A Major Investor Exits BYD Amid Financial Headwinds

Berkshire Hathaway has liquidated its entire stake in Chinese electric vehicle manufacturer BYD. Warren Buffett's investment conglomerate has sold all remaining shares, marking a significant shift in sentiment from one of the world's most respected long-term investors. This move coincides with a notable deceleration in BYD's expansion and raises questions about the company's future trajectory.

The departure of this cornerstone investor aligns with a period of substantial financial pressure for BYD. The automaker recently reported its most severe quarterly profit decline in over four years. Third-quarter earnings contracted by nearly 33%, while revenues saw a 3% reduction—the first quarterly sales drop recorded in more than five years.

Compounding these challenges, BYD experienced a dramatic cash outflow, burning through an estimated $10 billion during the first nine months of 2025. This substantial negative cash flow stems primarily from aggressive capital expenditure directed toward manufacturing capacity growth and research infrastructure development.

Intense Domestic Competition Erodes Profitability

BYD's home market has transformed into an intensely competitive arena where price wars are taking a measurable toll.

Should investors sell immediately? Or is it worth buying BYD?

• Margin Compression: The company's gross margin witnessed a significant contraction, falling to 17.6% in the third quarter from 21.9% a year earlier.
• Revised Targets: Mounting market pressure forced BYD to substantially lower its 2025 sales target by 16%, setting a new goal of 4.6 million vehicles.
• Leadership Position Challenged: With domestic sales stagnating, BYD relinquished its status as China's top-selling automaker to a state-owned competitor.
• Aggressive Rivals: Competing manufacturers, including Geely and Xiaomi, have successfully captured meaningful market share with new model launches, applying pressure across both mid-range and premium vehicle segments.

International Expansion Offers Counterbalance

Despite these considerable domestic difficulties, BYD's global operations present a more promising narrative. The company's push into overseas markets is evolving into an increasingly vital component of its growth strategy.

International sales surged by an impressive 160% year-over-year during the third quarter, driven by robust consumer demand across European and Latin American markets. This vigorous global expansion appears to be forming a crucial counterbalance to the mounting pressures within China's competitive automotive landscape.

The complete divestment by Berkshire Hathaway, following years of steadfast support, sends a powerful message to global markets regarding BYD's evolving investment profile and the shifting assessment of its future prospects.