Tesla Is Going to Embarrass Warren Buffett

If you typically follow legendary investor Warren Buffett and pursue some of his investments, this is one you should pass on. Here’s why...

Editor’s Note: This week we are taking a special look back at some of the great articles our editors wrote in 2017. I hope you enjoy these hand-selected articles and are able to use the wisdom to take control of our wealth in 2018. — Jocelynn Smith, Senior Managing Editor

“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.


Now it’s just another gas station along the Interstate 40/Interstate 85 corridor in the middle of North Carolina.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, Warren Buffett is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

Warren Buffett: The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? Warren Buffett is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Warren Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Warren Buffett on. And I don’t say that often.


Chad Shoop, CMT
Editor, Automatic Profits Alert

  • The future is not electric, at least not for many decades after Warren and Chad have turned into fossils.

  • Will Bradley

    stations make pennies per gallons on fuel. I don’t think this will affect the bottom line much.

  • Eloy Marquez

    what about having the cheapest gas for how longer it will stay and the best charging stations for electric semi-trucks??? 🙂 throw some food, coffee, restrooms, showers or what ever you expect in a gas station, then its an amazing deal!

  • jim wood

    Why couldn’t gas stations offer both electric and gas for their customers….?

  • TRex

    With Travel Centers, Buffett has three vital commodities: (1) Land and real estate on which to put up hotels, park cars and semis either fuelling-up or powering-up (2) These locations also now support restaurants which can be upgraded or variety added (2) Rooftops provide locations for solar panels or windfarms to charge massive batteries for powering-up at night; (3) Many Pilot locations are adjacent or close to natural gas lines for the upcoming compressed natgas (CNG) trade (80% of Thailand’s heavy over-the-road trucking (the equivalent of our 18-wheelers) are powered by CNG. Looks like a money-maker to me. Great investment Warren -if you got it at a good price.

  • Abalama

    BRK bought into Johns-Manville after they settled the asbestos lawsuits.

    This could be a similar buy for BRK following Pilot-Flying J settling the rebate scandal.

    Also, Pilot-FlyingJ’s are mostly located along interstate highways, where a large portion of their business is from long-distance travelers. Muskmobiles tend to stay close to home.

  • Abalama

    Pilot operates the 4th largest tanker fleet in USA, delivering over 8 billion gallons of fuel per year. That’s a lot of pennies. At just one penny per gallon, that’s 2,755 tons of pennies, or about 120 tractor-trailer loads.

    Think about a truckload of pennies going into your coffers every three days in perpetuity.

  • ALDIS Brozovskis

    If all the cars and trucks become Electric, we will have to re-start those Coal and Nuclear Power Plants because
    the Sun will not provide enough electricity thru your Solar Panels for them all !

  • disqus_KxAHnCo4Tu

    actually…..enough sunpower falls on the earth each day, to power all the world for one year. I forget how many terrawats of power that is but you can look it up. Elon Musk has said in interviews, he did not get in to the electric car business to build a car…his purpose was to reduce the cost of solar power. He has done it. By building millions of Tesla car batteries he uses them for his cars, sells them to other car makers and sells them in the Power Wall application…he lowers the cost of the batteries by economies in scale of production.. He also has iterations of the same product as car batteries, Power Walls and as storage batteries for homes and businesses. He is using Mass Production to lower his costs to increase his footprint in the market place..So there will be enough solar cars and batteries to not only power all the cars but homes businesses and buildings. We don;t need coal nor nuclear plants for electricity. Power companies see the writing on the wall and ar building solar collecting farms to add to their power on the electricity grid. IF you think nuclear power is the way to go I advise you to re read history and study Three Mile Island, Chernobyl and Fukushima power plants. Actually Fukushima is not finished and it has been 5 years,,,and its still leaing nuclear waste….Clean solar will be the savior of the world.

  • Iamnot dumb

    heeeeeeere we go… Pilot J (Power Jug)… come come my travelin’ beasts, reElectronize, reFuel, reLax, reSUME trip. …on-the-go power-packs! we have it all, camping-pack, road-pack, construction pack, party pack, mule pack, …

  • Iamnot dumb

    huhhh… someone planning to cover mother Earth with a second skin of solar panels? spot ‘treed’ with loud annoying bird killin’ wind turbines!? where will I find grass for me puppies?

  • Ryan Jack

    Warren invested into CHINA BYD a decade ago. Get ready to see charging way stations and the real ability to take an electric vehicle across america, sounds like the jelly to teslas peanut butter.

  • Steen Brüel

    Spot on – the future looks bright – maybe not for the most conservative of carbon-heads, but then again, who´ll ever mis them?