BYD, China’s EV pioneer and Tesla rival, has started expanding into Europe.

BYD, Elon Musk’s Shenzhen-based rival to Tesla, has unveiled intentions to enter the European automobile market, as the electric automaker continues on an aggressive global expansion despite criticism from shareholder Warren Buffett.

China’s largest electric car manufacturer and second-largest battery manufacturer announced presale prices for a variety of completely electric automobiles in Europe this week. BYD’s European expansion will begin in Germany, home to Volkswagen and Mercedes-Benz, and Sweden, before moving on to France and the United Kingdom later this year.

“They want to compete with the big boys,” said Tu Le, general director of Sino Auto Insights, a Beijing-based consultant, who expects Chinese models to compete with cars like the BMW iX3 and Musk’s fleet.

Analysts anticipate widespread adoption of Chinese nameplates across Europe as battery car sales climb, similar to the introduction of Korean names Hyundai and Kia. BYD is one of several Chinese electric vehicle manufacturers attempting to break into the region, including Nio, XPeng, and Aiways.

BYD started planning its European onslaught five years ago, engaging designers to improve the appearance of their vehicles. “They’ve come a long way in making their automobiles more appealing than they used to,” said Michael Dunne, CEO of ZoZoGo and an expert on China’s auto business.

“What drives this massive rise is considerably improved vehicle design and engineering,” he says.

However, BYD’s growth has been overshadowed by fear that it will lose Warren Buffett as a cornerstone investor after Berkshire Hathaway began decreasing its investment, bringing shares down 33% from their peak in July.

“The irony is that they’re making the best products they’ve ever made,” Tu Le said of BYD. “Their sales growth is off the charts. And one of their largest investors is pulling out.”

BYD is one of many Chinese EV manufacturers that have profited from years of government subsidies and the development of the battery metals supply chain. In the first half of 2022, the group’s revenues increased by approximately 70% to Rmb150.61 billion ($21 billion).

BYD surpassed Volkswagen as the world’s third most valuable auto firm in June, after only Tesla and Toyota. In September, the group’s EV battery unit sales volume overtook that of South Korea’s LG Energy Solution, making it the world’s second-largest provider of electric car batteries, trailing only Chinese competitor CATL.

Berkshire Hathaway valued its 7.7 percent interest in BYD at $7.69 billion in February, a staggering 33-fold increase over the $232 million it invested in 2008. Five months later, Berkshire sold 3 million shares of its Hong Kong investment, representing slightly more than 1% of the 225 million shares in its original ownership.

Other investors panicked at the move and following block trades. Buffett and BYD have not explained their choice to divest. A request for comment was not returned by the companies.

One senior adviser at a US hedge fund, who did not want to be identified, suggested that Buffett’s choice could be influenced by geopolitical factors.

US investments in China have come under increased scrutiny in recent years, and there is bipartisan pressure in Washington to cut ties with corporations and industries believed to assist the Chinese Communist Party.

Cole Smead, president of Smead Capital Management, a US investment fund, predicted that Berkshire will sell its stake gradually. He noted that Charlie Munger, Berkshire’s vice-chair and Buffett’s right-hand man, has long been “bullish” on China.

“I just don’t see Berkshire Hathaway being welcomed back to China if they were causing significant disruptions to capital markets by selling, say, their entire interest in a week or two.”

Traders warned that the steep decline in market sentiment this year had made it significantly more difficult to divest a significant stake in BYD without jeopardising Berkshire’s investment returns.

“It’s more difficult to exit a position like that than it was a year ago, or even six months ago,” said Andy Maynard, a trader with investment bank China Renaissance.

Berkshire might try to divest through huge block trades, sell the entire holding gradually into the market, or a combination of the two, according to Maynard.

“The problem with dribbling it out is that you keep the stock under pressure for a long time,” he explained. “It depends on Berkshire’s return [goal], which is only known to them and their bankers.”