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BYD’s biggest shareholder, US investor Warren Buffett’s Berkshire Hathaway, has reduced its stake in the car-maker to less than 7 per cent with the latest sale realising $A60 million.

Berkshire, according to analysts, doesn’t give a reason for its share transactions but some have said that it could be in response to increasing global tensions over China’s EV sales penetration.

Bloomberg reported that the latest sale comes as tensions soar over exports of cheap EVs from China.

Chinese car-maker BYD overtook Tesla last year as the world’s biggest seller of electric vehicles. The two regularly swap the top spot. 

Berkshire sold 1.3 million Hong Kong-listed BYD shares for HK$310.5 million ($A59.7 million), according to a filing with the Hong Kong stock exchange. That reduced its stake in BYD’s issued H-shares to 6.90 per cent from 7.02 per cent.

Berkshire still holds 75.7 million Hong Kong-listed shares of BYD, which were worth about 17.6 billion Hong Kong dollars ($A3.38 billion) last week.

Mr Buffett’s company began investing in Shenzhen-based BYD in 2008, when it paid $A345 million for about 225 million shares, then equal to a 10 per cent stake.

It began selling shares in 2022, after BYD’s share price had risen more than 20-fold.

In June 2022, BYD hit a record closing high of HK$331.4 ($A63.7), about 41 times the price Berkshire had originally paid.

Since then, Berkshire has been on a selling spree, with its first major sale disclosed in August 2022.

Since then, it has sold about 149 million shares but never disclosed the reason for the sales. The share price has fallen about 30 per cent since peaking in June 2022. 

Berkshire’s investment in BYD is the brainchild of Charlie Munger, Berkshire’s late vice chairman.

Mr Munger said at the 2023 annual meeting of publishing and software company Daily Journal that he had “never helped do anything at Berkshire that was as good as BYD.”

Berkshire invests mainly in the United States. Mr Buffett said at Berkshire’s AGM last month that it would continue with its pro-US investment stance but said BYD was a rewarding exception.

“Charlie twice has pounded the table with me and just said, you know, ‘Buy, buy, buy’,” he said to shareholders. 

“BYD was one of them, and Costco was the other … he was right, big time, in both companies.”

The Berkshire sale could be attributed to growing concern about China’s growing domination of global EV sales, at the expense of domestic EV manufacturers.

Bloomberg said that China’s EV proliferation was attributed to significant policy support from the government and heavy state subsidies. 

But it said the flood of cheap models has raised the spectre of another trade war with its Western trading partners.

Last week, the European Union hit EVs imported from China with additional tariffs because of what it sees as Beijing’s unfair support for companies that undercut European car-makers.

BYD will face an additional levy of 17.4 per cent on top of the bloc’s existing 10 per cent duty on car imports, according to an announcement from the European Commission.

China, which has big dreams for its EV industry, has threatened to retaliate. It has announced an anti-dumping investigation into imports of pork from the EU.

Tensions had previously escalated between China and the US over the same issue. In May, the Biden administration quadrupled tariffs on EV imports from China, from 25 per cent to 100 per cent, aiming to boost American jobs and manufacturing.

Mr Buffett said last year that it’s “imperative” for the US and China to settle their differences and “get along with each other.”

By Neil Dowling

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