Warren Buffett Tesla Rival Is Buying Back Own Shares — Can It ‘Compete With Elon?’
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David Nadelle
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Cory Dudak
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Warren Buffett certainly didn’t become the fifth richest person in the world by taking on battles he knew he couldn’t win. Buffett and his recently deceased right-hand man at Berkshire Hathaway, Charlie Munger, have practiced safe and steadfast strategies throughout their long investing careers.
Balking at going to battle with Elon Musk’s Tesla, Buffett and Munger decreased shares in main EV rival BYD by 60% since August 2022, according to Business Insider. And now, BYD has announced it will begin buying back company shares to halt its recent stock slump.
The Chinese car maker has announced plans to buy back 200 million yuan (around $28 million USD) of its own shares in an attempt to halt its tumbling stock price. The buyback, which was proposed by BYD’s chairman and president Wang Chuanfu, will be used to shore up investor confidence and stabilise BYD’s valuation.
Speaking to shareholders during the Berkshire Hathaway annual meeting in May, Buffett stated, “We don’t want to compete with Elon in a lot of things.” This was followed quickly by Munger, who said, “We don’t want that much failure.”
However, despite the reticence of Berkshire Hathaway to wrestle Musk for EV sales supremacy, BYD has performed very well this year. While its stock price has fallen 22% year-to-date, BYD’s sales continue to soar, especially in China, where the company sold over 300,000 vehicles in November (including over 170,000 full electric models), compared to Tesla’s 84,432, per WhichCar.
Although BYD continues to aggressively market its cars globally, China’s own underperforming stock market is the main catalyst behind BYD’s decision to start buying its shares. The Shanghai Composite Index is down around 5% year-to-date and the “Fear and Greed indicator” — a measure of buying strength versus selling strength — is at its lowest point since Oct. 2022, Fortune reported.
The Buffett-backed BYD is China’s largest seller of electric and plug-in hybrid vehicles, and Tesla’s closest rival in the global electric vehicle sales race. So close, in fact, that many experts are predicting the EV maker will soon overtake Musk’s Tesla in overall global sales. The brand has the scope and vision to easily compete with Tesla, barring any future significant financial collapses.
This investment news comes hot on the heels of details released about BYD’s anticipated Sport Crossover EV collaboration with Toyota, which is now expected to be launched in 2025 as a “stylish alternative” to SUVs, according to Electrek. The two companies have already released the bZ3 electric sedan in China.
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