(Yicai) July 24 -- Shares of BYD dropped in Hong Kong after Warren Buffett's investment company Berkshire Hathaway pared its stake in the Chinese electric car and battery giant to 4.9 percent.

BYD [HKG: 1211] fell 2.5 percent to HKD232.40 (USD29.76) a share as of 10.40 a.m. in Hong Kong today, after ending down 3.1 percent yesterday. Its Shenzhen-traded stock [SHE: 002594] dipped 1.5 1.5 percent to CNY249.54 (USD34.30) following a 4.7 percent tumble yesterday.

Berkshire sold 1.4 million of BYD's Hong Kong shares on July 16, further cutting its holding from an initial 24.6 percent, according to data from the Hong Kong Stock Exchange released on July 22. The bourse regulations state that the Nebraska-based firm does not need to disclose if it pares its stake again.

It was last revealed that Berkshire sold 1.3 million shares for about HKD311 million (USD39.8 million) on June 11, reducing its stake to 6.9 percent.

The latest sale likely represents the end of Buffett's profit-taking investment in BYD over the past ten years, industry insiders pointed out.

Buffett first cut his stake in BYD nearly two years ago, and from the perspective of investment history, the stock price has soared about 30 times, an analyst from Hong Kong told Yicai. It is normal to take profits at this high level of profitability, and Buffett will likely sell his remaining shares gradually.

Buffett's shareholding reduction is due to the redeployment need for his portfolio, including concerns about global electric vehicle policies, Wen Tianna, executive president of Partners Capital Investment, said to Yicai, adding that he also considers the layout of local capital markets.

The valuation of EV makers is too high, and the growth will gradually slow down after the penetration rate increases, noted Lin Jiayi, general manager of Xuanjia Finance. In addition, expected returns are falling with the price war intensifying, Lin said, adding that whether EVs can dominate the future also depends on the evolution of fuel vehicles and other new tech innovations.

BYD sold 342,000 units last month, up 35 percent from a year earlier, with its overseas sales of new energy passenger vehicles reaching 27,000 units. The Shenzhen-based firm's sales surged 29 percent to 1.61 million units in the six months ended June 30 from a year ago.

With higher tariffs in the European Union and other markets, BYD is speeding up the construction of factories overseas. In late June, the first batch of mass-produced new energy vehicles at its Uzbekistan plant rolled off the production line, while it completed the construction of its first EV factory in Southeast Asia on July 4.

Editor: Martin Kadiev