Read The Full Article On: Businessinsider
Tesla is off to the races, but a lot of other companies that stand to benefit from rising demand for electric cars are still at the starting line.
A team of Morgan Stanley analysts predicts a wave of enthusiasm in the still-young industry, and writes that Tesla’s battery-powered vehicle manufacturing will become profitable this year as its new factory in Shanghai ramps up.
They say that milestone — and proof of concept at scale — will change the spending patterns for makers of semiconductors, batteries, chemicals, and those involved in mining, energy, and making charging stations.
“There are a multitude of second derivatives players that are interdependent in the EV ecosystem and touch many industries across the globe,” the team wrote.
Here’s how they describe the effects for original equipment manufacturers as they put more money into battery electric vehicles:
“If Tesla can indeed prove that EVs can be profitable at scale, we believe this would remove one of the key impediments preventing legacy OEMs from shifting capacity to BEVs, potentially unleashing further waves of investment into the BEV production ecosystem and its supporting infrastructure.”
They add that that will start an evolution that makes electric vehicle components more profitable for those companies. And as sales climb, cost fall, and profitability improves, they thinks the effects will be dramatic.
Today, Morgan Stanley estimates that sales penetration for electric vehicles is only at 2% worldwide. But they think that will jump to 11% in five years, 24% by 2030, and 70% in 2040.
They say their best idea for taking advantage of that shift is “through large cap, credible battery companies with a proven track record such as CATL, Samsung SDI, Panasonic and LG Chem.”
But they’ve found more than 20 other companies that could be major beneficiaries.
Listed below are the 25 stocks they expect to have the most potential as investors embrace growing demand for electric vehicles and improving infrastructure for them. Almost all of them are based in Asia, and they may be less familiar to US investors.
The stocks are arranged from lowest to highest based on how much they would have to rise to reach Morgan Stanley’s current price targets.
25. Contemporary Amperex Technology
Ticker: 300750.SZ
Sector: Batteries
Region: Asia-Pacific
Upside to price target: -16%
Source: Morgan Stanley Research
24. Enel
Ticker: Enel.MI
Sector: Electric utilities
Region: Europe
Upside to price target: -8%
Source: Morgan Stanley Research
23. Samsung SDI
Ticker: 006400.KS
Sector: Batteries
Region: Asia-Pacific
Upside to price target: -5%
Source: Morgan Stanley Research
22. NXP Semiconductors
Ticker: NXPI
Sector: Semiconductors
Region: USA
Upside to price target: 6%
Source: Morgan Stanley Research
21. Iljin Materials
Ticker: 020150.KS
Sector: Chemicals and materials
Region: Asia-Pacific
Upside to price target: 7%
Source: Morgan Stanley Research
20. Posco Chemical
Ticker: 003670.KS
Sector: Chemicals/Materials
Region: Asia-Pacific
Upside to price target: 7%
Source: Morgan Stanley Research
19. Zhejiang Sanhua
Ticker: 002050.SZ
Sector: Autos
Region: Asia-Pacific
Upside to price target: 8%
Source: Morgan Stanley Research
18. LG Chemicals
Ticker: 051910.KS
Sector: Batteries
Region: Asia-Pacific
Upside to price target: 9%
Source: Morgan Stanley Research
17. Glencore
Ticker: GLEN.L
Sector: Metals and mining
Region: Europe
Upside to price target: 12%
Source: Morgan Stanley Research
16. STMicroelectronics
Ticker: STM.PA
Sector: Semiconductors
Region: Europe
Upside to price target: 12%
Source: Morgan Stanley Research
15. Freeport-McMoRan
Ticker: FCX
Sector: Metals and mining
Region: USA
Upside to price target: 13%
Source: Morgan Stanley Research
14. Panasonic
Ticker: 6572.T
Sector: Batteries
Region: Asia-Pacific
Upside to price target: 13%
Source: Morgan Stanley Research
13. Quanta Computer
Ticker: 2382.TW
Sector: Technology and hardware
Region: Asia-Pacific
Upside to price target: 13%
Source: Morgan Stanley Research
12. Delta Electronics
Ticker: 2308.TW
Sector: Technology and hardware
Region: Asia-Pacific
Upside to price target: 18%
Source: Morgan Stanley Research
11. Zeon
Ticker: 4205.T
Sector: Chemicals/Materials
Region: Asia-Pacific
Upside to price target: 19%
Source: Morgan Stanley Research
10. Motherson Sumi Systems
Ticker: MOSS.NS
Sector: Autos
Region: India
Upside to price target: 19%
Source: Morgan Stanley Research
9. Tripod Technology
Ticker: 3044.TW
Sector: Technology and hardware
Region: Asia-Pacific
Upside to price target: 23%
Source: Morgan Stanley Research
8. Petronet LNG
Ticker: PLNG.NS
Sector: Energy
Region: India
Upside to price target: 25%
Source: Morgan Stanley Research
7. Hota Industrial Manufacturing
Ticker: 1536.TW
Sector: Autos
Region: Asia-Pacific
Upside to price target: 26%
Source: Morgan Stanley Research
6. Chroma ATE
Ticker: 2360.TW
Sector: Technology and hardware
Region: Asia-Pacific
Upside to price target: 29%
Source: Morgan Stanley Research
5. NTPC
Ticker: NTPC.NS
Sector: Electric utilities
Region: India
Upside to price target: 31%
Source: Morgan Stanley Research
4. S&T Motiv
Ticker: 064960.KS
Sector: Autos
Region: Asia-Pacific
Upside to price target: 39%
Source: Morgan Stanley Research
3. Komatsu
Ticker: 6301.T
Sector: Machinery
Region: Asia-Pacific
Upside to price target: 46%
Source: Morgan Stanley Research
2. NARI Technology
Ticker: 600406.SS
Sector: Electric utilities
Region: Asia-Pacific
Upside to price target: 52%
Source: Morgan Stanley Research
1. New Fortress Energy
Ticker: NFE
Sector: Energy
Region: USA
Upside to price target: 55%