Berkshire Hathaway and BYD are both successful companies renowned in their market. Due to their huge market dominance, they have captured the attention of investors and business leaders from around the world. Both Berkshire Hathaway and BYD are multinational conglomerates which specialize in different fields. However, they have been involved in business with each other for over two decades now. Throughout the years, BYD has continued to increase in value much to the content of its shareholders. Berkshire Hathaway, the insurance giant led by famous billionaire Warren Buffett is also a major shareholder in the Chinese electric vehicle manufacturer, BYD. Both the companies have made it to the headlines after Berkshire Hathaway sold a portion of their shares in the company. The shares sold were worth about 58.9 million USD.
About Berkshire Hathaway:
Berkshire Hathaway which was founded in 1839 as a textile manufacturing firm was later transformed into a holding company with Warren Buffett at its top. Over a century in the future, Berkshire Hathaway is now a diversified holding company with a wide range of subsidiaries. Companies owned by Berkshire Hathaway include Geico, Duracell, Dairy Queen, and BNSF Railway just to name a few. With a market capitalization worth over $640 billion, the company is considered to be one of the most successful investment firms of all time.
BYD was founded over two decades back in 1995. Earlier the company which limited to manufacturing and supplying batteries has since grown into one of the largest electric vehicle manufacturers in the world. The company’s name BYD or ‘Build Your Dreams’ reflects its aim to create innovative solutions to make transportation sustainable and reduce energy consumption. Unlike many other electric vehicle manufacturers, Build Your Dreams has extended its manufacturing to not only cars but also buses, and trucks. The brand has not at all limited itself to the automobile sector and also manufacturers solar panels and provides feasible energy storage solutions. The company is headquartered in Shenzhen, China and has a market capitalization of over $115 billion.
Credits: Car Trade
Berkshire Hathaway’s Stake in BYD:
In 2008, the Warren Buffett led investment firm purchased close to a 10% stake in the electric vehicle manufacturer for about $232 million. This marked a significant investment for Berkshire Hathaway who as it marked the beginning of their ventures in the Chinese market. Since then, the investment company has been selling small portions of the shares that it owns in BYD. Recently, Berkshire Hathaway and BYD have both made headlines following the sale of shares worth about $58.9 billion which Berkshire owned in BYD. While this sale clearly reduces Berkshire Hathaway’s stake in BYD, the company still holds a significant amount of shares in the Chinese company.
What Does This Sale Mean for BYD?
Although the sale of shares has raised some questions about the future prospects of the Chinese company. However, it’s important to view this transaction with regards to the overall investment strategy of Berkshire Hathaway. It is possible that the sale was not related to BYD’s performance or future growth. It might be a step taken to raise funds for other investments that the company might be planning. Moreover, the sale only represents a small portion of BYD’s total worth as well as Berkshire Hathaway’s stake in the company. Therefore, it is unlikely to have a significant impact on the company’s future performance.
Although the sale of shares by Berkshire Hathaway have raised eyebrows in the industry, the future prospects of the Chinese company look promising. The company has been rapidly expanding its electric vehicle production around the world and is on track to become one of the largest manufacturers of electric vehicles in the world. In the year 2022 alone, BYD sold over 500,000 electric vehicles. The company is expected to soon give tough competition to others in their industry including Musk led Tesla.