BYD, a Tesla rival, is buying back around $28 million of its shares, per a stock-exchange filing.
The company is close to overtaking Elon Musk’s company as the world’s top seller of EVs.
But its stock price has tumbled 22% this year, dragged down by China’s faltering economy.
BYD, a Chinese EV maker backed by Warren Buffett, plans to buy back 200 million yuan – around $28.2 million – worth of its own shares as it battles to put an end to its 2023 slump.
In a Wednesday Shenzhen Stock Exchange filing, chairman and CEO Wang Chuanfu said the buybacks are intended to safeguard shareholders, boost investor confidence, and stabilize BYD’s valuation.
BYD is close to snatching Tesla’s crown as the top seller of EVs worldwide, selling just 3,000 fewer EVs than Elon Musk’s company in the three months to September 30.
But its stock price has tumbled 22% year-to-date amid worries that China’s faltering economy will weigh on future demand for its cars.
The company has also slashed its prices in a bid to compete with local rivals like XPeng and new entrants to the EV market like Huawei. Some analysts believe the price cuts will chip away at profits, even if they boost sales.
Investors appeared reassured by BYD’s stock buybacks. The company’s Shenzhen-listed shares climbed 2.6% Wednesday and shares trading in Hong Kong closed 1.3% higher, according to data from Refinitiv.
Buffett’s holding company Berkshire Hathaway has cut its own stake in BYD by 60% since August 2022. The stock is down just under 20% since the Buffett’s conglomerate started trimming its position.
Earlier this year, Buffett and his then-business partner Charlie Munger, who died last week aged 99, hinted that one reason they’d been offloading BYD shares was that they didn’t want to do battle with Tesla and its CEO, Elon Musk.
“We don’t want to compete with Elon in a lot of things,” Buffett told Berkshire’s annual meeting in May.
“We don’t want that much failure,” Munger quickly added.
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