Berkshire Hathaway, an early investor in BYD thanks to Charlie Munger, has continued to trim its stake in China’s biggest electric vehicle maker. The 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 around 225 million shares of BYD in 2008 for approximately $230 million, a bet that proved to be lucrative as the EV market experienced significant growth.
Berkshire Hathaway had already sold half of its holding in BYD through sales in 2022 and 2023 after the company’s stock price skyrocketed nearly 600% to a record high in April 2022. Under Hong Kong’s regulations, a filing is required only when a stake percentage crosses a whole number, so if Berkshire’s stake falls below 6%, another filing will be necessary. The influence of Charlie Munger, the late vice chairman of Berkshire, played a significant role in the conglomerate’s investment in BYD.
Founded by Wang Chuanfu, BYD initially began manufacturing batteries for mobile phones in the 1990s before pivoting to autos in 2003. The company has since become the top car brand in China and a major producer of EV batteries. In the fourth quarter of 2023, BYD surpassed Tesla as the world’s leading EV maker, selling more battery-powered vehicles than its U.S. rival. Warren Buffett credited Charlie Munger with deserving “100 percent of the credit for BYD,” as Munger was introduced to the company by his friend Li Lu, founder of Himalaya Capital.
Despite its continued divestment, Berkshire Hathaway’s history with BYD showcases its success in the electric vehicle industry. The initial investment in BYD in 2008 has proven to be a lucrative one, as the company’s growth in the EV market has outpaced expectations. The sale of additional shares by Berkshire Hathaway is a strategic decision based on market conditions and the conglomerate’s investment strategy, rather than a lack of confidence in the company’s future prospects.
As BYD continues to expand its presence in the electric vehicle market, its success has been attributed to its early adoption of EV technology and its competitive position in China. The company’s focus on innovation and its ability to stay ahead of competitors have allowed it to surpass Tesla as the world’s top EV maker. Despite Berkshire Hathaway’s decrease in ownership, BYD’s performance and market position indicate a bright future for the company in the rapidly growing electric vehicle industry. Charlie Munger’s influence and foresight in leading Berkshire Hathaway’s investment in BYD have played a crucial role in the conglomerate’s success in the EV sector.
