Sixteen years ago, Warren Buffett’s Berkshire Hathaway announced a $230 million investment in Chinese electric vehicle startup BYD, raising questions about the conglomerate’s unusual foray into early-stage technology. The bet turned out to be one of Berkshire’s most profitable, and its stake in BYD swelled to $8 billion at its peak as the EV market exploded in China and elsewhere. In recent years, Berkshire has been selling off its stake after making billions during the company’s rapid growth period. Berkshire reduced its stake in BYD to 5.99% as of June 19, down from 7% just days earlier, according to a filing with the Hong Kong Stock Exchange. Thank You to Munger The “Oracle of Omaha” said it was his late business partner Charlie Munger who persuaded him, who was famously averse to technology companies, to invest in Shenzhen-based BYD. Munger, who died in November at age 99, spoke highly of BYD’s founder and CEO, Wang Chuanfu, saying he came from a humble background but rose to fame through hard work and talent. “One of eight farmers’ children became a famous engineering professor and won China’s equivalent of the Nobel Prize before he was 50,” Munger said at Berkshire’s 2012 annual meeting. Buffett revealed that Munger had likened Wang’s genius to Thomas Edison and Bill Gates. “It’s a miracle” When Berkshire’s holdings of Hong Kong-traded BYD shares were first made public, Munger took great pains to explain to shareholders that BYD was not a fledgling venture capital firm, even though Wang Chuanfu, the company’s CEO, was only in his 40s at the time of Berkshire’s investment. “This is not some unproven, highly speculative play. This is nothing short of a miracle,” Munger said in 2009. He detailed BYD’s journey from making batteries for mobile phones in the 1990s to its eventual pivot to the automotive industry in 2003. The company has since become China’s top car brand and a major producer of EV batteries. “Starting from scratch, with very little capital, we were able to rapidly produce the single best-selling model in China,” Munger said. “And it beat out Chinese joint ventures with every major auto company in the world and technological marvels with far more capital.” In the fourth quarter of 2023, BYD finally overtook Tesla as the world’s top EV maker, selling more battery-powered cars than its Elon Musk-led rival. The late Berkshire vice chairman was introduced to BYD by his friend Li Lu, founder of Seattle-based asset management firm Himalaya Capital. Li had bought shares in the EV company for Munger’s family portfolio years before Berkshire invested. Mr. Munger was a longtime supporter of China, impressed by its rapid economic growth over the decades. “It’s just amazing how quickly the Chinese are learning things that it took us a long time to learn. The world is becoming more and more competitive,” he said in 2012.
