Traffic rules are changing when it comes to what people drive – or will drive in the future. Cars have been powered by internal combustion engines for more than 100 years. But around the world, consumers are slowly switching to electric vehicles, and countries are imposing bans on ICE-based engines. So far, 20 have announced such bans, with the earliest coming into effect in 2025 in Norway and nine more in 2030, including in the UK, Sweden and Austria, according to a Cowen report. The company now forecasts EV penetration of 21.5% in 2025 and 33.3% in 2030, up from its previous forecast of 9.6% and 25.7%, respectively. The rebound is largely due to Tesla’s continued success, new vehicles from established domestic manufacturers (OEMs) and continued strength in China and Europe, said Jeffrey Osborne, the company’s senior research analyst. This mobility disruption also includes automation, such as driverless cars and advanced driver assistance system (ADAS) applications. There are specific sectors and stocks that should benefit from these trends, Osborne said. “We see that the shift towards safe, green and connected vehicles is having a profound impact on semiconductors, sensors and battery materials,” he wrote in the report. He sees OEMs evolving into system solution providers, that the increasing share of semiconductors, sensors and domain controllers/central computing systems is the recipe for success, and that the lithium-ion battery remains the dominant technology powering electric vehicles. Here are some of the stocks Cowen thinks will be the main beneficiaries. Technology and mobility architecture company Aptiv delivers mobility solutions and manufactures components for electrified, software-defined vehicles. Cowen said the company is “well positioned in the growing space of electrical architecture, electronics and security applications.” It is also ready to take advantage of Smart Vehicle Architecture (SVA) programs. The stock is down 37% year-to-date. Automotive supplier Visteon develops and manufactures electronics and connected solutions for electric vehicle manufacturers. The company is well positioned to participate in the digitization of the cockpit, said Cowen. It’s also facing consolidation trends within electronic control units and is working on domain controllers for autonomous and ADAS applications, the company noted. Visteon shares are up nearly 35% so far this year. ChargePoint Holdings, a provider of EV charging technology solutions, has a 64% market share in connected Level 2 charging stations, excluding Tesla, and a growing presence in the EU, Cowen said. The company sees a 33% revenue CAGR (the annualized compound revenue growth rate) through 2030, with gross margin improving to 41%. ChargePoint on Thursday reported third-quarter earnings that missed expectations, with adjusted net income of $56 million versus StreetAccount’s estimate of $64.5 million. Revenue was $125.2 million compared to the expected $132.2 million. Shares of ChargePoint are down nearly 39% year-to-date. Lithium-ion battery maker Enovix is a disruptor and has a unique architecture in its BrakeFlow technology, Cowen said. “An attractive potential customer list is anchoring the bull case, with an EV licensing model as the big cherry on top, likely to manifest via an initial JDA soon [joint development agreement] with an auto OEM,” the report reads. Shares are down more than 52% so far this year. Piedmont Lithium, on the other hand, is up more than 15% year-to-date. The Company is developing battery-grade lithium hydroxide and other chemicals for the electric vehicle and battery storage markets. Cowen said Piedmont Lithium has “a uniquely diversified footprint” and “should quickly become one of the largest lithium chemical producers in the world.” Switzerland-based semiconductor company STMicroelectronics has a strong portfolio and a leadership position in the silicon carbide chemical that is backed by its key customer Tesla, Cowen said. The company is well positioned to benefit from both vehicle electrification and ADAS. STMicroelectronics stock is down nearly 21% so far this year. Mobileye Global, which develops and deploys ADAS and autonomous driving systems, has a first-mover advantage in the ADAS market Cs, according to Cowen [system-on-chip applications] and more than a decade of real-world driving data supports its positioning,” the report said. Mobileye debuted on October 26 after being spun off from Intel. Shares are up 52% from the IPO price of $21 per share. — CNBC’s Michael Bloom contributed coverage.
