About a year ago, BYD passed Tesla as the world’s largest electric vehicle (EV) company. Warren Buffett took a 10% ownership stake in BYD in 2008. It is another example of why Buffett is the world’s smartest investor, as the stock is up over 3,800% since he bought in. Recently, Buffett sold the last of the BYD shares he owned.
The investment was made by a unit of Berkshire Hathaway called Berkshire Hathaway Energy. Buffett has slowly been selling shares since 2021. He paid $225 million for his initial stake.
BYD’s primary reason for success is its share in China, which is the world’s largest EV market by far. About 69% of global EV sales are in China, based on late 2024 numbers.
BYD tops China’s EV sales with about one-third of all unit sales in the country. Tesla ranks third at 6%. The market is extremely crowded. Seven companies have a market share of 2% or more.
Buffett is getting out at the right time. There are about 100 EV brands in China, a number made possible by significant investment from the central government. Going forward, though, the survival rate among these companies will be low. Some of the increase in China’s EV sales is based on aggressive discounts. Some Chinese manufacturers take months to pay suppliers because of low cash positions. Even the government has warned that the number of companies and discounting is too high.
More BYD Headwinds
BYD faces problems beyond competition in China. It is in the midst of global expansion. However, some large markets, including the United States, have partially or completely blocked its sales. BYD expects more than half its sales to come from outside China by 2030. The goal may be hard to reach.
BYD’s early expansion has been into southern Asia. Its next big push has been into Latin America. The BYD Shenzhen, the world’s largest car container ship, is used to send thousands of cars to areas in Argentina and Peru.
The European Union has tried to protect its legacy car companies from BYD as they ramp up their own EV businesses. It has a plant in Hungary and will put another one in Turkey. Tariffs in the EU are as high as 35%.
The United States has blocked BYD completely with 100% tariffs. GM and Ford have expressed anxiety about Chinese EV imports because companies like BYD can make EVs much more cheaply than U.S. cars made in U.S. factories. Ford CEO Jim Farley recently said that the quality of Chinese EVs is better than those made by U.S. companies. He described Chinese EVs as an “existential threat” to Ford. For that reason, the government is unlikely to let Chinese EVs through the U.S. door.
Buffett has sold BYD just as its competition has become tougher. He appears to be right about another in his long string of public company ownership.
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