Elon Musk dismissed BYD as a Tesla rival in 2011, ridiculing the design and quality of its vehicles.

Warren Buffett's Berkshire Hathaway has made a nearly 40-fold gain on the Chinese automaker's stock.Berkshire spent $232 million in 2008 for a stake valued at more than $9 billion today.

Elon Musk laughed out loud at BYD in 2011, three years after Warren Buffett's Berkshire Hathaway invested in the Chinese electric-vehicle company. Buffett may be the one chuckling now: Berkshire has notched an almost 40-fold gain on its wager so far.

"Have you seen their car?" Musk asked derisively in a Bloomberg interview. I don't think they have a great product. I don't think it's particularly attractive, the technology is not very strong, he continued, adding that the company was in deep trouble in China and focused on staying in business there.

BYD has clearly defied the Tesla CEO's expectations. Its revenues mushroomed by almost 10-fold to 211 billion Chinese yuan ($32 billion) between 2008 and 2021, helping to triple its net income to 3 billion yuan ($450 million) last year.

Moreover, the company's sales of electric and hybrid vehicles soared by 250% to a record 114,000 units in May, lifting its cumulative unit sales past the 2 million mark.

For comparison, Tesla generated nearly $54 billion in revenue and $5.5 billion in net income last year, and produced and delivered more than 300,000 vehicles last quarter.

Berkshire spent $232 million to buy 225 million of BYD's Hong Kong-listed shares in 2008. BYD's stock price has soared from the yuan equivalent of $1 to $40 since then, boosting the value of Berkshire's 7.7% stake to over $9 billion today.

BYD has benefited from the intense hype around electric-vehicle companies such as Tesla and Rivianduring the pandemic. Investors have sent the Chinese automaker's shares up more than seven-fold since the start of 2020, and 18% this year alone, raising its market capitalization to $138 billion.

Buffett, who mostly invests in US companies such as Apple and Coca-Cola, took a stake in BYD at the insistence of Charlie Munger, his business partner and Berkshire's vice-chairman. Munger convinced him by trumpeting BYD's CEO, Wang Chuanfu, as a combination of Thomas Edison, Henry Ford, and Bill Gates in one person, one of Munger's close friends recently revealed.

Musk may have changed his mind about BYD over the past decade. A senior BYD executive recently told Chinese state media that the company was preparing to supply batteries to Tesla soon, and described Wang and his team as "good friends" with Musk, Reuters reported earlier this month.

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