Investment Opportunities Abound in Electric Vehicles

Seth Goldstein: Electric vehicles accounted for just 2% of new global auto sales in 2018. However, by 2030, we forecast EVs will be 20% of all cars sold, while the market expects just 15%.

We believe EVs will reach cost and functional parity with internal combustion engine vehicles by 2025. As battery costs decline and manufacturing scale is realized, we forecast electric vehicles will reach cost parity with internal combustion engines.

Battery innovations should increase driving range and shorten recharge times so that driving distance and recharging time will reach parity with internal combustion engines.

With costs and function equal, the amount of charging infrastructure in a region will be the wild card that either spurs or limits EV adoption. We think improvements in cost, range, and charging time will be rolled out globally given the size and scale of major automakers and battery producers. In contrast, chargers need to be saturated and nearby to benefit an EV owner.

We believe that China and Europe will have the necessary charging infrastructure to support mass market adoption, while the U.S. will only have enough infrastructure in place in some parts of the country to drive higher EV adoption.

Across the EV supply chain and ancillary industries, opportunities abound. Our top pick auto OEM picks are BMW, Ford, and General Motors. We also like auto suppliers that are well positioned across the ICE, hybrid, and EV platforms, including BorgWarner and Delphi Technologies. Panasonic is our top battery producer stock.

For lithium, we like low-cost producers already in production, such as Albemarle and SQM. We also like utilities that operate in EV-friendly regions such as Edison International.