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Pro Analysis

Electric autos are overhyped, bet on cleaner burning engine suppliers, Deutsche Bank says

Delphi headquarters
Gary Malerba | Bloomberg | Getty Images
Delphi headquarters

Deutsche Bank is increasingly bullish on auto suppliers, saying recent advances in battery technology are making conventional engine cars more competitive against electric vehicles.

"A consistent theme within our research in recent years was that electric vehicle powertrains will eventually approach cost parity vs. more advanced internal combustion powertrains. … But we found that our previous forecast underestimated innovation, efficiency improvement, and cost reduction in internal combustion," analyst Rod Lache wrote in a note to clients Wednesday. "Somewhat surprisingly, some of the innovations in batteries will help sustain ICEs [internal combustion engines]. ... Prospects for business units focused on internal combustion efficiency and emissions appear brighter than we previously thought."

A car's powertrain, which delivers kinetic power to the road, includes its engine, transmission and drive shafts.