Berkshire Hathaway and Warren Buffett Maybe Dumping Chinese BYD Shares

While Chinese new energy automaker BYD doesn’t execute any car sales in the United States, the company does have some interests here. In a financial context, Warren Buffett’s Berkshire Hathaway, a multinational holding company, might be dumping its considerable stake in the automaker. Read here about why Berkshire Hathaway would dump its stock and what it means for the auto industry.

Does Berkshire Hathaway own BYD?

Warren Buffett’s renowned multinational holding company, Berkshire Hathaway, owned 225 million shares in BYD, one of China’s major automakers and the country’s leading producer of “new energy” vehicles. However, Berkshire seems to have recently offloaded its considerable stake in the Chinese automaker. As a result, Berkshire Hathaway’s multi-billion dollar move has market implications beyond BYD. 

Warren Buffett's Berkshire Hathaway may dump all of its share in BYD.
An auto show features the Chinese automaker | Getty Images

Why is BYD stock falling?

Berkshire Hathaway’s dumping of its BYD stake caused a slump of nearly 12%, a seismic hit to the manufacturer. In addition to the market maneuvers, BYD has had to work around many Covid-related shutdowns in China. Still, BYD has managed to perform well given the government-mandated shutdowns. Last month, BYD was just off of Tesla’s pace for selling battery electric vehicles (BEVs); considering that the company doesn’t sell BEVs in the United States, that’s impressive.

CNN Business attributes the recent success of the Chinese manufacturer to its “vertical integrated supply chain.” That means the automaker has access to components essential to its operations that it would have to get from other sources. As a result, BYD can work around slowdowns like traditional supply chain follies and Covid-related shutdowns. BYD’s vertical integrated supply chain may also aid it in overcoming the slump after Berkshire dumped its stake in the automaker.

How much did Berkshire Hathaway invest in BYD shares?

Warren Buffett’s Berkshire Hathaway bought its stake in the Chinese manufacturer in 2008. According to Reuters, Buffett’s company owned 20.49 percent of the Chinese automaker’s total issued H shares, or the Hong Kong Stock Exchange-based shares of Chinese companies. In order to acquire that much of the company’s H shares, Berkshire had to shell out many millions of dollars. Still, now that Berkshire seems to be distancing itself from the automaker, BYD will no doubt be looking for more investments. 

BYD, like this car, took a beating after Warren Buffett's Berkshire Hathaway ditched its share.
A BYD F8 pretends it hasn’t shamelessly copied the fascia of a Mercedes-Benz SL | Stan Honda, AFP via Getty Images

Does Warren Buffett still own Berkshire Hathaway?

Warren Buffett runs the holding company Berkshire Hathaway. According to Forbes, Berkshire Hathaway owns more than sixty companies, including Geico and Duracell. Furthermore, Berkshire buys stakes in companies all over the world, like Apple

Is BYD going out of business?

Berkshire Hathaway’s move undoubtedly harmed BYD’s bottom line, especially considering the many issues contemporary automakers are facing. However, it is unlikely that BYD will go out of business. The company constitutes China’s number one producer of BEVs and plug-in hybrid electric vehicles (PHEVs). Considering the push to electrify the auto industry, the automaker will likely recover, if not receive assistance from the government. 

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