Goldman Sachs names the electric vehicle makers it likes over next few years

Published Tue, Aug 10 20218:09 PM EDT

The United States and European Union have announced big plans they hope will boost the popularity of electric vehicles. Goldman Sachs has ideas about how those regions' targets will help — or hurt — specific automakers. The Wall Street firm sees electric vehicles making up about 45% of new vehicles sales in the U.S. by 2030. That figure is relatively close to a national target U.S. President Joe Biden recently set for electric vehicles to make up half of all new vehicle sales by 2030. European authorities, on the other hand, have proposed "a very challenging target," and nearly all automakers will need to take "swift action" in order to bring it to reality, Kota Yuzawa, managing director and head of Asia auto research at Goldman Sachs, told CNBC's "Street Signs Asia" on Friday. In July, the European Union detailed a plan for reducing greenhouse gas emissions , and the auto sector could be among the hardest hit. The proposed measures include a de facto ban on diesel and gasoline cars by 2035. "Clearly pure electric vehicle maker(s) should have a certain advantage because they have no legacy cost to deal with," Yuzawa said. Winners and losers Companies such as Toyota Motor , China's BYD and Tesla could stand out and benefit from the electrification trend with "pretty good profitability," he said. Traditional automakers that are heavily focused on gasoline-powered vehicles are likely to face "a difficult situation." One such company is Japan's Mazda Motor , which Yuzawa said currently has a large exposure to gasoline engines and will need to "make a significant effort" to enter the electric vehicle space with profitability. 'Very critical' year coming up Looking ahead, Goldman Sachs sees battery-powered electric vehicles breaking even globally by 2022 with the help of government subsidies. And in 2028, the firm expects electric cars to break even without government subsidies as battery costs decline sharply. Before then, Yuzawa said 2025 will be a critical year for the auto sector as battery costs are expected fall by $100 per kilowatt, half their current levels. "With that price, almost all automaker(s) can be ... decently OK in terms of this cost structure of electric vehicle," he said. Over time the total cost of ownership for electric vehicle buyers may decline as they see savings compared with their previous expenditure on gas. "If you do the math — we call it the payback period — around 2025 you will see a payback period of less than three years and that's always a magic point," Yuzawa said, explaining that's when consumers would start considering an electric vehicle for their next car purchase. "2025 is going to be a very, very critical year for almost all, you know, electric vehicle … makers and also consumers," Yuzawa said.