

Should You Invest in Tesla?

On the upside, Tesla retains a strong position in the EV market, especially in North America, according to CarEdge. It also has an established charging network in the U.S. and abroad that gives it a leg up on competitors.

However, the main issue is that Tesla’s stock price is incredibly overvalued when compared to its earnings. While a regular car company like BMW had a price-to-earnings ratio of 7.13 (as of March 20), and a tech company like Apple has a price-to-earnings ratio of 33.98, Tesla’s PE ratio is 115.81. This means that at current valuations, investors have been expecting a massive amount of earnings growth in the next few years. As the data begins to show that growth is no longer likely and that sales are declining, however, Tesla’s stock price may continue to decline as investors lose confidence in the company’s future.

Tesla faces intensifying competition across the globe, from both well-funded automakers and newer Chinese entrants that often undercut Tesla on price. Musk’s political interventions have led to boycotts and protests in some regions. Questions also persist about Tesla’s autonomous-driving features and whether they can meet safety and regulatory hurdles in the near term.

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