BYD, Tesla’s Rival, Plans to Buy Back $28 Million of its Shares

BYD's Move to Overtake Tesla as the Leading EV Seller

BYD, a Chinese electric vehicle (EV) manufacturer supported by Warren Buffett, is set to repurchase approximately $28 million worth of its own shares, according to a recent filing with the stock exchange. The company is currently on the verge of surpassing Tesla as the world's largest seller of EVs. However, it has experienced a 22% decline in its stock price this year, largely due to the slowdown of China's economy.

BYD's Buyback Plan to Revive its Performance

BYD intends to repurchase 200 million yuan, equivalent to $28.2 million, of its shares as part of its strategy to reverse its slump by 2023. Wang Chuanfu, the chairman and CEO, stated in a filing with the Shenzhen Stock Exchange that the buybacks aim to protect shareholders, enhance investor confidence, and stabilize BYD's valuation.

BYD's Race to Surpass Tesla in EV Sales

BYD is nearing the accomplishment of overtaking Tesla as the leading seller of EVs worldwide, falling just 3,000 units short of Tesla's sales in the three months ending on September 30. However, its stock price has declined by 22% year-to-date due to concerns about China's economic slowdown and its potential impact on future demand for BYD's vehicles.

Price Cuts and Competitors

In an effort to compete with local rivals like XPeng and new players in the EV market such as Huawei, BYD has reduced its prices. While these price cuts may boost sales, some analysts predict that they could also diminish profits. Nevertheless, BYD's recent stock repurchases have reassured investors. Its shares listed on the Shenzhen Stock Exchange rose by 2.6% on Wednesday, and shares traded in Hong Kong closed 1.3% higher, according to Refinitiv data.

Berkshire Hathaway's Stake Reduction

Berkshire Hathaway, the holding company of Warren Buffett, has decreased its stake in BYD by 60% since August 2022. The stock has experienced a decline of nearly 20% since Buffett's conglomerate began reducing its position. Earlier this year, Buffett and his former business partner, the late Charlie Munger, hinted that one reason for selling BYD shares was to avoid competing with Tesla and its CEO, Elon Musk. They expressed a desire to steer clear of potential failures in such a competitive landscape.

Original article published on Business Insider.

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By: gglover@insider.com (George Glover)
Title: BYD, Tesla’s Rival, Plans to Buy Back $28 Million of its Shares
Sourced From: www.businessinsider.com/warren-buffett-tesla-rivals-elon-musk-evs-byd-buybacks-china-2023-12
Published Date: Wed, 06 Dec 2023 12:21:32 +0000