Berkshire Hathaway cuts stake in EV maker BYD as Warren Buffett and Charlie Munger say they don't want to compete against Elon Musk

• Berkshire Hathaway reduced its stake in Chinese electric vehicle maker BYD to just under 10%.
• The sale comes as Warren Buffett and Charlie Munger said they don't want to compete against Elon Musk.
• "We don't want that much failure." Munger said.

Berkshire Hathaway reduced its stake in Chinese electric vehicle maker BYD last week for the 11th time in less than a year.

The share sale came just days before Warren Buffett and Charlie Munger said they don't want to compete with Elon Musk.

Berkshire sold nearly 2 million shares and now owns just under 10% of BYD, which rivals Tesla as the world's largest EV manufacturer. Berkshire's current BYD stake is worth just over $3 billion.

According to the regulatory filing, the date of the BYD sale occurred on May 2, just days before Buffett and Munger said at Berkshire's annual shareholder meeting that they don't want to compete against Elon Musk.

"We don't want to compete with Elon in a lot of things," Buffett said on Saturday. Munger quickly added on to Buffett's comment,"We don't want that much failure."

The comments came in response to a question about whether the two investors believe Elon Musk overestimates himself. The pair responded that while Musk might overestimate himself, he's incredibly talented and is a "brilliant mind" that has achieved so much success, likely because he overestimated himself.

"He would not have achieved what he has in life if he hadn't tried for unreasonably extreme objectives. He likes taking on the impossible job and doing it," Munger said.

Berkshire originally purchased its BYD stake in 2008 for just $232 million. In late 2021, Berkshire owned about 21% of BYD, according to Hong Kong regulatory filings, which was worth more than $7 billion dollars at its peak last year.

Despite the comments about Musk from the legendary duo, Berkshire's ongoing sale of BYD likely has more to do with taking profits and redeploying the cash elsewhere rather than not wanting to compete with Musk in the EV space.

In an interview with CNBC last month, Buffett said "we'll find things to do with the [BYD] money that I'll feel better about... we are not in a hurry to sell it, but my job is to allocate the capital."

Berkshire's stake in BYD has grown immensely and the conglomerate could simply be taking profits to redeploy the cash elsewhere, like in Occidental Petroleum.

Buffett has also recently highlighted the increased geopolitical tensions between China and Taiwan, which is what led him to sell his stake in Taiwan Semiconductor just a few months after he bought it. Those geopolitical risks could extend to a Chinese auto manufacturer like BYD.