Berkshire Hathaway has apparently made good on its retreat from its investment in Chinese automaker BYD. It closes a spectacular 17-year partnership that in turn increased the value of its initial investment by more than 20 times. In 2008, Berkshire Hathaway doubled down by buying about 225 million new shares for $230 million. That investment got them a highly unusual, non-controlling 10% stake in the new company. As of March 2023, Warren Buffett’s firm has completed this strategic maneuver. This is a big deal, considering the company’s notoriously sporadic investment history.
Fast forward to today—BYD has transformed itself into one of the largest and most recognizable players in the global automotive landscape, especially in the electrification of vehicles. Berkshire Hathaway’s early faith in the startup has been well rewarded, with that initial stake growing to a valuation of $415 million by the end of 2024. The firm started off unloading its BYD shares in 2022. Yet by the end of March 2023, bankruptcy filings disclosed that value had fallen to zero for its entire investment. The significance of this exit extends beyond its dollar amount, as Berkshire Hathaway continues to re-evaluate its active portfolio in light of dramatic market shifts.
Li Yunfei, BYD’s general manager of branding and public relations, expressed gratitude towards Berkshire Hathaway for their support over the years. He acknowledged the significant role that the investment played in BYD’s growth, thanking the firm for its “investment, help and companionship over the past 17 years.” This comment highlights the deep, cooperative nature of the relationship between the two firms during their four year partnership.
In either case, BYD will be going out under difficult circumstances. Only three months ago, the company cut its annual sales goal by 16% — now targeting 4.6 million vehicles sold. This major change is an acknowledgment of the current, unfettered market pressures and competition in automotive. Through all of this, BYD remains a force in global electric vehicle production. The firm just continues to innovate and add to their repertoire.
Berkshire Hathaway’s energy subsidiary formally filed to finalize its exit from BYD. Despite this momentous shift, the company has still not responded to the multiple requests for comment regarding this big change. Berkshire Hathaway’s decision to sell its stake in BYD was a watershed moment for the company. It focuses on a new chapter of opportunity, boasting over the previous successful chapter in its investment history.