Warren Buffett-backed Chinese EV maker BYD has seen $18 billion in value wiped out amid Tesla's price war
REUTERS/Rebecca Cook
- Shares in China's BYD have fallen 14% in the past month as rival Tesla presses ahead with a price war.
- That stock price plunge has erased $18 billion off the Warren Buffett-backed EV maker's total valuation.
- Buffett's Berkshire Hathaway has still made gains of roughly 5,500% on its initial BYD investment.
Warren Buffett-backed BYD has suffered an $18 billion wipeout in value over the past month as rival EV maker Tesla presses ahead with a price war.
US-listed shares in the Chinese carmaker have fallen 14% since February 1, to trade at just under $58 as of Friday's close. By comparison, BlackRock's iShares Self-Driving EV & Tech ETF, which tracks listed companies in the sector, has fallen 5% over the same period.
BYD's fall has dragged its total US market capitalization down to $104 billion in the space of just over a month, according to data from Bloomberg and CompaniesMarketCap.
Meanwhile, key rival Tesla's stock has risen 9% since February 1, adding to a rally driven by investors' growing faith that interest-rate cuts are coming and a strong fourth-quarter earnings report that beat Wall Street forecasts.
The Elon Musk-run carmaker has been trimming prices in China in a bid to to revive faltering demand and boost its revenues in the key EV market, a move described as a huge success by Wedbush analyst Dan Ives. But Tesla has since reversed the price cuts of its key Model Y and Model 3 cars.
In the US, Tesla cut the prices of its two most expensive models at the weekend, according to its website. The move — the fifth time it has reduced the cost of its vehicles in 2023, per Reuters — signals the carmaker is set on continuing its price war.
Shares of BYD listed in Hong Kong and Shenzen, China have dropped around 13% since February 1, similar losses to those in the US.
Berkshire Hathaway spent $232 million to buy 225 million shares in BYD back in 2008, at a price of around $1 a share.
BYD's stock price has skyrocketed nearly 60-fold since then, even after the recent losses — meaning Berkshire has still made roughly $13 billion, or a 5,500% gain, on its initial investment.
"I have never helped do anything at Berkshire that was as good as BYD," Buffett's right-hand man Charlie Munger said during Daily Journal's annual meeting last month.
"That's a pretty good rate of return," he added, referring to the conglomerate's 55-fold gains trading the stock.