Warren Buffett (left) and Elon Musk (right)Alex Wong/Getty, Reuters/Rebecca Cook
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Berkshire Hathaway reduced its stake in Chinese electric vehicle maker BYD to less than 10%.
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The sale comes as Warren Buffett and Charlie Munger said they do not want to compete against Elon Musk.
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“We don’t want that much failure.” Munger said.
Berkshire Hathaway last week reduced its stake in Chinese electric vehicle maker BYD for the 11th time in less than a year.
Warren Buffett and Charlie Munger said they don’t want to compete with Elon Musk.
Berkshire sold nearly 2 million shares and now owns just under 10% of BYD, which rivals Tesla as the world’s biggest EV maker. Berkshire’s current BYD stake is worth more than $3 billion.
The date for the BYD sale was May 2, according to regulatory filings, after Buffett and Munger said at Berkshire’s annual shareholder meeting that they did not want to compete against Elon Musk.
“We don’t want to compete with Elon on a lot of things,” Buffett said Saturday. Munger quickly added to Buffett’s comment, “We don’t want that much failure.”
The remarks came in response to a question on whether the two investors believe Elon Musk is undervalued. The pair responded that while Musk may have underestimated himself, he is incredibly talented and a “brilliant mind” who has achieved so much success, probably because he underestimated himself.
Munger said, “If he had not striven for unreasonably high aims he would not have achieved what he has in life. He likes to do the impossible and does it.”
Berkshire originally bought its BYD stake in 2008 for just $232 million. At the end of 2021, Berkshire owned about 21% of BYD, worth more than $7 billion at its peak last year, according to a Hong Kong regulatory filing.
Despite the veteran pair’s comments, it hasn’t been explained exactly why Berkshire is selling its stake in BYD, and competition with Musk’s Tesla could be one of several factors.
Berkshire’s stake in BYD has grown significantly and the conglomerate can only take profits to reinvest cash elsewhere, like Occidental Petroleum.
Buffett has also highlighted rising geopolitical tensions between China and Taiwan, which led him to sell his stake in Taiwan Semiconductor just months after buying it. Those geopolitical risks could extend to Chinese auto makers like BYD.
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