Goldman says buy these global stocks to play a $900 billion EV opportunity — and names one with over 50% upside
A new European battery ecosystem could be in the cards, as the region seeks to be a leader in the global shift to electric vehicle adoption, according to Goldman Sachs . The bank names the key stocks along the battery value chain that it thinks could benefit from "Europe's largest industrial transformation." The bank estimates EV penetration in Europe will hit 72% in 2030, up from just 11% in 2021. The region is expected to lead the world in EV penetration. In a note from June 20, Goldman's analysts, led by Philipp Konig, said they expect EV battery demand to increase by a compounded rate of 20% into 2030. Coupled with the European Union's ban on fossil-fuel vehicles by 2035, this will create a battery market valued at $900 billion by 2035, according to Goldman. The bank warned that the supply of battery capacity is likely to remain tight into 2030 — given the challenges of manufacturing batteries on an industrial scale — and could see further tightness if automakers accelerate their electrification plans. Stock picks Against this backdrop, Goldman has named a number of stocks along the battery supply chain that it thinks will benefit from the growth of the battery ecosystem in Europe. German battery manufacturer Varta makes Goldman's list. The bank said the company is the only established German battery maker and commands leadership in micro and consumer batteries across Europe. Goldman noted that the company plans to expand battery production into the EV space and has already snagged Porsche as its first customer. It also aims to capitalize on further demand from other automakers, energy storage and other end-markets. Varta's expansion into the EV space will drive compounded top-line growth of 14% from 2025 into 2030 and generate revenues of nearly 3 billion euros ($3.15 billion), according to Goldman's estimates. "With the stock currently trading near all-time-low multiples and reflecting little potential from growth in the e-mobility segment, we see an attractive entry point with a potential large catalyst, [such as an] EV order," Konig said. The bank has a price target of 102 euros on the stock, which implies a potential upside of 18.6% to its closing price of around 86 euros on June 28. Goldman also likes South Korea's LG Energy, which the bank described as the second largest EV battery supplier in the world. The bank "particularly likes" the company's "sustained high" market share in Europe, as well as rising exposure to the United states, which it sees as the next big driver of EV adoption. The bank estimates that the company's earnings before interest, taxes, depreciation and amortization will grow 6.7 times into 2030. It has a price target of 475,000 Korean won ($365.90) on the stock, representing a potential upside of 21.3% to its closing price of 391,500 Korean won on June 29. Samsung SDI is another stock that Goldman likes. The bank believes the company will continue to deliver earnings growth, mainly led by strong demand for cylindrical batteries and solid growth in EV battery shipment. The company also has a strong presence in the European EV battery market and counts BMW and Volkswagen as its main customers, according to Goldman. The bank expects the company to retain its leadership in this space. Its new joint venture to build a battery plant with Stellantis will also position the company well to expand its global exposure and grow its EV battery capacity and revenue, Konig said. Other positives cited by the analyst include the company's ability to defend its EV battery margin, attractive valuation level, as well as strong earnings growth potential. Shares of Samsung SDI closed at 570,000 Korean won on Wednesday, implying a potential upside of 56.1% to Goldman's price target of 890,000 Korean won.