BMW And Others Have Been Downgraded And Tesla Could Have Something To Do With It

It has been reported that Chinese and Tesla are threatening to overtake European automakers in the market share stakes.

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There was a downgrade of BMW from buy to neutral, a sell rating for Volvo Cars, and an upgrade for Ferrari from sell to neutral at Goldman Sachs. Stellantis, Fiat Chrysler's parent company, was also upgraded from sell to neutral. Goldman also raised its price target by 10.5% for Stellantis.

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A Wall Street investment bank warned that some stock prices might swing if Europe transitions to battery electric vehicles.

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Despite the fact that the automakers' strong positions are dependent on producing products with industry-leading powertrain efficiency, Goldman Sachs analysts said last year that European mass-market brands accounted for 72% of sales last year.

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“Based on a review of European BEV offerings using the overall efficiency of their powertrain, we believe there is little evidence of industry-leading products,” said the analysts led by George Galliers.

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Below is Goldman Sachs' updated price target table:

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• BMW

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• Mercedes-Benz

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• Porsche

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• Volkswagen

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• Stellantis

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• Renault

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• Volvo Car

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• Aston Martin Lagonda

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• Ferrari

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• Porsche 

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Only two stocks received price target increases from Goldman: Porsche, whose multiple increased by 24%, and Ferrari, whose capital costs were changed in the valuation.

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There is a wide gap between North America and Europe in terms of technological advancements, as Tesla's reported gross margins are considerably higher than those of European battery electric cars, a finding that suggests a wider gap between the two.

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Furthermore, the report points out that Chinese competitors that are looking to expand internationally should be cautious about the risk of excessive levels of competition, discounting, and price cuts in their domestic market, which could also detract from the market share of established players.

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In 2025, Warren Buffet-backed BYD plans to open a manufacturing facility in Hungary. The Chinese electric car company Nio announced plans to open a factory in Hungary last year.

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The production of EV batteries in Europe has already begun at several Chinese manufacturers, including CATL.

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European automakers, however, have already begun adapting to market changes, noted Goldman.

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As an example, it mentioned several firms have already begun to focus on luxury markets that they perceive to be less competitive and consumer demand is more resilient during times of economic weakness.

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In addition to de-risking companies and brands, e-Fuel, which is a synthetic drop-in replacement for gasoline, could also revolutionize the automotive industry.

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