In a move that has sent ripples through global financial markets, Warren Buffett's investment conglomerate, Berkshire Hathaway (BRK.A, NYSE) (BRK.B, NYSE), has reportedly completed the offloading of its entire stake in Chinese electric vehicle (EV) giant BYD (1211.HK, HKEX) (002594.SZ, SZSE). This significant divestment, spanning over 17 years, culminated in confirmed reports on September 22, 2025, and triggered an immediate downturn in BYD's stock performance on September 23, underscoring the potent "Warren Buffett Effect" and raising questions about the future of the highly competitive Chinese EV market.
The news marks the conclusion of one of Buffett's most successful international ventures, an investment championed by the late Charlie Munger. While profitable, the full exit is being interpreted by many as a signal of shifting strategic priorities and increasing caution among Western investors regarding Chinese equities.
What Happened and Why It Matters
Berkshire Hathaway's journey with BYD began in September 2008 when it acquired 225 million H-shares for approximately $230 million. This investment, largely attributed to Charlie Munger's foresight and admiration for BYD founder Wang Chuanfu, blossomed into a monumental success, soaring over 4,500% at its peak and reaching a value of nearly $9 billion by mid-2022. The "Oracle of Omaha's" backing provided immense credibility and visibility to the then-nascent Chinese automaker, contributing significantly to its global ascent.
The gradual reduction of Berkshire's stake commenced in August 2022. By June 2024, the holding had dropped below the 5% disclosure threshold under Hong Kong exchange rules, allowing subsequent sales to go unreported publicly. The definitive confirmation of the complete exit came via a CNBC report on Sunday, September 22, 2025, citing a Berkshire Hathaway spokesperson and a filing from its energy subsidiary, Berkshire Hathaway Energy, which listed the value of its BYD investment as zero as of March 31, 2025.
The immediate market reaction was swift and negative. On Monday, September 23, 2025, BYD's Hong Kong-listed shares plunged 3.4%, marking their most substantial single-day decline in three weeks. Its Shenzhen-listed stock also experienced a 1% fall. This further exacerbated a broader decline for BYD, whose shares were already down approximately 30% from their all-time high just four months prior. The "Warren Buffett Effect" — the significant market influence of Buffett's investment decisions — is clearly at play, as investors interpret such a move from a renowned long-term value investor as a potential loss of confidence, even if the underlying reasons for the sale are complex and strategic. BYD's General Manager of Branding and Public Relations, Li Yunfei, acknowledged the news, stating that "in stock investing, buying and selling are normal practices," while expressing gratitude for the long-term support from Munger and Buffett.
The Ripple Effect: How Buffett's Exit Might Reshape the Market
The departure of a marquee investor like Berkshire Hathaway from BYD carries significant implications for the broader market, influencing investor sentiment and potentially redirecting capital flows. While BYD (1211.HK, HKEX) (002594.SZ, SZSE) remains a dominant force in the EV sector, its immediate stock performance reflects the direct impact of this perceived loss of confidence. The company is already grappling with intense price wars and slowing sales in the fiercely competitive Chinese EV market, evidenced by a reported 30% year-on-year drop in its second-quarter profit and a downward revision of its 2025 sales goal from 5.5 million to 4.6 million vehicles.
Beyond BYD, other Chinese companies, particularly those in sectors facing similar competitive pressures or geopolitical uncertainties, may experience increased investor skepticism. The divestment by Berkshire Hathaway (BRK.A, NYSE) (BRK.B, NYSE) aligns with a broader trend of heightened caution among Western institutional investors towards Chinese equities. Concerns over regulatory unpredictability, market transparency, and escalating geopolitical risks have contributed to this shift. Reports indicate that other major Western institutional shareholders, including Vanguard, BlackRock, JP Morgan (JPM, NYSE), Fidelity, and Citigroup (C, NYSE), collectively divested a substantial amount of BYD's Hong Kong-listed shares in the second quarter of 2025, suggesting a more widespread re-evaluation of exposure to the company or the sector.
Conversely, this capital reallocation could benefit companies in other regions or industries. Western EV manufacturers, or even established automotive companies (like General Motors (GM, NYSE) or Ford (F, NYSE)) that are making significant strides in their EV transitions, might see renewed investor interest as capital seeks alternative growth opportunities. Furthermore, companies that remain in or attract new investments from Berkshire Hathaway in other markets, such as the U.S. or Japan, could experience a positive boost as investors continue to try and mirror Buffett's legendary investment acumen.
Broader Implications and Industry Realignments
Berkshire Hathaway's complete divestment from BYD (1211.HK, HKEX) (002594.SZ, SZSE) is more than just an individual stock transaction; it signals a potentially significant recalibration in investment strategy and perception within the global automotive and technology sectors. This event fits into broader industry trends marked by an intensifying price war in the Chinese EV market, which is the world's largest but also the most cutthroat. The exit could prompt a wider re-evaluation of investment exposure to the Chinese EV sector, pushing investors to scrutinize profitability and sustainable growth over sheer market share.
The ripple effects could extend to competitors and partners alike. For BYD's domestic rivals, while they might gain some market share in the immediate term due to potential investor unease surrounding BYD, they will still face the same underlying pressures of fierce competition and tightening margins. For global automakers with significant operations or partnerships in China, this move might serve as a cautionary tale, leading them to reassess their strategic alliances and market entry strategies.
From a regulatory and policy perspective, the exit could exacerbate existing concerns among foreign investors regarding China's regulatory environment and the ease of doing business. Geopolitical tensions and policy uncertainties have already been cited as factors contributing to increased caution, and a high-profile exit like Buffett's only amplifies these anxieties. While there are no direct historical precedents for a divestment of this magnitude from a Chinese EV company by such a legendary investor, it echoes past instances where a major institutional exit signaled a shift in market sentiment towards a sector or region, often preceding a period of consolidation or re-alignment. This event could accelerate the ongoing discussions about de-risking supply chains and diversifying investment portfolios away from over-reliance on any single market.
Navigating the Post-Buffett Landscape
As the dust settles from Berkshire Hathaway's (BRK.A, NYSE) (BRK.B, NYSE) complete exit from BYD (1211.HK, HKEX) (002594.SZ, SZSE), investors and industry observers will be keenly watching several key developments. In the short term, attention will focus on BYD's performance in its upcoming quarterly reports. The company's ability to navigate the ongoing price wars, maintain its technological edge, and demonstrate resilient profitability will be crucial in restoring investor confidence and mitigating the "Warren Buffett Effect." Any strategic pivots or adaptations in its product roadmap, international expansion, or cost-efficiency measures will be under intense scrutiny.
Longer term, the evolution of the broader Chinese EV market will be a critical indicator. Will the intense competition lead to consolidation, or will new players emerge? Government policies affecting foreign investment and market access in China will also play a significant role in shaping future capital flows. Furthermore, movements by other major institutional investors in Chinese equities, particularly in the tech and automotive sectors, will provide insights into broader sentiment shifts.
Potential market opportunities may emerge for companies that can demonstrate strong fundamentals, clear growth strategies, and a degree of insulation from the competitive pressures affecting the Chinese market. Conversely, challenges will persist for companies heavily reliant on the Chinese market or those struggling to differentiate themselves in a crowded EV landscape. Potential scenarios range from a continued period of pressure on Chinese equities, especially in growth sectors, to a re-stabilization if leading companies like BYD can prove their resilience and adapt effectively to the new market realities.
A Defining Moment for BYD and Global EV Investment
Berkshire Hathaway's (BRK.A, NYSE) (BRK.B, NYSE) complete and profitable divestment from BYD (1211.HK, HKEX) (002594.SZ, SZSE) marks a defining moment for both companies and the global electric vehicle industry. While the investment proved immensely successful over its 17-year duration, the exit signals a strategic recalibration, highlighting the complexities and evolving risks of investing in rapidly developing, geopolitically sensitive markets. The immediate drop in BYD's stock on September 23, 2025, powerfully underscores the "Warren Buffett Effect," demonstrating how the actions of a legendary investor can profoundly influence market sentiment.
Moving forward, the market will continue to grapple with the implications of this high-profile departure. It brings into sharper focus the existing concerns about the fierce competition within the Chinese EV market, slowing growth, and the broader geopolitical environment that is increasingly influencing investment decisions. For BYD, the challenge is clear: to prove its resilience and continued growth potential without the implicit endorsement of one of the world's most respected investors.
Investors should watch for BYD's innovation pipeline, its ability to maintain profitability amidst intense price competition, and its strategy for international expansion. Beyond BYD, the broader trend of Western institutional investor sentiment towards Chinese equities will be a critical barometer. This event serves as a potent reminder that even the most successful long-term investments can come to an end, and that market dynamics, competitive landscapes, and geopolitical factors are in constant flux, demanding continuous vigilance and adaptability from all market participants.
This content is intended for informational purposes only and is not financial advice
