The European Union has presented one of the most ambitious plans to combat climate change in the world, a program that is anticipated to have a major impact on industries such as electricity and autos. The European Commission, the bloc’s executive department, wants the region to be carbon neutral by 2050, reduce carbon emissions by 55% by 2030, and virtually ban the sale of new gasoline-powered cars after 2035.
At a time when the industry is transitioning away from internal combustion engines and toward electric vehicles, this puts the pedal to the metal for European automakers. In 2020, Europe overtook China as the world’s largest market for electric vehicles, but in 2021, it was surpassed by the world’s most populous country. Last year, European governments announced fresh incentives for people to purchase electric vehicles, while the European Union imposed harsh fines on automakers whose fleets failed to reach new emissions limits, hastening the shift to electric vehicles. Also check out: According to UBS Plus, as a crucial electric-vehicle subsidy is extended, Tesla and these other companies should benefit. To join the electric-vehicle party, buy these three battery stocks, but avoid this business, according to UBS. According to automotive researcher Matthias Schmidt, editor of the European Electric Car Report, 1.05 million totally electric (as opposed to hybrid) new registrations are predicted in 18 important European auto markets in 2021. According to Schmidt, that number will climb to 1.31 million in 2022, and will exceed 2 million by 2024. 14 European Union member states, as well as the United Kingdom, Norway, Iceland, and Switzerland, are among the 18 markets. The EU’s latest proposal, which was revealed on Wednesday, still faces a number of challenges. As it makes its way through parliament and individual member states, it is expected to face strong opposition from industry lobbyists and environmental campaigners alike. Automakers’ fleet emission limits would be tightened, and one million charging spots for cars will be built along European roads by 2025, according to the recommendations. Schmidt believes that plug-in hybrid electric vehicles, which are a stepping stone to completely electric vehicles, will be critical for European automakers in meeting carbon emission objectives. Currently, Volkswagen VOW, -1.73 percent Group brands lead the plug-in car industry, with a 23 percent market share so far this year among the 18 European countries monitored by the analyst. Volkswagen is followed by Stellantis’ STLA, -1.43 percent brands, which include Fiat, Chrysler, Peugeot, and Citroen, with 14 percent, and Daimler DAI, -0.44 percent, which owns Mercedes Benz, with 11 percent. According to Berenberg analysts Luke Junk and Alex Barenklau, the EU’s plan is an incremental positive for the electric-vehicle sector, and it will accelerate broader trends that should help shares in at least eight businesses. Plus: The New Mercedes-Benz ‘Tesla Fighter’ Is As Good As It Gets. Berenberg’s top stock recommendations are auto electronics company Visteon VC, -0.88%, which develops cockpit displays, and auto parts company Aptiv APTV, -1.32 percent, which can deliver twice as many parts to an electric vehicle as a gasoline-powered vehicle. Visteon’s stock may rise 29 percent, while Aptiv’s might rise 11 percent, according to the investment bank’s target prices. Amphenol APH, -1.02 percent, and TE Connectivity TEL, -1.68 percent, all of which make electronic connectors, as well as circuit protection company Littelfuse LFUS, -0.21 percent, are among the companies Junk and Barenklau identified as having strong tailwinds from the EV trend.
According to Berenberg’s target pricing, Amphenol and TE Connectivity stock might both rise by around 6%, while Littelfuse stock could rise by more than 18%. Berenberg’s “value” investment recommendations include BorgWarner, Sensata Technologies, and Methode Electronics, all of which are industry suppliers. According to Junk and Barenklau, BorgWarner’s stock might rise more than 25%, while Sensata Technologies’ stock could rise more than 20%, and Methode Electronics’ stock could rise more than 11%./n
