Warren Buffett Clears His Position in BYD: A Disagreement over "Certainty"

A dramatic conflict is presented in BYD.

On October 9th, in Camacari, Bahia State, Brazil, BYD's 14 millionth new energy vehicle rolled off the production line at its passenger car factory in Brazil. This means that BYD has taken another solid step in its global expansion and large - scale business layout.

Interestingly, even against this seemingly favorable backdrop for BYD, according to a previous CNBC report, Warren Buffett's Berkshire Hathaway has completely exited its highly profitable equity investment in BYD, the Chinese electric vehicle manufacturer.

A spokesman for Berkshire confirmed that all of its holdings in BYD have indeed been sold.

In response to this news, on September 22nd, Li Yunfei, the general manager of BYD Group's Brand and Public Relations Department, responded before the market opened: "In August 2022, Berkshire began to gradually reduce its holdings of the company's shares purchased in 2008. By last June, its shareholding had fallen below 5%. In stock investment, there are both buyers and sellers. This is a very normal thing! Thanks to Charlie Munger and Warren Buffett for their recognition of BYD! Also, thanks for their investment, help, and companionship over the past 17 years! Let's give a thumbs - up to all long - term investors!"

Buffett's holding of BYD's shares dates back to 17 years ago when, on Charlie Munger's advice, Berkshire made its first purchase. At the 2009 annual meeting, he told shareholders that although it seemed "Warren and I were crazy," he thought the company and its CEO, Wang Chuanfu, were a "damn miracle."

During the years that Berkshire held BYD's shares, its stock price rose by approximately 3890%.

Although Buffett didn't elaborate on why Berkshire started selling, in 2023, in an interview with CNBC, he said that BYD was an "extraordinary company" run by an "extraordinary person," but "I think we'll find some investment directions that will satisfy me more."

Looking beyond historical trajectories, Buffett's investment approach is mostly centered around value investing, emphasizing long - termism, the circle of competence, and the margin of safety. It specifically includes key features such as long - term investment, focusing on intrinsic value, the principle of the circle of competence, concentrated investment, and attention to the economic moat.

So, what does Buffett's complete sell - off of BYD imply? And what about BYD's long - term investment value?

01

Ended 18 months of year - on - year growth

According to the data released by the China Passenger Car Association on October 13th, in September, the retail sales of the national passenger car market reached 2.241 million vehicles, a year - on - year increase of 6.3% and a month - on - month increase of 11.0%.

However, BYD's performance in September was not that outstanding. Its sales volume in September was 396,200 vehicles, a year - on - year decrease of 5.52%. Specifically: the sales volume of BYD's pure - electric passenger car models in September was 205,000 vehicles, a year - on - year increase of 24.31%; the sales volume of plug - in hybrid models in September was 188,000 vehicles, a year - on - year decrease of 25.58%, a significant decline.

It's worth mentioning that this was BYD's first single - month year - on - year decline since March 2024, ending the consecutive 18 - month year - on - year growth trend. In addition, BYD lost the monthly sales championship among Chinese listed automakers and ranked second.

BYD's market performance in September has no direct relation to Buffett's complete sell - off of BYD. Of course, we can also sense some other information from it.

In other words, the sell - off is the result of his own investment strategy and comprehensive market judgment. As is well - known, Buffett has always adhered to the value - investment concept, focusing on the long - term intrinsic value of enterprises and stable cash flows.

In the early days of investing in BYD, the industry's cyclical dividends, BYD's technological potential in the new energy vehicle field, market prospects, and the capabilities of its management were important factors for Buffett to make a heavy - position investment.

However, as time passed and the market environment changed, various factors may have prompted him to make the decision to sell completely.

For example, on the one hand, the fluctuations in the global macro - economic situation will affect his consideration of asset allocation. He may adjust the investment portfolio to cope with uncertainties and reduce risk exposure. On the other hand, the competition in the new energy vehicle industry is becoming increasingly fierce, technology is iterating rapidly, and the market pattern is constantly changing. Although BYD is developing well, Buffett may think that the future uncertainty in the industry has increased, and the above - mentioned market performance in September more or less echoes this point.

The sales fluctuations are essentially a microcosm of the transformation of the new energy vehicle industry from "high - speed growth" to "high - quality competition." The dividends of a single model or technology have faded. The differentiation between BYD's plug - in hybrid and pure - electric models and the performance differences between high - end and mainstream brands exactly expose the structural contradictions during the industry's transformation period. Of course, it can also be said that other competitors have made the industry more intense.

This may be the concrete manifestation of the "uncertainty" in Buffett's eyes. That is, the industry is shifting from an incremental blue ocean to a stock game, and the short - term data fluctuations of enterprises are beginning to reflect the in - depth test of long - term value.

02

Is BYD's investment value still there?

Looking back at BYD's investment value, we may be able to find some patterns from three perspectives: the basic business, the moat, and the growth potential.

In terms of the basic business, although BYD has short - term fluctuations, it also has long - term resilience.

That is to say, the year - on - year decline in BYD's sales volume in September is only a phased adjustment. Its basic business, composed of the revenue structure, product matrix, and global layout, still has strong anti - risk capabilities.

Financial data shows that in the first half of 2025, BYD's revenue reached 371.281 billion yuan, a year - on - year increase of 23.3%; the net profit attributable to the parent company was 15.511 billion yuan, a year - on - year increase of 13.79%. The core profit indicators maintained a double - growth trend.

Although there were fluctuations in sales volume, the cumulative sales volume from January to September still reached 3.2601 million vehicles, a year - on - year increase of 18.64%. Among the high - end brand lineup, Fang Cheng Bao's single - month sales exceeded 24,000 vehicles. The Ti 7 model is about to enter the "10,000 - vehicle - per - month sales club." The Denza D9 has continuously occupied the championship position in the new energy MPV market above 300,000 yuan. The sales proportion of high - end models has increased to 15%. This means that BYD is transforming from "scale expansion" to "value enhancement." Even if the plug - in hybrid models are under short - term pressure, the growth in the pure - electric and high - end markets has formed an effective hedge.

BYD's resilience in its basic business is related to its product strategy of "covering the entire price range + gradient technology output." Against the backdrop of intensified price wars in the industry, it has not only maintained its share in the mainstream market through models such as the second - generation Qin PLUS but also broken through the ceiling of high - end value with Yangwang and Fang Cheng Bao. This "offensive and defensive" layout is the core confidence to resist cyclical fluctuations.

Looking at the moat, BYD has dual barriers in technology and the industrial chain.

In fact, BYD's moat has not been weakened by the intensified industry competition. Instead, it has been continuously broadened through R & D investment and industrial chain integration, which forms the core support for its long - term value.

For example, in terms of technology R & D, an indicator for evaluating a company's innovation ability, in the first half of 2025, the R & D investment reached 30.9 billion yuan, a year - on - year surge of 53%, with a focus on cutting - edge fields such as intelligent driving and solid - state batteries.

As of October 2025, BYD has applied for more than 65,000 patents globally and obtained more than 39,000 authorized patents. The implementation of core technologies has achieved remarkable results: the fifth - generation DM hybrid system has reduced the fuel consumption under power - deficit conditions to 2.6L per 100 kilometers. The safety advantage of the blade battery still leads globally. The "Tian Shen Zhi Yan" intelligent driving system has covered most models.

At the industrial chain level, the vertical integration ability has been further strengthened. The localization rate of IGBT chips has exceeded 90%, and the cost of a single controller has been reduced by 35%. The self - built ro - ro fleet has reduced the shipping cost by more than 30%. Coupled with the layout of factories in 7 countries such as Brazil and Hungary, it effectively avoids trade barriers. Financial data shows that the gross profit margin of its automobile business has increased to 20.2%, significantly higher than the industry average.

Therefore, BYD's moat has evolved from "single - technology leadership" to an ecological barrier of "technology matrix + supply - chain autonomy." This barrier can not only withstand the profit pressure brought by price wars but also seize the opportunity in technological iterations. When the industry is caught in the involution of "trading price for volume," it can still achieve profit growth through cost control and technology output.

In terms of growth potential, BYD is currently exploring incremental space in globalization and new tracks.

The expansion in overseas markets and the layout of new businesses have provided BYD with a second growth curve, and its growth potential has not stagnated due to the slowdown in the domestic market.

Globalization has become the most obvious growth engine. The overseas sales volume in September reached 70,900 vehicles, and the cumulative overseas sales volume from January to September accounted for nearly 22%, far exceeding the level of less than 10% in 2024.

Objectively speaking, BYD's growth potential has shifted from the "domestic penetration dividend" to multi - directional drivers of "global market penetration + industrial - ecosystem extension." Although this transformation requires short - term investment, in the long run, it is crossing from being an "automobile manufacturer" to a "global new energy solution provider," and the growth ceiling has been significantly raised.

Of course, the investment value of an enterprise is mostly determined by the capital market. From the rational perspective of valuation and ratings, BYD's current valuation is in a balanced range of "growth premium and short - term pressure." Most institutional ratings are still positive, and its long - term value has a margin of safety.

In terms of institutional ratings, many institutions expect the net profit in 2025 to be in the range of 49.632 billion - 60.749 billion yuan, with a maximum of 102.821 billion yuan in 2027. Most institutions maintain a "buy" rating.

The capital market's valuation logic for BYD is no worse than Buffett's. It has mostly shifted from being "story - driven" to "performance - verified - driven." Short - term price fluctuations are due to the emotional impact of industry involution and sales fluctuations. In the long run, the matching degree between its valuation and growth potential is still attractive. The core variables are the speed of technology implementation and the efficiency of profit conversion in overseas markets.

However, BYD does have some concerns. It may not necessarily be about accounts receivable, cash flow, or liabilities. More importantly, apart from the Dynasty and Ocean series, other models have not reached the level of blockbusters. The monthly sales of the Yangwang series are mostly in the hundreds. Although there has been an obvious improvement, the ultra - high - end price range makes it difficult to increase sales volume. After the great success of the Denza D9, neither the N7 nor the N8 could capitalize on the momentum. The price of the N7 was even cut by 80,000 yuan during the model upgrade. The Fang Cheng Bao Leopard 5 has reached the threshold of 300,000 yuan, and the latest Ti 3 is priced at less than 140,000 yuan. There is still a long way to go in building a high - end image.

It can be said that BYD is still an all - around automaker for vehicles below 200,000 yuan, but it is highly dependent on the Dynasty and Ocean series. As more automakers enter the market, BYD's concerns cannot be completely ignored.

03

Has the dividend of the new energy vehicle industry peaked?

To be honest, the overall dividend of the new energy vehicle industry has not peaked. Instead, it is approaching a 60% penetration rate. It has just entered a new stage of "structural upgrading and efficiency improvement" from "rapid total - volume expansion," with a slower growth rate but improved quality.

However, the industry also has certain growth risks. The reason is that the current preferential policies such as the new energy vehicle purchase tax exemption will gradually expire. In the past, this policy did leverage the sales volume of new energy vehicles to a large extent and benefited enterprises in the industry.

Once the policy stops, it is possible that the growth rate of some leading enterprises will be affected in the short term.

However, a more appropriate statement is that the core of the industry dividend has shifted from being "policy - subsidy - driven" to "technology - iteration and consumption - upgrade - driven." The point when the penetration rate approaches 50% is not the end of growth but the starting point of the "elimination round." Enterprises that can provide better technologies (such as fast charging and intelligent driving) and a more comprehensive ecosystem (such as vehicle - energy cloud) can still seize the incremental market.

Actually, the evolution of an enterprise from a "price war" to a "value war" may be the key to maintaining continuous investment value. The current industry involution is essentially an inevitable process of "capacity clearance and value reconstruction," not a signal that the dividend has been exhausted. Instead, it is forcing the industry to transform towards high - quality development.

The industry involution is weeding out "policy - dependent" and "capital - burning" enterprises and concentrating the dividend on "technology - driven" and "efficiency - leading" enterprises. This "creative destruction" is a sign of industrial maturity. Just like the evolution from the "hundred - car battle" to the "competition among a few strong players" in the fuel - vehicle era, the new energy vehicle industry is reconstructing the value chain through involution, which is beneficial for technological breakthroughs and the improvement of global competitiveness in the long run.

Therefore, Buffett's decision to completely sell off BYD's shares is more of an avoidance of the "uncertainty during the industry's transformation period" rather than a complete reduction of his holdings in this enterprise. This master of value investment is better at grasping the certain opportunities in the mature