Emerging EV Market Dynamics: BofA Says GM, Volkswagen Aggressive Among Legacy Automakers

The lead that internal combustion vehicles have is shrinking as electric vehicles steadily find increasing adoption, according to a BofA Securities analyst. 

Product Activity Among OEMs Varies: OEMs are pursuing a range of strategies, with product pipelines focused on everything from traditional high-volume models to lower-volume EVs, analyst John Murphy said in a note.

The product pipelines are experiencing notable volatility due to a number of delays, pivots and pushes to product launches, including an acceleration in alternative powertrain launches, the analyst said. 

The Rise Of EVs: For the first time in history, over half of the powertrain offerings across all new models to be launched over the model years 202-2025 will be alternative ones, he said.

A number of these, Murphy said, will be variant offerings of existing internal combustion models, most commonly hybrids.

The analyst also expects a slew of EVs to be launched under standalone nameplates.

In terms of number of nameplate offerings by powertrain type, ICEs, though still dominant, are seeing their lead shrinking, Murphy said.

EVs, according to the analyst, occupy the second position due to focused product efforts.

Hybrids, which account for a little over a quarter of powertrain offerings, are shrinking in relevancy as ICE vehicles and EVs approach cost parity, he added.

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GM, Volkswagen Lead: Among the traditional automakers, General Motors Company GM and Volkswagen AG VWAGY are aggressively pursuing electrification, with a slew of standalone models launching over the next four model years, Murphy said.

GM will be launching most of its EV models under its Cadillac brand, in addition to standalone pickup/SUV models under the Chevrolet, GMC and Hummer brands, he added.

Volkswagen, the analyst noted, has created two standalone pillars — ID under Volkswagen and E-Tron under Audi —through which it will be launching many EV models.

Startups, Tech Entry To Fuel EV Growth: The strong pipeline of standalone EV nameplates BofA expects over the four-year forecast period is also a function of several newer industry entrants like Rivian, Lucid, Fisker Inc. FSR, Lordstown Motors Corp. RIDE, Canoo Inc. GOEV and Arrival ARVL, Murphy said.

Additionally, there could be introductions of several electric/autonomous vehicles from Alphabet, Inc.'s GOOGL (GOOG) Waymo, Amazon.com, Inc.'s AMZN Zoox, and Apple Inc. AAPL, he added.

"In our view, many of these companies are trying to replicate Tesla, Inc.'s TSLA early success in the electric vehicle market," Murphy wrote in the note.

The competitive environment, according to the analyst, is fierce among incumbents and entrants.

Related Link: Tesla Analyst Cuts Price Target By 17% On Potential Battery Delay