Li Lu publicly discusses BYD for the first time, an introductory lesson on value investing (Part 1)

（Source: RMB Trading and Research）

On April 3, 2026, the official released video information. Li Lu, the founder of Capital and the main manager of the Munger family wealth, along with Li Qian, BYD’s Deputy Secretary to the Board and Chief Investment Officer, held an open dialogue, reviewing the full process of how the two parties came to know each other and the years of heavy positioning that have accompanied each other over the past 23 years.

This is the first time that Li Lu has publicly held a direct dialogue with BYD executives since he took a heavy position in BYD for 23 years. It is also the first time Li Lu has, in a public setting, dissected in such detail the entire process of his heavy-held stock. Rare public records! It is also the best example in the domestic value-investing community of this philosophy being put into practice and popularized.

The following is the dialogue transcript compiled by Xiao Ya.

Carefully select companies with distinct traits, then build a heavy position

Buy when BYD goes public, and hold until today

Li Qian: Mr. Li Lu, it’s been a long time. I’m very happy that today in Hong Kong you’re able to accept my invitation to do this interview. This is a very important interview, because over the years we’ve experienced many stories—between you and me, and even including me personally. It’s a rare chance to review and revisit everything.

For you, you’re not only an important investor, but also an old friend of ours. You have also been an important participant and witness in BYD’s development, the capital markets, and the company’s growth. You’ve also been one of the people advising on many key milestones. We’d like to take some time to整理 our thinking with you—review the past and look ahead to the future.

Do you remember when you first heard these three words, and what kind of setting it was in? When you learned about BYD, what was your first impression?

Li Lu: By my reckoning, it has been about 25 years.

In early 2000, I was reading a trade magazine—a technical publication. I came across a piece of news: a Chinese company had started making rechargeable battery products, for cellphone use. At that time, Motorola was the biggest cellphone company, flourishing. Based on the report in that magazine, it was using products from this Chinese company.

Of course, I didn’t pay too much attention to the name. But the fact that it was a Chinese company immediately caught my attention.

Because before that, I had just been studying an investment case: an American well-known battery company wanted to use lithium batteries to make rechargeable batteries. Back then, batteries were mostly disposable. Only a few Japanese companies could make rechargeable products.

So that really left an impression on me. I remembered the company.

Li Qian: That was 2000?

Li Lu: Yes. Then two years later, I found that this company started listing.

Then there were indeed reports that Motorola was using that company. I looked into it—turns out it was in the U.S., right there, and there was an office next to Motorola in Chicago. So I just called.

Li Qian: You’re too impressive.

Li Lu: The person who answered was Stella (Li Ke, Vice President).

At that time, I didn’t know she was that important. We chatted a bit. I was very interested in technical questions—very interested in how they solved the problem. She said, “That’s great. Our founder understands the technology really well. After our call, he will come to Chicago soon.” She said, “I can arrange for you to meet him.” I said, “That’s great.”

Not long after the call, Mr. Wang came.

Li Qian: Was that after the listing?

Li Lu: Yes. It was probably around autumn. I flew over. At that time, they arranged a time for him right before he left. We were in a small hotel near the airport. Originally, she had arranged for me to learn the situation—half an hour, maybe an hour. But the moment I met Mr. Wang, we hit it off. We talked for several hours, and I even forgot about the time. This was what truly made me understand BYD’s special qualities.

After that, very soon I decided to start truly understanding the company. After understanding it, we bought our first stake—now it has been 23 years. These shares are still held.

Li Qian: Of course. I’m very clear on that. Time flies. The company listed in July 2002. You probably met Mr. Wang in autumn, and soon after (you bought shares).

Li Lu: I founded the company in 1997. In 1998, the company began running operations. Back then, the scale was still quite small.

Li Qian: Probably your position was heavier. Compared with today, the amount isn’t big, but the allocation was still okay.

Li Lu: Yes.

Li Qian: My impression is that it was around 10 percentage points in allocation.

Li Lu: Yes, because our style is relatively concentrated in general, and we tend to hold for a long time—but we choose those more special companies.

What kinds of enterprises can succeed?

Use first-principles thinking to think about strategy

Use an engineer’s mindset to solve problems

Li Qian: I still remember it very clearly—you’re quite different from most investors. Later, when I accompanied Mr. Wang and you to meet more than a few times, someone like me with a financial background, every time I basically couldn’t插得上嘴. For an hour, even two hours, you and Mr. Wang kept discussing strategy, products, and technology. Financial numbers were only mentioned in passing to help us understand, mainly to understand the financial structure, not to be overly constrained by cold financial data.

This point has always made me感慨, and I’ve learned a lot. (It turns out) that real value investing should be this kind of process.

So what kind of impression did Mr. Wang leave on you at that time?

Li Lu: The impression was very deep. For these thirty-odd years, what I’ve been researching is what kind of enterprises can succeed and what kind will fail; the process of enterprise development, and the commercial history—none of this can be separated from the personal traits of these special entrepreneurs themselves.

In general, businesses are an extension of the founders—at least in the early days, that is the case, with very strong founder fingerprints.

From our first chat all the way to now, over twenty years have passed. Every year there has been very in-depth communication. In some fundamental respects, Mr. Wang has never changed over the years.

First, he is indeed original. Musk later used that term—first-principles thinking. I call it scientific thinking, physics-based thinking. Use first-principles thinking to think about strategic issues; use an engineer’s way of thinking to solve problems—focusing on implementation and execution.

At the same time, he has a steadfast will. He is not afraid of any hardship, and he also dares to succeed.

At the same time, regarding stakeholders in business—he always maintains a trustee spirit and a trustee’s responsibility. Whether it’s for shareholders and employees, or for dealers, or for customers—this kind of combination is actually very rare. It’s hard to find.

I was really surprised back then: before the company listed overall, he had never had VC. He promised shares to everyone, and those shares were essentially provided directly by him. Without VC, in reality there was no agency power. But his shares kept decreasing—always giving to everyone. This made it very easy for us to trust him, and together we could face all kinds of difficulties and challenges.

Over these twenty-plus years, we’ve experienced countless difficulties, countless challenges, and countless tough moments. But I have never doubted that our interests and the founder’s interests were completely aligned. All the different kinds of business in his companies are all kept within the same company—there is nothing outside. Before dividend distribution, besides a basic salary, he has no other income.

All his energy, all the company’s IP, all his creativity—everything is in the same place. Our interests with Mr. Wang are always on the same side, always together. Such a combination is truly extraordinary.

To think about strategic problems with first-principles thinking, solve practical problems with an engineer’s mindset—steadfast and never giving up—until success.

With the spirit and responsibility of a trustee, make everyone trust you, and be willing to walk with you across mountains and rivers—until success.

Entrepreneurs like this are scarce in any era. Once you find them, it’s worth cherishing for a lifetime.

Li Qian: You’ve got to lock onto him. It has to be him, right?

I also find it very moving. In my view, Mr. Wang is like a god—also a benefactor and guide who created personal life value for me in this lifetime.

But I’m also very moved. Back then, Mr. Wang was only 36 years old. And you were also 36.

Li Lu: We were born the same year, just two months apart.

Li Qian: So you two are both in the same birth year—both 36. Earlier you mentioned that actually, when it comes to the essence of business, it shows what Mr. Wang has seen through.

For example, regarding sharing—throughout the years, his incentives for the entire team and how he distributes interests have been very generous and fair, with long-term considerations. Because in the role I’m in around him, I know where Mr. Wang’s long-term considerations are. For all kinds of interest relationships across upstream and downstream, he is very clear about his responsibilities and commitment.

Second, he also has resilience, the ability to pursue in-depth research like an engineer, and an unbreakable spirit. That’s the core.

Li Lu: The first time I met him, I immediately felt those characteristics—the will, the determination, his ability to withstand pressure, and his trustee spirit. Then over time, I felt it more and more deeply.

But his first-principles way of thinking, and his ability to solve problems with an engineer’s approach—during our first long talk for a few hours, I was deeply impressed. And from start to finish, it has always been like that.

Li Qian: Mr. Wang’s personality is never satisfied.

Li Lu: Yes, yes.

Heavily positioned stocks: choose to grow in “the graveyard”

How investors use first-principles thinking to make decisions

Li Qian: When BYD listed in July 2002, we were only doing rechargeable battery products. It was also a small company—but it was a very distinctive company. And Mr. Wang was a distinctive entrepreneur.

But in early 2003, Mr. Wang dealt the capital market a big blow. Mr. Wang wanted to move into the auto industry, acquiring Qinchaang Auto. () The stock price then plummeted. The relationship between BYD and the capital market instantly fell to the freezing point that day. At that time, you were already an investor. What was your first reaction?

Li Lu: I didn’t have any special reaction. Because for someone who thinks with first-principles, his business has no boundaries. His boundaries are—don’t violate scientific principles, and don’t violate the basic principles of physics. You can do anything, as long as it doesn’t violate those. Then in execution, you need to use an engineer’s mindset.

So the question I cared most about was: how can he do that? Is this business a good one? What is his basic thinking? We kept communicating and learning continuously.

This industry itself is indeed a huge one. There’s no question about that. China companies have many advantages—also no question. But this is a particularly difficult business. It’s a well-known graveyard—one that has buried countless pioneers.

Li Qian: Back then, actually many Chinese companies went into autos and in the end were buried.

Li Lu: Including the acquisition of Qinchaang.

Li Qian: Qinchaang failed, right?

Li Lu: Yes. That was my basic reaction. I wanted to understand more about how to do it well—what different ways could be used.

Mr. Wang’s acquisition of the company was actually to make cars. But from the very beginning, in reality, he had already considered the development of batteries—there might be a future where they could support a bigger driving force. The development of lithium batteries itself had already started showing a curve. That curve, in the end, would allow them to become cheaper and have enough power to support a large carrier—cars. This is exactly what first-principles thinking leads to.

But this process would be very long to execute. It would require an engineer’s mindset to build it up step by step. His thinking was: first make and perfect traditional cars, and when the time is right—when the battery becomes mature—overlay it, so as to trigger change.

At that time, I was also in contact with Tesla (). Back then, Tesla was not yet fully in place; Elon Musk () was still an investor. The founder at that time was called Martin. They were also considering whether I should go as well. I had a few friends who were fairly big investors in that company; they also wanted me to join, so I was learning about the whole process.

It can be said that BYD () and Tesla were almost simultaneously exploring, in two different countries, the possibility of electric vehicles overturning traditional cars. Of course, in the end, history showed that these two companies truly guided this revolutionary change.

Why bring in Buffett to hold shares in 2008?

Li Qian: By 2005, BYD’s first car, the F3 fuel vehicle, came out. It basically made a big splash, using fuel cars to support BYD’s continued R&D investment in the entire electric vehicle ecosystem.

But honestly, at that time it was still walking on multiple legs. The batteries were still being developed, cars were being invested in, and component outsourcing/processing industries also started to rise.

From the balance sheet perspective, the burden was still very heavy. And R&D was a direction that Mr. Wang had always insisted on. At that point, in 2007—if we remember the balance sheet then—it should have reached a critical point like a rope stretched over the cliff.

I remember very clearly: they wanted you to do the contract manufacturing business, but they were afraid you wouldn’t be able to hold up. Under that background, we started the spin-off and listing.

For the spin-off and listing of BYD Electronics, at that time you were also supporting Mr. Wang—to split it off and raise funds.

Li Lu: Yes.

Li Qian: The spin-off was a painful process, but luckily for us, we were still confident that the world would definitely reward honest and hardworking people. At the end of 2007, we caught the last train—at the last second, we got onto the vehicle. It was December 2007.

Li Lu: Yes, we raised enough funds in the end.

Li Qian: We were able to raise HKD 6.7 billion. So when the 2008 financial crisis came, we still got through it smoothly, and we could also continue to massively invest in R&D.

To be frank, in 2008 we didn’t feel what people call “the winter of the financial crisis.”

And in 2008, we had another bright moment. In 2008, you introduced Buffett to invest in BYD. I want to ask you: why did you introduce Buffett to BYD? What were you thinking at the time? And why 2008—not 2007, and not 2009?

Li Lu: Our whole development process was that the boundaries kept expanding, and we kept redefining the boundaries of manufacturing. We did a lot during the process, but all of it was to enable us, during a transition period, to continue developing battery technology. Then we also needed to master the basic manufacturing capabilities for cars.

(We) were still thinking about it: one day, this industry would experience a revolutionary change in paradigms. At that time, we needed to be in the best possible state to do this. These things actually reinforced each other.

By the 2008–2009 financial crisis, we were positioned in a way that still looked okay. But from the perspective of the United States, the global economy was indeed facing the possibility of collapse. Including our stock price, and the stock prices of all companies, and the stock prices in the entire China market—we were truly in a relatively good position.

I’ve always hoped that during China’s development—especially in such a special kind of development—we can truly blaze a road no one before us has taken. We still need some special energy input.

If our R&D and if our manufacturing capabilities keep pushing forward, there will come a day when we are able to overturn the industry. To truly do that requires many, many boosts.

One very important boost is not only capital, but also reputation. Over these years, I’ve become relatively confident about Mr. Wang, the company, and our future development—building increasing confidence across all aspects. This has nothing to do with the stock price. It is completely related to value creation for the company itself.

Once I build such confidence, I also know we need some external assistance to keep moving forward. We need to do better in reputation. And the hardest hit for us at the time was actually reputation. If it collapsed at that moment, all our efforts and the company’s potential would be strangled in the cradle.

But by then, the company’s development had already possessed all the embryos needed to become revolutionaries—the embryos of an overturner. The external pressure from the outside, and our entire market’s perception—created a huge gap between the stock price and our actual capability. At this time, it also brought investors a very good opportunity. It was at this time that introducing an investor I trust and respect became value-possible.

Because over these years, Munger and I formed an investment partnership relationship back in 2003 and 2004. Since then, Munger has been my lifelong teacher and friend, as well as a business partner.

Through my fund, the Munger family already had at least 4 years of involvement by then. During this process, I also kept introducing BYD—its dream, its capabilities, the expanding margins it kept achieving, the opportunities it would face in the future, the situation it faced at the time, its intrinsic value, its stock price, and the other pressures. All of these formed common ground.

In 2008, the company also needed this kind of reputation boost. This was also a very good opportunity for investing—because price and value formed a huge gap. So this is a win-win situation.

In the 2008–2009 period, I started pushing this effort.

Of course, we were also very lucky. This eventually became possible. In a relatively short time, our company gained attention from the entire world. When it truly became capable of being an “overturner,” it already had this reputation. That reputation then helped our own capabilities reach key nodes, which led to a huge burst of growth. That allowed the company to step onto an extraordinary new level.

This is a win-win situation. For Berkshire, it’s a win-win. For BYD, it’s a win-win. And for China’s capital market, it’s also a win-win—so that the world for the first time learned that something miraculous, revolutionary, and technical is happening in China.

Li Qian: For me, this is a particularly amazing journey. When it first came to us that Buffett invested, when you brought that news to us, honestly, from inside my own heart, I felt, “How could this be? How could this be possible?”

Later, in Buffett’s speech at the shareholders’ meeting, he also highly praised Mr. Wang and our several team members. At that time, it was also highly confidential. Including me, only three or four people knew. During that more-than-a-month period, we didn’t hype it. Our stock price was very stable—no movement. And to a certain extent, that also reflects that this team is a team with professional ethics.

Li Lu: Yes.

Li Qian: After we confirmed everything on the agreed day, once we finished the call meeting, that evening I stayed up all night. I prepared the agreement and prepared for the press conference.

Then the next morning—because I had early agreed with a domestic securities firm that three or four dozen investors would come to do research and due diligence. I had stayed up all night, but I had promised them that I would receive them. The next day I still had to go and receive them.

Mr. Wang also called me and asked, “Is your health okay?” I said, “Mr. Wang, I’m fine. The agreement is basically finalized. We just need to make sure the stock price doesn’t move unusually on the day, and then the deal will be completed.”

Then I seriously received them. After they finished, for the next half hour they wanted to visit the factory. I told them, “Sorry, my colleague will take you to the factory. I still have an important matter to handle.”

As it turned out, that night, the news came out: Buffett invested. One of the investors—whoever it was—gave it to the reporter. The reporter wrote an article stating that during the reception, BYD’s Deputy Secretary to the Board, Li Qian, said, “I still have an important matter to receive.” It turned out that the important matter was that Buffett was investing in BYD.

We closed the day at 8.04 yuan, with a price of 8 yuan. That Monday when trading began at 16. Later it surged to 80. For me, this was one of the brightest moments in my life. And I also have to thank Mr. Li Lu—thank you for creating the opportunity.

Li Lu: No. It’s not just me—it’s both of us. It’s worth investing.

Li Qian: This is also a win-win—two-way commitment.

Li Lu: That’s right.

Li Qian: Munger has always evaluated you as well. His best investment is you. And in the entire circle of the capital markets, there’s no doubt that you are a Chinese investment giant. This is widely recognized, and it’s also what’s in my heart.

Li Lu: You flatter me.

Li Qian: This is also my psychological admiration for you, and my high recognition. Actually, I think what’s even more meaningful about this is that you’ve built a bridge between China and the West.

Exactly because of this investment, the link between China and the Western capital markets—especially a great investment firm like Berkshire, like Buffett—has been connected. And I believe the impact goes far beyond making money itself.

Even today, in our internationalization, we can finish the internationalization path that takes others 10 years or even decades in just two or three years overseas. In my view, this also has a close relationship with the shareholding investment at the time—helping BYD become well known around the world.

Today that we’ve reached a global presence, the capital markets around the world know BYD. There are many reasons. I believe this is also one of the important reasons.

(To be continued)

The following are 10 core points summarized by Yuangbao:

1. The core logic behind investing in BYD (the underlying reasons for a 23-year heavy position)

1. Long-term growth track + strong business model on both fronts

BYD is operating on a dual-track of an energy revolution and a transportation revolution—not merely making cars. The business model is “vertical integration across the whole industrial chain + a closed-loop of independent technological R&D.” From batteries, motors, and battery control systems to full vehicles and energy storage, the moat is extremely deep. This is what it determined as early as 2003—only full-chain in-house R&D can control costs, quality, and iteration over long cycles, and survive through different cycles.

2. Wang Chuanfu is an “unreplicable entrepreneur”

Wang Chuanfu combines a scientist’s depth in technology + an entrepreneur’s execution strength in business + a long-termist’s steadiness. He doesn’t chase short-term trends, and he doesn’t play capital games. Over 20-plus years, he has only focused on technology and manufacturing. Li Lu emphasizes: in the end, investing is investing in people. Wang Chuanfu’s focus, resilience, and belief in technology are BYD’s most core assets—without comparison.

3. Long-term adherence to the “anti-consensus”

When BYD entered the market in 2003, the market generally didn’t look favorably on Chinese automakers or electric vehicles. His judgment was: energy transition is a century-level trend for humanity. China has a complete manufacturing industry + an engineering talent dividend + a massive market scale. BYD is the only Chinese company capable of pushing “technology + manufacturing + scale” to the extreme. Short-term fluctuations don’t change the inevitability of the long term.

2. Judgments on BYD’s current stage and future

From the “technology validation phase” into the “scale realization + global expansion phase”

The past 20 years have been BYD building the foundation, completing the full chain, and refining technology. Now is the turning point where technology is fully implemented, global capacity is being rolled out, and the brand is breaking upward. With electric vehicles + energy storage as dual engines, the next 10 years will be the golden period for global share to keep rising and profitability quality to keep improving.

Energy storage is the next “multi-trillion-dollar” growth hotspot

Electric vehicles are the first half, while energy storage is the second half—and it has even greater space. BYD’s battery technology, manufacturing capabilities, and supply-chain advantages can be fully transferred to energy storage. In the future, energy storage business will run in parallel with electric vehicle business, becoming the company’s second growth curve.

Not chasing short-term stock prices—only looking at long-term value realization

He has never paid attention to short-term stock price fluctuations or market sentiment. He only tracks three core indicators: the speed of technology iteration, global market share, and the sustainability of profitability. BYD’s value should be assessed over a 10-year and 20-year horizon—short-term ups and downs are meaningless.

3. Deep, underlying understanding of the electric vehicle industry and investing

The endgame for electric vehicles: the winner is the survivor, and the full-chain player wins

In the end, only 3–5 giant firms will remain. Only companies that control core technologies (batteries / chips), manufacture across the full industrial chain, and have global channels will be able to live and make big money. Companies that rely on assembly or outsource core components will eventually be eliminated.

China automakers’ global advantage is a comprehensive barrier of “manufacturing + costs + iteration”

It’s not a single advantage. It’s a combination of an engineering talent dividend + a complete supply chain + extreme cost control + rapid technology iteration. BYD has taken this advantage to the extreme, something that overseas automakers cannot replicate in the short term.

The essence of investing: find “things that don’t change”

In a rapidly changing industry, you need to capture the long-term, unchanging underlying logic: humanity’s demand for cheaper, cleaner, and more convenient energy, and the demand for better tools for getting around—these are eternal. BYD has always been meeting this demand, so it won’t be wrong in the long run.

4. Personal perspective & advice for investors

5. Advice to ordinary investors: don’t chase hotspots, stay within your circle of competence, and hold long term

Don’t follow the herd to trade short term, and don’t trade frequently. Invest only in companies you truly understand and can understand for more than 10 years. After buying, be patient and accompany the company as it grows. Companies like BYD are suitable for long-term holding, not short-term speculation.

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