Demand for electric vehicles is expected to explode in the coming decades – and UBS has identified a topic for investors to pour money into that electrified sector. UBS says the growing amount of electronic content in vehicles will lead to new supply chains, as automakers increasingly work directly with semiconductor companies and new technology companies. In particular, this increase in electrification will have a profound impact on the powertrain – a key component cluster that generates power from the engine and sends it to the wheels, UBS analysts said. led by David Lesne, wrote in a July 20 report. According to UBS estimates, the traditional powertrain supply chain generates about 250 billion euros ($255 billion) in annual revenue in 2021, but is expected to grow by 150 billion euros in 2030 as Battery powertrain production increased. Top Stock Ideas With powertrain electrification gaining “significant” investor attention, UBS has named its “most favored” stocks for access. with this topic. One of the bank’s top picks is Tesla. The bank believes the company is likely to remain the “most successful” global electric vehicle manufacturer, thanks to its technology leadership and best-in-class battery supply chain management. Tesla is also poised to expand its gross margin in the coming quarters and years, and offers guidance for 50% production growth this year, according to UBS. Banks also like Mercedes. It expects the automaker to “master the electric transition in a highly profitable way.” UBS said the company’s profit margin target of 12% to 14% is conservative and expects the share price to increase further as the company demonstrates its ability to compete in the premium electric vehicle segment. Read more Wall Street believes these stocks will do well this quarter – and Citi offers 50% gain BofA believes we are in a recession – and says these stocks have what it takes necessary to defeat it. Goldman Sachs says the bear market is not ‘not over’, and explains why German auto parts supplier Vitesco also made the UBS list. The bank considers the company “one of the few winners” in the field of powertrain electrification, with a head start out ahead of its peers and the ability to deliver the full spectrum of powertrains. EV drivetrain. The bank added that much of Vitesco’s transition from supplying traditional carmakers to electric vehicle manufacturers has been completed, and the company now benefits from one of its electric product portfolios. largest gasification. Chinese battery maker Contemporary Amperex Technology (CATL) is another UBS favorite. The bank believes the company has the “capacity and ambition” to consolidate its technological advantage and maintain its “outstanding competitiveness” over its peers. “We expect CATL to maintain its leading position in the battery industry over the next 5-10 years, with solid R&D support,” said Lesne. UBS also likes Taiwanese electronics maker Delta Electronics, which believes it is ahead of its peers in the electric vehicle sector, thanks to its product and strong customer portfolio. The bank estimates electric vehicle sales will account for more than 10% of the company’s revenue by 2025, up from 5% to 6% now. EV Outlook In a research note released last month, UBS said it expected 2026 to be an “inflection point” for EVs, as the global EV market will outpace market size. combination of personal computers, smartphones and servers. “According to our forecast, internal combustion vehicle vehicle production growth will broadly stabilize until peaking in 2024, then decline by an average of 15% annually through 2030. Meanwhile, the number quantity [battery electric vehicles] produced will increase sixfold between 2021-30,” UBS added in its July 20 report.