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- China's BYD shares have dropped 14% over the past month, as Tesla pushes ahead with a price battle.
- The Warren Buffett-backed EV maker has lost $18 billion due to the stock market plunge.
- Buffett's Berkshire Hathaway still has gains of approximately 5,500% from its initial BYD investment.
The Warren Buffett-backed BYD suffered a $18 billion loss in value during the last month, as Tesla pushes ahead with a price war.
The shares of the Chinese carmaker that are US-listed have dropped 14% since February 1, and trade at just below $58 by Friday's close. BlackRock's iShares Auto-Driving EV & Tech eTF, which tracks listed companies within the sector, has seen a 5% drop over the same time period.
According to data from Bloomberg, CompaniesMarketCap and Bloomberg, BYD's collapse has brought its US market capitalization to $104 billion in just over a month.
Tesla, a key competitor, has seen its stock rise 9% since February 1. This rally was driven by investors' increasing faith in interest-rate cuts and strong fourth-quarter earnings reports that outperformed Wall Street predictions.
Elon Musk's carmaker has been lowering prices in China to try to boost its revenues and revive weakening demand. This move was described by Wedbush analyst Dan Ives as a great success. Tesla has now reversed the price cuts for its Model Y and Model 3 vehicles.
According to Tesla's website, the US company cut the prices for its two most expensive models over the weekend. According to Reuters, this is the fifth time that Tesla has cut the price of its vehicles in 2023. This shows that the carmaker is determined to continue its price war.
BYD shares listed in Hong Kong, Shenzen, China on February 1 have fallen around 13%, similar to losses in the US.
Berkshire Hathaway spent $232million to purchase 225 million shares of BYD in 2008 at a cost of about $1 per share.
BYD's stock has risen nearly 60 times since then, despite recent losses. This means Berkshire still has approximately $13 billion or a 5,500% return on its initial investment.
Charlie Munger, Buffett's right-handman, stated that "I have never helped to do anything at Berkshire which was as good as BYD," during the annual meeting of Daily Journal.
He said, "That's quite a good rate of return," in reference to the conglomerate’s 55-fold gains in trading the stock.
Continue reading: Warren Buffett’s right-hand guy says Elon Musk has a gift but is strange – and places Tesla-rival BYD among his best bets in his career
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By: gglover@insider.com (George Glover)
Title: Warren Buffett-backed Chinese EV maker BYD has seen $18 billion in value wiped out amid Tesla’s price war
Sourced From: markets.businessinsider.com/news/stocks/warren-buffett-byd-stock-erase-billions-china-tesla-price-war-2023-3
Published Date: Mon, 06 Mar 2023 10:42:50 +0000
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