As sales of electric vehicles climb — and excitement around the segment grows — Goldman Sachs has shared its market outlook and named a number of stocks to buy going into 2022. "In recent months, battery electric vehicle sales mix has continued to increase, with EV mix now running in the mid to high teens range in Europe and China," Goldman analysts, led by Mark Delaney, said in a note on Dec. 13. They named a number of suppliers exposed to the transition to battery electric vehicles, as well as original equipment manufacturers (or automakers) that are set to benefit. Component companies and suppliers "We believe direct enablers of the transition towards BEVs including electronic component companies ( APH , TEL , ST , APTV ), and tier-1 suppliers ( MGA , LEA ), should be key beneficiaries given higher content on BEVs [battery electric vehicles] vs. ICE vehicles [internal combustion engine] vehicles," the analysts said. All six stocks are buy-rated by Goldman analysts. The electronic component companies referenced above include APH , or Amphenol, a company that makes a variety of connectors for electric vehicles. Switzerland's TE Connectivity ( TEL) provides in-vehicle connectivity and components used in hybrid and electric vehicles. ST refers to Sensata Technologies, an industrial technology company that develops, manufactures, and sells sensors and electrical protection products. APTV refers to Aptiv, an Ireland-headquartered company that manufactures vehicle components and provides technology for self-driving cars. Goldman's analysts noted that both Aptiv and TEL have commented on their increasing content in battery electric vehicles, while Sensata expects its BEV content to be about double that of regular vehicles within five years. The "tier-1 suppliers" (that is, companies that are directly engaged with EV makers) include MGA , or Magna International, a Canadian auto parts supplier (one of the world's largest) and manufacturer that supplies to both electric and traditional vehicle companies. The other tier-1 supplier Goldman says is set to benefit from rising EV sales is LEA , or Lear, a supplier of automotive seating and electrical systems to automakers, or OEMs. Jabil Circuit Goldman also recently upgraded electronics manufacturing service company Jabil Circuit ( JBL ) to buy after noting the company's exposure to the electric vehicle market — and to Tesla and Rivian Automotive in particular. In a note on Dec. 13, Goldman analysts led by Delaney said: "We believe the company is well positioned to grow its auto business over time (the company expects its auto end market to grow about 40% year on year in 2022) given its exposure to applications tied to autonomous, connected and electric vehicles (about half of its auto exposure; we estimate that EVs represent a mid single digit percent of total company revenue)." Read more: Goldman says buy this stock with exposure to Tesla and Rivian as EV market grows Automakers As for the automakers themselves, Goldman's experts said they remain positive on "select OEMs," citing Tesla and General Motors as companies "that we believe are ahead developing scalable EV architectures, and can sell EVs most profitably longer term." "We also note that Ford has seen very strong traction (including with approximately 200,000 pre-orders for its [electric pickup] F-150 Lightning ), and we believe Rivian 's products and vertical integration position it well long term," they noted. Goldman has a buy rating on Tesla and GM, but is neutral on Ford and Rivian. Rising sales Its list of stocks to watch comes as sales of electric vehicles continue to increase around the world. In the United States, battery electric vehicle sales increased to about 45,000 units in November 2021, up from around 30,000 units back in January, according to motor sales analysis firm Motor Intelligence. Meanwhile, in key European car markets (the U.K, Germany, Norway, Netherlands, Sweden, France, Italy and Spain), battery electric vehicle sales represented 16% of the industry mix in November (up from 7% in January), and have seen 62% year-on-year growth, Goldman said. In China, battery electric vehicle sales are also now a mid-to-high-teens percent of industry volumes in November (up from mid-to-high-single digits in January), the bank added. Tesla continues to dominate market share in the United States, with approximately 70% of the EV market year-to-date, Goldman noted.
An employee assembles a rear bumper at the Magna International Inc. Polycon Industries auto parts manufacturing facility in Guelph, Ontario, Canada.
Cole Burston | Bloomberg | Getty Images
As sales of electric vehicles climb — and excitement around the segment grows — Goldman Sachs has shared its market outlook and named a number of stocks to buy going into 2022.