Buffett’s Berkshire Hathaway Reduces Stake In Chinese EV Maker BYD

Warren Buffett‘s Berkshire Hathaway, Inc. (NYSE:BRKA) has been steadily reducing its stake in Chinese EV maker BYD Co Ltd (OTC:BYDDY) (OTC:BYDDF), sparking speculation of a divergence in investment strategies between Buffett and his deputy, Charlie Munger.

The latest sale involved Berkshire offloading around 2.53 million Hong Kong-listed shares of BYD valued at $86.3 million, Reuters reported. This transaction took place on June 19, and Berkshire’s stake now stands at 8.98%.

“It’s imperative that both U.S. and China understand what the game is and both can’t push too hard, but both can prosper,” said Buffett.

This follows a previous sale in May when Berkshire sold 1.96 million BYD shares for $59 million, lowering its holding below 10%. It is reported that Berkshire has cut its BYD stake by half since August 2022, amidst a price war among Chinese EV makers.

Berkshire first invested in BYD in 2008, purchasing 225 million shares valued at $230 million. Over the years, BYD’s stock has experienced significant growth.

Munger has consistently expressed support for BYD and its CEO, Wang Chunafu. At Daily Journal’s annual meeting in February, Munger praised BYD, stating that it was one of the best things he has done at Berkshire. He said he preferred BYD to Tesla, Inc (NASDAQ:TSLA), highlighting BYD’s ability to maintain prices in China without cutting, unlike Tesla.

Reports suggest that Buffett’s recent divestment from BYD reflects his cautious approach to the automotive industry. 

At Berkshire’s annual shareholder meeting in May, Buffett expressed the challenges of the auto business and the difficulty of predicting long-term winners and losers.

It is worth noting that the sale of BYD shares may be a routine investment move by Berkshire to secure profits. Additionally, BYD’s diversified production of plug-in hybrids and EVs sets it apart from Tesla.

BYD’s sales figures demonstrate its strong performance, with 488,614 BEVs and 507,862 PHEVs sold in the first five months of this year, totaling 996,476 new energy vehicle sales, a 98% YoY increase.

BYD has stated they’re taking a cautious approach to selling EVs in the United States, but hasn’t articulated its global ambitions.

“BYD is taking a cautious approach to the U.S.,” said a BYD spokesperson. “Think about all the U.S.-China political tensions and then think about the craziness of the whole world now. You don’t want to jump into a big mess.”

China has been one of the biggest sellers in EV cars with the presence of Tesla’s Shanghai factory.

Produced in association with Benzinga

Edited by Alberto Arellano and Joseph Hammond