The ethical investment boom

““ | September 3rd, 2017

By James Kynge

When a Warren Buffett owned company bought a stake in BYD, then a little-known Chinese car company, some sceptics were withering in their condemnation of the 2008 deal.

Car and Driver, an industry magazine, commented that it was “hard to take BYD seriously” because many of its cars seemed to be copies of older Japanese models, while their performance was lacklustre. “We drive faster in our driveways,” the magazine said.

But Mr Buffett, the celebrated US investor, is now more than vindicated. The Chinese company’s focus on electric cars and climate-friendly motoring is delivering on the promise concealed in its acronym — Build Your Dreams. Its shares are trading at roughly 21 times forward earnings, or 2.5 times the ratio when Mr Buffett bought in.

The deal stands as an example of how investing in renewable technologies can pay off. Since 2008, BYD has become the world’s leading manufacturer of electric vehicles, surpassing the wildly popular Tesla, and in electric vehicle batteries overtaking Panasonic.

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