Warren Buffett reduced his holdings in China EV giant BYD for the second time in just over a week. The disclosure from Buffett's Berkshire Hathaway comes as BYD posted record August China EV sales numbers.
Buffett's decision to decrease his stake in the company coincides with August sales reports from a slew of China-based electric-vehicle companies.
Among China EV startups, Nio outpaced XPeng Motors and Li Auto in August electric-vehicle deliveries, according to sales reports Thursday. While Nio's August sales increased modestly compared to July, XPeng and Li Auto saw their deliveries decrease after issuing conservative guidance earlier in the month.
August is somewhat of a transition period for China EVs. Nio, Li Auto and BYD began deliveries of new models at the end of the month, with BYD and Nio set to begin delivering yet other new EVs in September. XPeng will launch a new vehicle later this year.
BYD Stock
BYD stock dove 7.4% to 27.26 Friday after Berkshire Hathaway disclosed it sold 1.72 million H-shares on Sept. 1 in Hong Kong. BYD stock tumbled earlier this week after Berkshire Hathaway said on Aug. 30 that it sold 1.33 million H-shares on Aug. 24.
BYDDF stock has skidded this week. It fell 4.7% Thursday after dropping 4.35% in Wednesday's stock market trading, the lowest price since mid-May. Shares of the EV and battery giant tumbled 7.8% on Tuesday, breaking below its 200-day moving average. Shares hit a record 43.61 on June 28.
Buffett's stake reductions are both less than 1% each of his large holdings. Berkshire still owns slightly less than 8% of BYD, but there is concern that it'll keep selling shares.
BYD stock had already plunged July 12 on rumors that Buffett would sell some or all of his longtime stake. Cathie Wood's Ark Innovation ETF also owns a small stake in BYD, as well as Nio and XPeng stock.
BYD announced Friday it sold 174,915 new energy vehicles (NEVs) in August, a 184% year-over-year increase and the sixth straight month of record sales, according to a Hong Kong filing. Of those deliveries, 173,977 were passenger vehicles and 938 were from its commercial line.
NEVs include fully electric vehicles, plug-in hybrids and fuel-cell vehicles.
The company sold 82,678 all-electric passenger vehicles, up 172% from the same month in 2021. Deliveries of plug-in hybrid vehicles grew 203% to 91,299 in August.
BYD currently has a backlog of 700,000 orders with a delay of 4-5 months for new orders, according to CnEVPost.
BYD President Wang Chuanfu told local media Friday that August deliveries were constrained by Covid outbreaks and drought conditions. Wang added BYD forecasts monthly deliveries of 280,000 units by the end of the year, CnEVPost reported. He says BYD is setting a target of 4 million deliveries in 2023.
BYD is likely to easily top 1.5 million deliveries in 2022.
On Monday, BYD announced it had tripled its net income in the second quarter, easily beating views. BYD had previously said it sold 355,021 NEVs in Q2, ballooning 256% year over year and 24% vs. Q1.
Tesla reported Q2 China deliveries at 254,695, a drop of nearly 18% from Q1. Elon Musk's EV giant still leads BYD in sales of all-electric vehicles, but that gap is narrowing.
BYD is rolling out several new EV-only and hybrid-only models in the coming months.
The Seal sedan is BYD's first clear-cut competitor to Tesla's Model 3. The vehicle has roughly equal dimensions and range to a Model 3 — and is $10,000 cheaper.
More than 1,000 SEAL sedans have already been delivered, Wang said Friday, according to CnEVPost. BYD had previously said Seal preorders topped 60,000 since they opened on May 20.
BYD has several other models launching in the next few months. It began deliveries in New Zealand in August, while expanding to Australia in the next few days as well as several other Asia-Pacific nations and Europe in the next few months. It'll enter Japan in 2023.
BYD does not have a Composite Rating, a key IBD benchmark. But it has a 37 Relative Strength Rating, an exclusive IBD Stock Checkup measurement for share price movement with a top grade of 99. The EPS rating is 82.
Nio Stock
NIO shares fell 5.6% to 17.73 Friday. The stock dropped 5.7% to 18.78 Thursday, below the 50-day line. The stock is in the midst of consolidation with an official 24.53 buy point, according to MarketSmith. However, in the current market environment extreme caution should be exercised.
Nio announced Thursday it delivered 10,677 vehicles in August, a 82% increase year over year. August sales included 7,551 SUVs and 3,126 sedans. In total, 2022 vehicle sales have grown 28% to 71,556.
On Aug. 28, Nio launched deliveries of the ES7 SUV. Nio will begin deliveries of its ET5 sedan on Sept. 30, following the ET7 luxury sedan in March. Nio, which will also refresh its ES8 SUV soon, so it will have five EVs with the ET5. The EV startup said Thursday it delivered 398 ES7 SUVs in August.
Nio is stepping up its European presence, sending the ET7 to several countries.
The company announces second-quarter earnings on Sept. 7, before the market opens. Nio stock has a Composite Rating of 30. Its Relative Strength Rating is 25. It has an EPS Rating of 7.
Li Auto Stock
LI stock dropped 4.7% to 26.58 Friday after it fell 3% Thursday. Shares retreated 0.1% Wednesday, again hitting resistance at the 200-day line. Shares have retreated sharply from the June 24 high of 41.49, especially since mid-July.
Li Auto said Thursday it delivered 4,571 vehicles for the month of August, down 56% vs. July and 52% vs. a year earlier
This follows disappointing guidance on Aug. 15, with Li Auto expecting to deliver 27,000-29,000 vehicles in Q3. That's down from Q2 and despite already reporting 10,422 deliveries in July.
The Li One SUV hybrid, which has been Li Auto's only vehicle, has seen demand suddenly plunge. The automaker is blaming cannibalization from its more-premium L9 hybrid SUV. Li began L9 deliveries on Aug. 30, with the automaker still expecting 10,000 L9 deliveries in September.
"We are pleased to have commenced deliveries of our flagship smart SUV, Li L9, and to have heard from Li L9's initial users that it exceeded their expectations," Yanan Shen, Li Auto co-founder and president, said in a statement.
Shen added the company is preparing to launch the Li L8, a scaled-down L9, in early November, with delivery beginning in the same month.
Li Auto stock has a 59 Composite Rating out of 99. It has a 72 Relative Strength Rating. The EPS rating is 26.
XPeng Stock
XPEV shares dropped 3.3% Friday to 16.76. The stock was down 6.3% Thursday. XPeng stock has struggled in 2022, hitting a 22-month low on Tuesday, not far from its August 2020 IPO price.
XPeng reported Thursday vehicle deliveries grew 33% vs. a year earlier to 9,578 vehicles. That was down 17% vs. July.
XPeng delivered 5,745 P7s, its sports sedan model, in August. It also delivered 2,678 P5 sedans along with 1,155 G3i and G3 compact SUVs.
The new flagship G9 SUV should begin deliveries in Q4, likely replacing the aging G3.
For Q3, XPeng expects vehicle deliveries of 29,000-31,000, a decline from Q2. With July deliveries in hand, XPeng expects August-September deliveries combined will be below 20,000.
XPEV stock has a weak 10 Composite Rating out of 99. It has an 7 Relative Strength Rating, also very weak. The EPS rating is 2.
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