GM will soon loose all its subsidiaries-Buick, Cadillac, Chevrolet and GMC to a government backed company and in the process will shed its debts, dealerships, other brands and its former labor obligation.

What once belonged to General Motors would now compete with it in the open auto market. This is the curse of bankruptcy, and had GM not opted for it, even this ‘privilege’ wouldn’t have been available. Moving on from here, GM has a lot to achieve in order to gain firm footing, but the road ahead is tough and the once largest automobile manufacturer in the world, needs a lot of inspiration to reinvent itself.

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Warren Buffet is breaking his own rules.

The rules -

1. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.
2. You should invest in a business that even a fool can run, because someday a fool will.
3. And perhaps most famously, Never invest in a business you cannot understand.

Munger, 85-year old, vice chairman of Berkshire Hathway, advised Buffet, 78-year old, to take up the new venture and Buffet agreed, despite the fact I don’t think he knows Chinese or electric car technology. I may be wrong.

Buffet does, however, know the future. And, he may not have much left in his. Electric cars is what he is betting on for those who will take over his business. Hathway bought up 10% of BYD with an investment of $230 million.

BYD are the initials of the company’s Chinese name. It was started in 1995 in Shenzhen, China.

Wang, a chemist and government researcher raised $300,000 from relatives, rented about 2,000 square meters of space, and started making rechargeable batteries to compete with imports from Sony and Sanyo.

By the turn of the millennium, BYD had become one of the world’s largest cellphone battery makers. BYD makes mobile-phone handsets and parts for Motorola, Nokia, Sony Ericsson, and Samsung.

Wang went into the automobile business in 2003 by buying up an almost defunct Chinese state-owned car company. Though he knew almost nothing about making cars … well now, Warren Buffet is his friend. The BYD sedan called F3 is the bestselling sedan in China, beating out the Volkswagen Jetta and Toyota Corolla.

BYD has a plug-in electric car with a backup gasoline engine. The company is ahead of GM, Nissan, and Toyota.

And, did I say that Warren Buffet is interested?

Panasonic is planning to spend Y100 billion ($1billion+ depending on the yen rate) to develop eco-friendly energy technologies like rechargeable batteries and solar cells.

This plan is in align with the company’s desire to acquire Sanyo Electric for a sum close to $9 billion.

Sanyo’s strength is in rechargeable batteries (leader in Li-ion batteries) and solar cells (ranks 7th), which Panasonic considers as strategic areas.

“We needed to take drastic measures to secure growth amid a global economic downturn and structural changes in the electronics industry,” said Panasonic’s President, Fumio Ohtsubo.

When the two are combined it will create a giant manufacturer more competitive to ride out a worsening global downturn, with consolidated sales of more than 10 trillion yen, equal to Japan’s No 1 electronics and electrical machinery maker – Hitachi Ltd.

The Panasonic/Sanyo duo will also make for a powerful force in developing eco-friendly technologies, too.

Source: Nikkei (sub req)