10 Takeaways From BofA's Future Car Conference

BofA Securities recently hosted its fifth annual Future Car Conference. This year’s event featured 11 auto industry expert speakers discussing the leading trends in the future of the global auto industry like electrification, software, autonomy, hydrogen fuel cells, ride-hailing and the impacts from COVID-19.

Top Takeaways: On Tuesday, BofA Securities analyst Horst Schneider outlined what investors need to know from the conference.

The analyst named 10 takeaways from both industry experts and investors who attended the event: 

1. COVID-19 will have a lasting impact on the auto industry. Experts anticipate the disruption will help facilitate the rollout of new EV models and the consolidation of the more than 30 EV manufacturing startups.
2. Long-haul trucking is an opportunity for hydrogen fuel cell technology. Executives from both Daimler and Nikola Corporation NKLA said hydrogen fuel cell vehicles are advantageous over battery electric vehicles (BEVs) for long-haul trucking due to their quick refueling and longer range capability.
3. Full self-driving technology will take longer than the industry originally anticipated. Some industry insiders had projected Level 5 autonomous vehicles by the end of 2020, but the industry has so far only achieved Level 2.
4. More than 85% of investors say it will take at least five more years before a Level 5 AV is on the market. More than 40% of investors believe it will take more than 10 years.
5. Both investors and industry insiders say autonomy will be the trend that ultimately has the largest impact on the auto industry. BEVs, hydrogen fuel cells and shared mobility services are other top themes that investors are monitoring.
6. Investors said they trust legacy automakers the most in bringing a mobility revolution to the industry. Of those surveyed, 69% of investors say mobility services are “very likely” or “somewhat likely” to replace privately owned and leased vehicles in the future.
7. Only 20% of investors see legacy automakers and next-generation automakers as the biggest winners from the transition to EVs. Instead, 33% see technology and software companies as the biggest winners, and 22% see electronics and EV component suppliers as the biggest winners.
8. Investors see vehicle functionality (31%) and battery capacity (26%) as the biggest hurdles to the global transition to EVs. Another 26% of investors see obtaining the capital required for the transition as the biggest challenge.
9. Investors seem to be growing increasingly concerned about the safety of AVs. Less than 40% of investors say they would feel safe in a driverless vehicle, down from nearly 50% just a year ago.
10. Looking ahead to 2030, more than half (55%) of investors said they believe EV penetration will still be less than 25% of total global vehicle sales. Only 10% believe EVs will represent at least 50% of all new vehicles sold within 10 years.

How To Play It: BofA has the following stock ratings and price targets for automakers:

• General Motors Company GM, Buy rating, $60 price target.
• Ford Motor Company F, Buy rating, $9 target.
• Ferrari NV RACE, Buy rating, $235 target.
• Tesla Inc TSLA, Neutral rating, $550 target.

Benzinga’s Take: There’s no question the auto industry is in the early stages of the largest and most significant technological transformation in more than a century.

That transition may take much longer and be far more difficult and costly than many auto investors realize.

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Photo courtesy of Nikola.