Customers’ growing interest in electric vehicles has significantly pushed the competition to intensify worldwide. An increasing number of startups and legacy automakers are striving to dominate the highly competitive market.
Now, American investment bank Goldman Sachs forecasts two groups of EV companies to advance in the market. It has also specifically named six stocks to exceed the competition, CNBC reports.
Projections
Goldman Sachs noted that the EV industry is seeing strong competition due to the series of price cuts since the beginning of 2023.
As a result, the EV market grew while government incentives continued to decline. This outcome ultimately tests the effectiveness and efficiency of the electric automakers’ business models.
On August 10, Goldman reportedly named two groups of EV companies “prevailing in an era of intense competition.”
It noted that the first group has substantial financial support aiming to establish “vertically integrated business models,” like power batteries. These EV companies majorly manage their supply chain network than depending on suppliers such as follows:
As for the second group, Goldman asserted that it includes companies prioritizing new technology and business for growth prospects. These are the following:
Goldman’s conviction buy list
Goldman stated that Hon Hai is a “key beneficiary” of the “rising EV outsourcing trend. For context, it is the biggest contractor electronics company globally.
It further cited Hon Hai’s global footprint, production experience, and thorough products and services in EV design, chips, and software.
“Hon Hai could also leverage its experience in operating factories in 24 countries for ICT products, which we think reflects its strong ability to manage labour, supply chain, logistics, and government relations globally.”
Goldman Sachs
That said, the investment bank gave it a buy rating. It also predicted 151 New Taiwan dollars ($4.73) as its 1-year target price. Remarkably, it indicates approximately 42% possible growth.
Tesla is also on Goldman’s conviction buy list. It indicated that the Musk-led company is accelerating its battery production apart from collaborating with suppliers.
“Tesla believes its battery strategy and capacity expansion plans will help to support its long-term growth targets and lower costs.”
Goldman Sachs
However, Goldman only asserted a neutral rating for the American automaker. It also gave the company a $275 12-month target price. Notably, that figure indicates about a 25% possible increase.
Goldman also said that Japan’s Toyota currently lacks competitive EV offerings. Nonetheless, it believes the company is a “potential catalyst for share price re-rating.”
“Toyota lags behind Tesla and BYD in EV sales, but we still see a large possibility of Toyota catching up.”
Goldman Sachs
It further claimed that not all electric automakers could allocate “a substantial amount of money sustainably” to adopt technological advancements like Toyota. It also cited the Japanese automaker’s ability to cut costs.
“Sustainable profit-making in EVs requires true cost competitiveness in an environment without government subsidies.”
Goldman Sachs
The investment bank gave Toyota a buy rating. It also forecasts the company with a 2,800 Japanese yen ($19.25) 12-month target price. That figure represents approximately 19% growth.
On the other hand, Goldman defines Panasonic as a pioneer in developing cylindrical power batteries. It stated that the company has unprecedented production capacity and a safety reputation. Therefore, it gained a buy rating from the investment bank. It also received a 12-month target price of 2,100 Japanese yen. That amount indicates around 32% potential growth.
Meanwhile, Toyota Industries gained a neutral rating from Goldman Sachs with a 9,200 Japanese yen 12-month target price. It indicates about a 7% possible decline.
“Toyota Industries is a major player with a global market share of roughly 50% in electric compressors, the value added for which is increasing alongside advances in EVs. Toyota Industries receives reliable dividend income on its shareholdings in Toyota and Denso, ensuring a steady income stream and cash flow for the fiscal year. The company has an adequate financial position to fund any needs for greater investments in bipolar batteries in the future, in our view.”
Goldman Sachs
Last but not least, Goldman indicated a buy rating for BYD. It forecasts the Chinese company to hit 353 yuan ($48.40) in 12 months. That figure represents a potential growth of approximately 47%.
See Also:
- Goldman Sachs: Tesla may benefit from US economy “Soft Landing”
- Goldman Sachs: Tesla Bot-like humanoid robots could be a $150 billion-a-year business
- Goldman Sachs triggers gold rush in energy storage
- Tesla announces lower than expected Optimus Bot production figures
- Bank of America predicts lithium surplus in 2023 as demand wanes
The EV industry is growing as EV companies strive to beat each other through their offerings and technological advancements. These six EV stocks can guide you in deciding which companies to support the following year.
