Berkshire Hathaway further reduces BYD stake

Warren Buffett’s Berkshire Hathaway has further reduced its stake in Build Your Dreams (BYD), the Chinese electric vehicle giant. On June 11, 2024, the multinational conglomerate sold 1.35 million Hong Kong-listed shares of BYD, trimming its stake to 6.9% from 7.02%. The sale was valued at approximately $40 million. This marks Berkshire’s first major sale of BYD shares in ten months and its 14th sale since August 2022. The latest sale occurred as tensions increased over inexpensive EV exports from China. BYD, China’s leading maker of electric vehicles, competes with Tesla to dominate the global EV market. However, the influx of low-cost models has sparked fears of another trade conflict with Western nations. The European Union recently imposed additional tariffs on EV imports from China, citing Beijing’s unfair support for its companies. BYD now faces an additional levy of 17.4% on top of the existing 10% duty on car imports imposed by the EU. These increased tariffs are expected to significantly impact Chinese manufacturers, given Europe’s importance as a key export market for them. In retaliation, Beijing has threatened countermeasures, including an anti-dumping investigation into pork imports from the EU. Trade tensions also flared between China and the United States over the same issue.

Buffett’s latest BYD share sale

In May, the Biden administration raised tariffs on EV imports from China to bolster American jobs and manufacturing. Buffett highlighted the importance of U.S.-China cooperation, emphasizing last year that it’s “imperative” for the two countries to resolve their differences. BYD, based in Shenzhen, has experienced an extraordinary ascent over the past three decades. At the end of last year, it surpassed Tesla as the world’s largest seller of electric vehicles. In 2008, Berkshire Hathaway invested $230 million in BYD shares at an average price of $1.02 per share. This investment turned out to be one of Berkshire’s most successful, with BYD shares reaching a record closing high of 331.4 Hong Kong dollars in June 2022. Since then, Berkshire has been gradually selling its BYD shares, with the first significant sale announced in August 2022. So far, Berkshire has sold about 149 million shares. Despite these sales, Berkshire still holds 75.7 million Hong Kong-listed shares of BYD, valued at around $2.3 billion as of Tuesday. Buffett recently acknowledged BYD at Berkshire’s 2024 annual meeting, crediting his late business partner, Charlie Munger, for the decision to invest in BYD. Munger “was right, big-time,” Buffett said. Berkshire Hathaway has not disclosed specific reasons for the continued sale of BYD shares, and the company did not immediately respond to a request for comment.