Warren Buffett Cuts Stake in EV Giant, Elon Musk Loses $16B on Tesla Results: What’s Next for the Electric Blues?

Warren Buffett, known for his long-term investment strategy, recently made a surprising move by cutting his stake in Chinese electric vehicle giant BYD. Berkshire Hathaway, Buffett’s company, sold 1,395,500 shares of BYD, reducing its stake from 5.06% to 4.94%. This decision allowed Berkshire to fall below the 5% threshold, eliminating the need for further disclosure of BYD shares.

The investment in BYD has been highly profitable for Berkshire Hathaway. In 2008, the company acquired 225 million shares for $232 million, which grew to approximately $5.9 billion by the end of 2020. However, Berkshire has been gradually reducing its stake in BYD since late 2022.

On the other side of the electric vehicle industry, Tesla, the EV giant led by Elon Musk, faced a significant setback. Following its latest earnings report, Tesla’s shares dropped by 12%, leading to a $16 billion decline in Musk’s personal wealth according to Forbes’ real-time estimates. The company’s automotive revenue also decreased by 7% year over year in Q2.

Despite these challenges, the global electric vehicle market continues to grow rapidly. The International Energy Agency reported that global EV sales reached nearly 14 million in 2023, representing a significant portion of total car sales.

In the U.S., Tesla remains a dominant player in the EV market, with 55% of EVs purchased by Americans in 2023 being Tesla products. However, Tesla’s stock has experienced volatility, doubling in value in 2023 but declining by 10% in 2024. Analysts like Dan Ives from Wedbush see potential for Tesla’s stock to revive, with a price target of $300, implying a 34% upside.

Ford, while not a pure-play EV stock, has been making strides in electrifying its lineup. The company’s EV sales increased by 61% in Q2 of 2024, with models like the Mustang Mach-E and F-150 Lightning gaining traction in the market. Despite this growth, Ford expects a full-year loss of $5 billion to $5.5 billion for its EV segment, leading to a 13% drop in its shares after the latest earnings report. Barclays analyst Dan Levy remains optimistic about Ford’s future, with an “Overweight” rating and a price target of $16.

ChargePoint Holdings, a company focused on EV charging infrastructure, has one of the largest charging networks globally. Despite a 74% decline in its stock over the last 12 months, analysts like Chris Pierce from Needham see potential upside, with a “Buy” rating and a price target of $3.00, implying a 47% increase.

The electric vehicle industry continues to evolve, presenting both challenges and opportunities for investors. As key players like Tesla, Ford, and ChargePoint navigate this dynamic landscape, investors will closely monitor their strategies and performance in the coming months.