Speedy electrification of the automotive sector would carry higher inventory market valuations

Transport & Environment has asked Profundo for a financial analysis of the impact of the rapid transition on electric vehicles. According to this study, published a few days before the vote on CO2 emissions in the European Parliament, the market value of car manufacturers would increase by 800 billion euros.

T&E commissioned Profund to carry out a financial analysis, which according to them proves that the rapid electrification of vehicles brings better valuation on the stock exchange.

The publication of the financial analysis submitted by the Transport & Environment association is up to date. While the European Parliament is preparing to vote in plenary on 7 and 8 June 2022, the climate package texts, including those on CO2 emissions from new vehicles, T&E are publishing a financial analysis that shows the benefits of vehicle electrification. for manufacturers.

Read the full study here: Profundo study market valuation of producers facing the transition to electricity

The association has ordered a study from Profundo (close to several environmental organizations) on the stock exchange of producers in the event of faster market electrification. “Every time in the history of the car, a quick transition equates to financial tensions, job losses and potential bankruptcies. The topic is again changing to an outdated formula, which is the environment versus the economy“Explains T&E, which this time decided to use only financial arguments to force manufacturers to speed up the abandonment of heat engines.

Read also : Call 28 to ban thermal vehicles in 2035

Profundo analyzed the financial data of six cars: three car companies in the mass market (VW, Stellantis and Toyota) and three premium car manufacturers (Volvo Cars, Mercedes-Benz and BMW). Based on the companies’ financial data, their strategic plans and market trends, an in-depth analysis was performed for VW, representing the market average, and then a similar methodology was applied to other manufacturers to understand the relationship between the speed of phasing out the internal combustion engine and the market value of 100% electrical schedules: current schedules, slow and fast (2025-2030 will be fully electric).

Profundo’s analysis shows that the rapid transition of the six traditional car manufacturers to electric vehicles could lead to an increase in equity value of € 800 billion compared to the slow transition. These should generate higher margins, which will lead to increased shareholder value and better access to capital.

The fast-moving scenario (ie faster start-up between 2025 and 2030 than current plans) represents an average growth potential of 316% compared to current market values, with mass car manufacturers multiplying their market value by three and top manufacturers by five.

Automakers that plan to phase out internal combustion engines by 2030 in developed markets have the highest potential for recovery. Profundo states that the market value of Stellantis could increase by 270% and the market value of Mercedes-Benz by 410%.

Arguments for the division of thermal and electrical activities

This analysis is visibly shared by other manufacturers whose desire to divide electrical and thermal activities is the subject of a study or has already taken place. The last example concerns Renault, which is still being analyzed.

Also read: Renault specifies the contours of a possible split in its activities

At the General Meeting of Shareholders of Renault, held on May 25, 2022, Luca de MeoCEO of the group said: “We want to combine electrical assets in a specific unit in France and a heat engine entity outside France. These studies are progressing very well and confirm the strong potential of the operation and the great motivation within the group. But beware, this is a construction project and not a division of the group“.

Ford, meanwhile, has already committed and merged its electrical activities under the name Ford Model e, while the thermal division can now be found under the Ford Blue brand.

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