Carbon emission cost for automakers 'far from fully appreciated,' says Morgan Stanley's Adam Jonas

Key Points
  • Morgan Stanley estimates that passenger vehicles will emit 3.8 gigatons of carbon in 2020, which is equal to about 7% of total carbon emissions. 
  • "Billions of tons of CO2 and hundreds of trillions of dollars of economic value hang in the balance," Morgan Stanley auto analyst Adam Jonas said in a note to clients.
  • He said that he is increasingly convinced that the impact of carbon emissions "on earnings and multiples is far from fully appreciated."

Passenger vehicles will account for about 7% of global carbon emissions in 2020, and as carbon costs increase this could seriously impact automakers' bottom line, according to Morgan Stanley.

"In a world where the price of carbon emissions rises, the impact of such numbers on financial results and investment performance may be significant," Morgan Stanley auto analyst Adam Jonas said in a note to clients Wednesday.

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"While this process may take time and auto & auto related firms may have any number of strategies to adapt their fleets … we believe investors cannot be too early in assessing the exposure as a starting point," he added.

Morgan Stanley estimates that passenger vehicles will emit 3.8 gigatons of carbon dioxide worldwide next year, or 7% of total emissions.