Warren Buffett’s Berkshire Hathaway has scored a $2 billion gain on BYD stock this year

Warren buffett
Warren Buffett. AP Images
  • Warren Buffett’s Berkshire Hathaway has made a $US2 ($AU3) billion gain on BYD this year.
  • Berkshire spent $US232 ($AU311) million in 2008 for a stake in the automaker worth nearly $US8 ($AU11) billion today.
  • The Chinese group’s sales of electric and hybrid vehicles rose by over 300% year-on-year in August.
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Warren Buffett’s Berkshire Hathaway has racked up a $US2 ($AU3) billion gain on BYD stock this year, boosting the value of its bet on the Chinese electric-vehicle company to almost $US8 ($AU11) billion – a 3,400% gain on its investment in under 13 years.

The famed investor’s company spent $US232 ($AU311) million to buy 225 million shares of BYD in 2008. Its stake was worth $US5.9 ($AU8) billion at the end of last year, Berkshire’s latest annual report shows. Yet BYD’s stock price has surged by about 23% since then, lifting the value of Berkshire’s roughly 8% stake to $US7.9 ($AU11) billion.

BYD’s Hong Kong-listed shares climbed 8% on Monday alone after the automaker revealed its sales of passenger vehicles more than quadrupled year-on-year to 60,500 units in August. It sold a total of 261,000 passenger vehicles in the first eight months of this year – more than triple the 85,000 it sold in the same period of 2020.

The robust sales growth reflected a 125% rise in sales of fully electric vehicles to 149,000 units in the first eight months of this year, along with a 485% increase in sales of plug-in hybrids to 112,000 units. In contrast, BYD’s sales of gas-powered vehicles dropped 22% to 106,000 units during that period.

Buffett’s business partner and Berkshire’s vice-chairman, Charlie Munger, has repeatedly sung BYD’s praises since he first brought the company to Buffett’s attention. For example, he described BYD’s founder and CEO, Wang Chuanfu, as a mixture of inventor Thomas Edison and former GE boss Jack Welch in a Fortune interview in 2009.

Munger has been right about BYD’s prospects so far. The company has grown its revenue by nearly six-fold to the equivalent of $US24 ($AU32) billion since Berkshire invested, and more than tripled its net income to around $US1 ($AU1) billion.