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After 15 years of Volkswagen’s presence in the most sensitive part of the Chinese car market, a new manufacturer takes the lead: BYD, subsidized by Warren Buffett.
The Shenzhen-based electric vehicle maker led domestic sales for the twelfth consecutive month in December, according to information released through the China Passenger Vehicle Association and reported through Car News China. Thanks to generous government subsidies, BYD sold about 30% more new cars. than last year, 12% of the domestic market, narrowly overtaking VW in the most sensible position annually.
Warren Buffett’s Berkshire Hathaway first invested in BYD way back in 2008 on a prescient hunch that the then-no-name startup could become one of the world’s largest automakers, buying a 10% share for a mere $230 million. Buffett has been slowly selling off his position, but the investment has yielded him around $2.5 billion to date, Fortune reported last year.
“I have never helped do anything at Berkshire that was as good as BYD,” Buffett’s late business partner Charlie Munger, who helped close the 2008 deal, said last February.
Volkswagen was an early adopter of the electric vehicle generation and a pioneer in the Chinese market, but its sales expansion lags behind China’s overall industry and is struggling to remain competitive in the global market.
These disorders have been compounded by a recession in Germany and persistent inflation, which have pushed up Volkcous’ producer prices and forced it to compete with subsidies-driven Chinese producers.
“With many of our pre-existing structures and processes and our high costs, we are no longer competitive as a Volkswagen logo,” Volkswagen logo leader Thomas Schaefer wrote in an internal memo last November.
China dominates the global EV industry: 59% of all new EVs were sold in China in 2022, while it also produced 64% of the world’s EVs, according to data from the World Economic Forum.
Its domestic manufacturers, BYD, have led the charge at home and abroad. China overtook Japan as the world’s largest auto exporter last year, according to the China Association of Automobile Manufacturers. And one in three cars sold in China is electric.
BYD has leveraged a strong domestic market and generous government subsidies to a global heavyweight: it has just overtaken Tesla as the world’s largest distributor of electric vehicles.
“I think the time has come for Chinese passes,” BYD Chairman Wang Chuanfu said last August. “It is an emotional wish for China’s 1. 4 billion people to see a Chinese pass pass through globally. “
BYD cars are rare on U. S. roads, largely due to the 27. 5% price lists implemented for Chinese-made electric cars. But BYD turned heads at car shows last year with its low prices. Last year, it introduced an electric vehicle in China. Even with this price, some experts say that at such a low price, BYD cars could soon remain competitive in the U. S. market.
BYD and other Chinese automakers are facing resistance from the EU, which recently launched an investigation to assess subsidies that give them unfair merit in the export market.
This story appears on Fortune. com