Berkshire Hathaway shocked global investors when it sold its remaining stake in BYD, the Chinese electric vehicle giant. Warren Buffett and his team had first invested in BYD back in 2008, long before EVs became mainstream. Over the years, that bet turned into one of Berkshire’s most profitable investments in Asia. But now, with the final exit complete, the market is buzzing with questions. Why did Buffett sell? What does it signal about the future of EV stocks? And how should investors respond to this bold move?
This article dives into the details behind Berkshire’s exit, the immediate impact on BYD’s stock, and the broader implications for the electric vehicle industry.
Berkshire Hathaway’s Long Relationship With BYD
In 2008, Berkshire Hathaway invested $232 million in BYD, acquiring around 225 million shares. At the time, most analysts doubted the future of electric vehicles. But Buffett trusted Charlie Munger’s conviction that BYD had the right leadership, technology, and vision to disrupt the global auto industry.
That bet paid off. BYD’s shares surged more than 3,000% over the next decade as China’s push for green energy boosted demand. BYD grew into one of the world’s largest EV makers, surpassing even Tesla in sales in some quarters. Berkshire’s stake grew to a valuation of nearly $9 billion at its peak, making it one of the most successful foreign investments in China’s corporate history.
The Gradual Exit
Berkshire did not sell BYD in one shot. The firm began trimming its position in mid-2022. Every few months, filings revealed that Buffett’s team had sold another batch of shares. Each sale triggered speculation about Berkshire’s confidence in the Chinese EV market.
By September 2025, Berkshire sold its last remaining shares of BYD. This move marked the end of a 17-year relationship. While Berkshire never explained its decision publicly, analysts offered multiple reasons, ranging from valuation concerns to geopolitical risks.
Market Reaction: BYD Shares Slide
The news of Berkshire’s final exit spooked investors. BYD’s Hong Kong-listed shares dropped nearly 7% in a single day. Traders saw Berkshire’s complete withdrawal as a red flag. If the world’s most respected value investor decided to walk away, what did that say about BYD’s long-term prospects?
The selling pressure spread beyond BYD. Other Chinese EV stocks, including NIO, Li Auto, and XPeng, also faced declines as investors worried about broader sector risks. Even Tesla, though an American company, saw short-term volatility because of its heavy reliance on the Chinese market for growth.
Why Berkshire Might Have Sold
1. Valuation Concerns
BYD’s stock had climbed to record highs in 2022, giving it a valuation higher than many legacy automakers. Buffett follows a strict value-investing philosophy. Once a stock exceeds its intrinsic value, he prefers to cash out. BYD’s stretched multiples likely made Berkshire uneasy.
2. Geopolitical Tensions
U.S.-China tensions have worsened in recent years. Trade disputes, technology restrictions, and regulatory crackdowns in China increased the risk of holding Chinese stocks. Berkshire may have chosen to reduce exposure to this uncertainty.
3. Changing EV Landscape
Competition in the EV market has intensified. Tesla, BYD, and dozens of Chinese startups are fighting for market share. Margins are shrinking as companies engage in price wars. Berkshire may have anticipated slower profit growth for BYD in the future.
4. Portfolio Rebalancing
Berkshire manages hundreds of billions of dollars across industries. Selling BYD freed up billions in cash that Buffett can deploy into U.S. stocks, energy, or other sectors where he sees better long-term opportunities.
What It Means for BYD
BYD still remains a strong company. It sold over 3 million EVs in 2024, surpassing Tesla in global deliveries. Its vertical integration, which covers everything from batteries to chips, gives it a competitive advantage. And China’s push for electric mobility ensures that domestic demand will continue to grow.
But Berkshire’s exit delivers a psychological blow. Investors often see Buffett’s endorsement as a stamp of trust. His departure could weaken confidence, at least in the short term. BYD now faces the challenge of proving that it can sustain growth and profitability without Buffett’s backing.
Broader Implications for the EV Industry
1. Investor Caution in EV Stocks
Buffett’s exit may spark greater caution among institutional investors. EV valuations soared in recent years, often detached from earnings. Berkshire’s decision could serve as a wake-up call that not every EV stock will deliver long-term gains.
2. China’s Market Risks Under Spotlight
The move highlights the growing risks of investing in Chinese firms. Regulatory unpredictability, government intervention, and geopolitical friction can impact stock performance. Global investors may now favor Western EV makers despite higher prices.
3. Pressure on Tesla and Others
Tesla competes fiercely with BYD in China. If investors begin to doubt the strength of Chinese EV demand, Tesla could face collateral damage. Other U.S. automakers expanding in China may also feel pressure.
4. Shift Toward Battery and Energy Plays
Buffett’s strategy often leans on long-term infrastructure themes. While Berkshire exited BYD, it has invested heavily in energy companies. This suggests that Buffett sees more reliable growth in energy infrastructure than in competitive EV markets.
What Should Investors Do?
Investors should not panic, but they should reevaluate their EV exposure. Here are key takeaways:
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Focus on fundamentals. Look for EV companies with strong cash flow, sustainable margins, and technological advantages.
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Diversify globally. Don’t rely solely on Chinese EV stocks. Spread investments across U.S., European, and Asian players.
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Watch policy signals. Government subsidies, regulations, and trade policies play a huge role in EV growth. Monitor them closely.
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Consider battery and energy stocks. As EV adoption rises, battery manufacturers and renewable energy firms may deliver more stable returns than carmakers.
Conclusion
Berkshire Hathaway’s full exit from BYD marks the end of an era. Buffett proved once again that he knows when to enter and when to walk away. The move does not mean the EV industry will collapse, but it does remind investors that hype cannot replace fundamentals.
BYD must now stand on its own and prove it can maintain dominance in an increasingly crowded EV market. For global investors, Berkshire’s decision offers a valuable lesson: no matter how successful a stock looks, every investment has a cycle. Knowing when to get in—and when to get out—defines true investing wisdom.
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