The order list exceeds 700,000 units ( in June it was 600,000 ), which at its production rate implies a very reasonable waiting list of four to five months for new orders. The list should be narrowed, as BYD is aiming for a rate of 280,000 deliveries per month before the year is out. August’s results were not any better due to supply chain disruptions.
BYD is in a very comfortable position, because the batteries are provided internally and it is less dependent on the outside, and even sells batteries to third parties. The higher the production, the higher the margin per unit, so last year they won’t care if China withdraws the subsidies. Since July, BYD is installing more than 7 GWh per month in batteries. In 2023 they expect the Chinese market to reach 9-10 million plug-in vehicles, they aspire to sell at least 4 million, even more than now.
However, despite these good numbers, the investment fund Berkshire Hathaway, owned by magnate Warren Buffet, has divested BYD for the first time in 14 years. His participation fell from 20.04% to 19.92% on August 24, selling 1.33 million shares, and yesterday he got rid of more shares, up to 18.87% of the shareholding, with another 1.7 million sales. This has negatively affected BYD’s listing on the Hong Kong stock exchange and the Shenzhen stock exchange (both in China) in recent days.
What’s the point of Warren Buffet’s fund ditching 3 million shares at such a good time for BYD, where it’s a profitable manufacturer and world leader?
One possible explanation is its exposure to the Chinese market, on which it depends, which is at risk of a housing bubble burst of astronomical proportions. Interest rates in China have been lowered in an attempt to prevent this. If a major crisis occurs in its home market, BYD’s growth and sales expectations could be greatly affected, as happened in the US after its particular mortgage blowout in 2008.
On the other hand, the new Inflation Reduction Act is detrimental to BYD’s interests, since its industrial presence in the United States is null -now we qualify it-, and the cars that BYD takes to US ports will not be eligible for federal credits up to $7,500. In other words, they will be at a disadvantage. They even consider temporarily withdrawing from the American adventure and focusing more on Europe.
One thing is clear, Berkshire has made an epic profit taking with how much BYD has grown in 14 years
BYD is someone worldwide for the Chinese market, outside its borders it is an irrelevant company right now, but promising unless we talk about something as specific as electric buses. That is where BYD is more important and has an industrial presence both in the United States and in Europe. Buses, due to their size, price and volume, make it more affordable to manufacture them locally instead of putting them on ships.