EVs Will Rule the World By 2040. Tesla Stock Isn’t the Only Winner. – Barron’s

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Piper is predicting the EV takeover of the global automotive industry will be complete in 19 years.

Ben Stansall/AFP via Getty Images

A lot of electric vehicles are going to be sold in the coming generation. That’s good news for Tesla. It’s also good news for a host of other auto makers, including some start-ups. It’s bad news, surprisingly, for NIO and its Chinese EV peers.

Tuesday, Piper Sandler analyst Alexander Potter published a very detailed forecast for EV sales stretching all the way out to 2040. He forecasts sales and market share for essentially every major auto maker globally.

“We have spent the past few months assembling a brand-by-brand, region-by-region forecast for battery electric vehicle (BEV) sales,” writes the analyst. Looking ahead, he forecasts EV penetration at 45% of new car sales by 2030 and 94% by 2040.

Potter is predicting the EV takeover of the global automotive industry will be complete in 19 years.

At the top of the market share list sits Volkswagen (ticker: VOW.Germany), not Tesla (TSLA). Potter predicts Volkswagen will sell about 9.2 million EVs in 2040, or 11.4% of the global total.

Tesla investors shouldn’t fret. Potter is a Tesla bull and rates shares Buy. His price target is $1,200 a share, valuing company stock at more than $1 trillion. He predicts Tesla will have a 10.1% market share by 2040, selling about 8.2 million vehicles a year. Tesla sold 500,000 vehicles in 2020.

Those are interesting projections, but the report has other bombshells in it. New EV start-ups, as a group, are expected to capture 11% of the market. NIO (NIO), however, will have a less-than-1% share in 2040, by Potter’s math. That would certainly be a disappointment to NIO bulls.

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In fact, NIO, XPeng (XPEV), and Li Auto (LI)—which have a combined market capitalization of about $130 billion—are expected to sell a total of just 2.1 million EVs in 2040. That’s about one-third Potter’s predicted GM sales. GM’s market cap is about $86 billion.

Potter sees General Motors (GM) and Ford Motor (F) maintaining their global market shares by successfully navigating the transition to EVs.

That isn’t the case for Toyota Motor (TM). Potter predicts a market-share collapse from about 11% today to only 4.3% by 2040.

In the shorter term, Potter predicts 18% EV penetration of global light-vehicle sales by 2025. About a year ago, analyst estimates were closer to 10%. More EVs means more lithium for batteries and more batteries to power the EVs. The EV industry is set to see a lot of growth over the coming few years.

Some of Potter’s predictions are bold, but 2040 is, of course, a long way off, and stocks aren’t really reacting. Tesla shares are close to flat, as are the S&P 500 and Dow Jones Industrial Average. GM shares are flat as well. Ford stock is up 0.6% after Barclays increased its price target for shares to $17 from $15.

Shares of NIO and its peers might be reacting, though. NIO stock is down 3.5% in recent trading. Li stock is off 4.1%. XPeng shares are down 7.2%.

Write to Al Root at allen.root@dowjones.com