Berkshire Hathaway, an early investor in BYD, has continued to trim its stake in China’s biggest electric vehicle maker. Warren Buffett’s conglomerate recently sold an additional 1.3 million Hong Kong-listed shares of BYD for $39.8 million, reducing its holding to 6.9% from 7%. Berkshire initially purchased about 225 million shares of BYD in 2008 for around $230 million, a decision that proved to be highly lucrative as the electric vehicle market saw explosive growth in China and beyond. Despite the recent sales, Berkshire remains a significant investor in BYD.
Berkshire Hathaway had previously sold half of its BYD holding through sales in 2022 and 2023 after the company’s stock price skyrocketed nearly 600% to a record high in April 2022 from the start of 2008. Hong Kong’s regulations only require a filing when a stake percentage crosses a whole number, so if Berkshire’s holding falls below 6%, another filing will be necessary. The conglomerate’s decision to trim its stake in BYD may be part of a larger portfolio management strategy or a response to changes in the electric vehicle market.
BYD, founded by Wang Chuanfu, initially focused on making batteries for mobile phones in the 1990s before shifting to the production of automobiles in 2003. Since then, the company has become the top car brand in China and a major producer of electric vehicle batteries. In the fourth quarter of 2023, BYD surpassed Tesla to become the world’s leading electric vehicle maker, selling more battery-powered vehicles than its U.S. rival. This milestone reflects the rapid growth and success of BYD in the global electric vehicle market.
Warren Buffett attributed much of Berkshire Hathaway’s success in investing in BYD to the late Charlie Munger, the vice chairman of Berkshire. In 2010, Buffett stated that Munger “deserves 100 percent of the credit for BYD.” Munger’s introduction to BYD came through his friend Li Lu, who founded Seattle-based asset manager Himalaya Capital. Munger’s influence and vision played a significant role in Berkshire’s decision to invest in BYD, ultimately leading to substantial returns for the conglomerate.
The decision to reduce its stake in BYD does not diminish the impact of Berkshire Hathaway’s initial investment in the company. With roots in battery production for mobile phones and a successful transition to electric vehicles, BYD has become a prominent player in the global electric vehicle market, surpassing competitors like Tesla in key metrics. Berkshire’s ongoing involvement in BYD reflects its long-term investment strategy and commitment to identifying opportunities for growth and profitability in emerging industries.
As Berkshire Hathaway continues to adjust its investment portfolio, the sale of additional BYD shares may signal a shift in the conglomerate’s priorities or a response to changing market conditions. Despite the reduction in its stake, Berkshire’s history with BYD and the contributions of individuals like Charlie Munger underscore the importance of strategic partnerships and visionary leadership in successful investing. The evolution of BYD from a battery manufacturer to a leading electric vehicle maker highlights the potential for innovation and growth in the global automotive industry.
