ROME – The faster shift of homes to electric vehicles would be able to increase market value and profit margins faster than currently anticipated. This is the surprising fact that emerges from a financial analysis of six car manufacturers by the consultancy firm Profundo.
According to the research, commissioned by Transport & Environment, automakers could increase the value of their shares by € 800 billion if they switched to electric more quickly this decade, instead of staying anchored to the combustion engine business. A result in stark contrast to the thesis of the automotive sector according to which Europe’s push to sell only zero-emission cars in 2035 would affect profitability and cause job losses.
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Going into the detail of the analysis, research firm Profundo looked at the financial data of the six car manufacturers and separated the electric vehicle and combustion engine businesses of each of them. The analysis therefore highlighted that the operating profit margins of electric vehicle manufacturers are expected to exceed those of combustion engine manufacturers within 3-5 years. Towards the end of the decade, engine companies’ profit margins are set to decline and even turn negative on balance sheets.
“Opting for a slow elimination of combustion engines is financial suicide for automotive companies – said Luca Bonaccorsi, sustainable finance director Transport & Environment – A slow transition destroys shareholder value and puts entire companies at risk of disappearing. The only transition that makes commercial sense is the quick and easy one. ” In short, the valuation of the six car manufacturers examined could grow by an average of 316% compared to today with a faster transition to electric between 2025-2030 compared to current plans.
According to the analysis, Volkswagen could increase their market value more than three times (253%) and Stellantis almost five times (388%) compared to today if they switched to electric faster than expected, while Toyota, which is been slow in electrification, has a lower growth potential (70%). In the premium market, according to analysts, the opportunities are even greater: Mercedes-Benz could increase its value by 471% in 10 years and BMW could reach a profit of 472%, as well as Volvo Cars, which is currently valued by the market twice as generously than the others thanks to its advantage in electrification, it could increase by 245% if it went faster. (Maurilio Rigo)