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TMTPOST -- Shares of Chinese electric vehicle maker BYD Co. fell 3% in Hong Kong on Monday following news that Warren Buffett』s Berkshire Hathaway had sold its remaining stake in the company, ending a 16-year investment that had delivered extraordinary returns.
Berkshire』s initial purchase of BYD shares in late 2008 was made through its Berkshire Hathaway Energy subsidiary. At the time, the company paid roughly $232 million, or just over $1 a share, for 225 million shares, representing about 25% of BYD』s Hong Kong-listed stock and roughly 9.9% of the automaker overall.
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Over the years, the holding became one of Berkshire』s most lucrative investments, with BYD shares climbing roughly 50-fold to trade around the equivalent of $50 on March 31, the last day of Berkshire』s final quarter as a shareholder. Adjusted for a three-for-one stock split in July, the shares have dropped about 16% since that peak.
An analysis by Business Insider estimated that Berkshire likely earned around $7 billion from the investment, roughly 30 times its original outlay. At its peak in June 2022, the stake was valued at $9 billion.
Buffett』s team had signaled their intention to exit years in advance, listing the entire stake on the Hong Kong Stock Exchange』s clearing system in July 2022. The company began gradually selling shares in August 2022 and had cut its holding by 76% by July 2024, at which point its stake fell below the 5% disclosure threshold.
Buffett, who has long favored long-term, buy-and-hold investing, explained in April 2023 that BYD』s soaring stock price and the potential for higher returns elsewhere motivated the gradual divestment.
BYD, now valued at over $130 billion, was worth less than $3 billion when Berkshire first invested. Buffett』s late business partner, Charlie Munger, who passed away in November 2023, called the BYD investment his 「greatest contribution」 to Berkshire. 「BYD is so much ahead of Tesla in China it』s almost ridiculous,」 Munger said, highlighting the intense competition between BYD and Elon Musk』s EV company.
The investment also marked a notable departure for Buffett and Munger, who typically focused on established U.S. companies in sectors such as insurance and consumer goods. Munger credited BYD』s founder and CEO Wang Chuanfu as a key reason for the investment.
At the time, Wang had already transformed BYD into a global leader in rechargeable lithium batteries and cellphone components. Munger described Wang as 「a combination of Thomas Edison and Jack Welch,」 praising both his technical ingenuity and operational execution.
Despite the historic gains, BYD』s stock has faced headwinds in recent months. Sales in July and August were flat compared to the same period last year, and profits have declined amid a Chinese government crackdown on EV discounting in the country』s highly competitive market. Analysts suggest that the company may no longer be in the high-growth phase it experienced between 2022 and 2024.
Lei Xing, an independent analyst covering China』s auto sector, said that BYD faces increasing pressure from rivals such as Geely and Leapmotor, which have launched affordable new models. He also expressed skepticism that BYD will meet its annual target of 5.5 million vehicles.
