Warren Buffett’s Berkshire Hathaway has fully divested its longstanding stake in Chinese electric-vehicle giant BYD Co., marking the end of a 17-year investment saga that began with a modest $230 million bet and ballooned into billions in profits. The sale, disclosed in a recent filing, sent BYD’s shares tumbling more than 3% in Hong Kong trading, reflecting investor jitters over the departure of one of the company’s most prominent backers. This move comes amid escalating geopolitical tensions and shifting dynamics in the global EV market, where BYD has emerged as a formidable rival to Tesla Inc.

The investment’s origins trace back to 2008, when the late Charlie Munger, Buffett’s longtime partner, championed BYD as a “miracle” opportunity. Munger, impressed by founder Wang Chuanfu’s engineering prowess, convinced Berkshire to acquire a 10% stake. Over the years, as BYD pivoted from batteries to full-fledged EVs, the holding grew exponentially, at one point valued at nearly $9 billion.

The Profitable Exit and Market Ripples
Berkshire’s complete exit, detailed in a CNBC report, underscores a strategic pivot away from certain international exposures. Analysts estimate the conglomerate reaped approximately $7 billion in gains, representing a staggering 30-fold return on its initial outlay, according to calculations by Business Insider. Yet, the timing aligns with BYD facing headwinds, including shrinking profits and intensifying competition from domestic players like Nio and XPeng, as well as international tariffs on Chinese exports.

Buffett and Munger had previously voiced reservations about competing directly with Tesla’s Elon Musk, with Buffett stating at a 2023 shareholder meeting that Berkshire preferred to avoid such battles. This sentiment, echoed in a Markets Insider article, highlights a broader caution toward high-stakes tech rivalries.

Geopolitical Underpinnings and Strategic Shifts
The divestment also reflects mounting U.S.-China frictions, with Berkshire trimming its BYD holdings progressively since 2022, as noted in a Reuters update from mid-2024. By July of that year, the stake had dipped below 5%, falling under Hong Kong’s disclosure threshold, per Fortune Asia. Industry observers suggest this full exit allows Berkshire to reallocate capital toward less volatile assets, such as its growing bets in energy and insurance.

BYD, which overtook Tesla as the world’s top EV seller in 2023, has acknowledged Berkshire’s role in its ascent. In a statement, the company expressed gratitude for the partnership, but the stock’s immediate drop signals potential vulnerability. As The Economic Times reported, geopolitical concerns and shifting priorities were key factors in the decision.

Legacy of the Munger-Inspired Bet
Munger’s influence on the BYD investment cannot be overstated; he once described the company’s edge over Tesla as “almost ridiculous” in a 2023 Fortune interview. Despite his passing in 2023, this deal stands as a testament to his contrarian vision, even as Berkshire navigates a post-Munger era under Buffett’s stewardship.

The sale caps a chapter of remarkable returns but raises questions about BYD’s future without Buffett’s imprimatur. For Berkshire, it frees up resources amid a portfolio increasingly focused on domestic stability, as evidenced by recent moves in other sectors.

Implications for Global EV Dynamics
Looking ahead, BYD must contend with tariffs in Europe and the U.S., which could crimp its export ambitions. A Forbes analysis from today highlights how the exit coincides with BYD’s profit declines, exacerbating pressures from rivals. Meanwhile, Berkshire’s cash hoard, now bolstered by this windfall, positions it for opportunistic buys in a volatile market.

This divestment not only reshapes perceptions of Chinese tech investments but also underscores the enduring impact of Munger’s bold calls on Berkshire’s storied history. As global EV competition heats up, BYD’s path forward will test its resilience beyond the Buffett era.