Faster electrification of car production would add €800 billion to the value of the companies’ shares. This is the most important conclusion of the organization Transport & Environment after a financial analysis ‘Quick calculation of the share prices’ on the future of the most important European car companies.
The conclusion of this analysis is that these manufacturers would add $800 billion to their share value if they were to move more quickly during this decade rather than sticking to their internal combustion engine business model. The results contradict the industry’s version that a European initiative to sell exclusively zero-emission vehicles by 2035 would hurt profitability and cost jobs.
Manufacturers, according to this organization, face the possibility of cutting the profits of internal combustion engines by the end of the 2020s, as competition from cheaper electric battery vehicles and stricter regulations will affect sales and reduce their economies of scale.
According to Luca Bonaccorsi, director of sustainable finance at Transport & Environment (T&E) “Choosing a slow phase-out of combustion engines is financial suicide for car companies. The slow pace of the transition is destroying shareholder value and putting entire companies at risk of disappearing. The only transition that makes business sense is fast and furious.”
For Carlos Rico, an expert in automotive electrification at T&E, “Contrary to what industry executives say, we are not going to save jobs by maintaining combustion engine production. Spanish MEPs hold the key to accelerating electrification and Spain competitive in the global car market by supporting ambitious EU CO2 standards for vehicles, with a sales end date no later than 2035. The Fast Future Plan Forward is the model to follow and shows the effort and commitment to keep its brand and its enhance market value.”
Shares of the six automakers could grow an average of 316% if they switch to electric vehicles between 2025 and 2030 faster than currently planned.
A slower-than-expected transition to electric vehicles in those years would reduce market value growth and could actually lower the valuation of Toyota (one of the slowest automakers to date to be electrified) from today.
According to the analysis, FMCG automaker Volkswagen could nearly triple its market value (253%) and Stellantis could nearly triple its current value (388%) if they switch to electric vehicles faster than expected. Toyota, which is slow to electrify, has less growth potential (70%).
In the high-end auto market, the odds are even greater: Mercedes-Benz could increase its market value by 471% in 10 years and BMW could be next by 472%. Even Volvo Cars, currently valued twice as generously by the market thanks to its lead in electrification, could rise by 245% if the pace picks up.
In Europe, the main drivers of electrification are the EU’s clean vehicle rules. The current proposal to adopt more ambitious rules would require little progress until 2030. However, Profundo’s research shows that by 2030 it will be too late to make the change if automakers want to avoid financial damage, potentially severely affecting jobs in the sector. automotive sector.
Source: La Verdad
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
