Warren Buffett Exits BYD: Is This Bad News for EV Investors?

Warren Buffett’s investment firm has fully divested its stake in the Chinese EV maker BYD. Doug and Lee break down what this might mean to the future of EVs.

Doug McIntyre: So Lee, Warren Buffett’s still the smartest investor in the universe. I mean, so he got into BYD, which is now the largest EV company. What was a stinking little company in 2008? He put in about $200 million and he got 10% of BYD. Which is now, oh, by the way, the largest EV company in the world. He just sold his last few shares in it earlier this year. So, let’s look at the trajectory he buys in when no one cares about EVs, right?

Lee Jackson: And remind our viewers why he bought BYD. Charlie Munger. Charlie Munger went, went to Buffet and said, “We gotta own this. We gotta own this Chinese technology and car company.”

Doug McIntyre: This was in the stone age of EVs. Fast forward, China then becomes the largest EV market in the world. BYD becomes the largest seller of EVs in China, and it starts to expand overseas. Mr. Buffet, again, may be looking over the horizon, sees that all of a sudden in China, sees BYD is going to be part of about a hundred other EV companies, right? It’s gonna be massive discounting. Their margins are gonna drop, their estimated unit sales are gonna drop. And it’s not been easy peasy to get into these foreign markets. So, Warren Buffett then also started selling about three years ago. What’s going on?

Lee Jackson: Well, he was, you know, he’s smart. When he does sell things, even when he sold Apple part of it at a while, he is not gonna throw the whole stack up there. You know, and, and, and he kinda legged out of it. But this last chunk, it was kind of interesting and, and one of the reports I read on this is that Buffet has become more and more and more concerned about the situation with China. How things are gonna evolve over there. Will they start to take over businesses? You know, put ’em all on some sort of corporate book for the state. But he just, I think he senses too much is going on in the geopolitical world to own a huge chunk of a Chinese car company.

Doug McIntyre: Well, whatever else you can say. He and Charlie got in at a time that was brilliant to get in. And he started to get out and is now out at a brilliant time not to be in the Chinese EV business.

Lee Jackson: Yeah, I think you’re right. And, and he’s got other issues to, to deal with, so I’m sure he wants to focus more on where value can be found. Now, I was a little surprised he didn’t buy some Boeing. You know, we talked about this about six months ago and I was a little surprised. You know, we know the other issues. He went after United and some other companies, but I was a little surprised that there wasn’t a Boeing pickup. But he still has a big pile of cash and it’s like 342 billion. So, maybe he’s waiting for a fall correction or a seasonal correction to, to, you know, get some other value plays.

Doug McIntyre: Or maybe another Boeing plane to crash.

Lee Jackson: Or that. Or that. So no more BYD and who knows? [00:14:00] He can’t buy Tesla, so maybe he’s out of the EV game

Doug McIntyre: For now.

Lee Jackson: Yeah.