Warren Buffett’s Berkshire Hathaway has once again cut its substantial holding in Tesla rival BYD amid intensifying tensions over Chinese-made electric vehicles, The Globe and Mail reported.
Stake reduced to 6.9%
The American multinational conglomerate holding company reportedly sold another 1.35 million Hong Kong-listed BYD shares on June 11.
The sales dropped Berkshire Hathaway’s stake in BYD from 7.02% to 6.9%, according to the filing released on Monday.
The sale valuation was reportedly 310.5 million Hong Kong dollars ($40 million).
It marks Berkshire Hathaway’s first significant sale of BYD shares in ten months and 14th since August 2022.
In hindsight, BYD shares hit a record high of HK$331.4 (around 41 times the price Berkshire had paid originally) in June of the same year. Since then, Berkshire has sold portions of its shares in BYD.
So far, Berkshire has sold approximately 149 million BYD shares.
Intensifying trade war
China has dominated the global electric vehicle market owing to substantial government support through policies and subsidies.
However, the surge of China-made EVs in foreign markets has prompted a trade war against the world’s largest auto market and its Western trading partners.
In 2023, Buffet asserted that it is “imperative” for the US and China to settle their disputes and “get along with each other.”
Despite the legendary investor’s advice, the US government has still imposed a major tariff hike from 25% to 100% against Chinese EVs.
Europe also announced additional tariffs on Chinese EV imports due to Beijing’s unfair support for automakers that undercut European players. BYD will endure a tariff of 17.4% on top of the EU’s existing 10% duty on car imports.
‘Right’ investment in BYD
Berkshire Hathaway invested $230 million in acquiring BYD shares at an average of HK$8 ($1.02) apiece in 2008. BYD’s share price had declined at the time due to the global financial crisis.
This major investment has emerged as one of Berkshire Hathaway’s most profitable ever.
As mentioned, Berkshire started to sell BYD shares in June 2022, when it achieved a record high of HK$331.4.
Despite the selling spree, Berkshire Hathaway still has 75.7 million Hong Kong-listed BYD shares or about 17.6 billion Hong Kong dollars ($2.3 billion) by Tuesday.
