USX
Stock picks for the zero-emission commercial vehicle transition
- Morgan Stanley takes a deep dive into the impact of the adoption of
alternative powertrains in the commercial vehicle industry.
- The firm notes the combination of stricter emissions regulations,
battery advancements, increasing viability of Green Hydrogen and influx
of
fresh capital in Zero Emissions Vehicle startups has re-ignited the
debate
around the timeline for ZEV adoption in the global Commercial Vehicle
market.
- MS estimates the total ZEV truck Total Addressable Market will grow
from <$5B today to ~$30B by 2025 and ~$600B by 2050, resulting in a ~20%
CAGR over the 2020 to 2050 time period.
- How do investors play that long-term ZEV trend?
- Among truckload carriers, the firm see the highest degree of implied
EBIT upside from ZEV adoption at US Xpress (NYSE:USX), Schneider
National (NYSE:SNDR), ArcBest (NASDAQ:ARCB) and Knight-Swift
Transportation (NYSE:KNX). Among OEMs, PACCAR's (NASDAQ:PCAR) current
share price is said to more than appropriately discounts the ZEV risk to
its legacy Truck & Parts business and MS sees Daimler's (OTCPK:DDAIF)
truck business as fairly valued. Tesla's (NASDAQ:TSLA) valuation does
not contemplate significant contribution from the production of the semi
(~1-2% to the sales figure over the 2023-2030 time frame).
- Among Utilities/Clean Tech, key beneficiaries include NextEra Energy
(NYSE:NEE), AES Corp (NYSE:AES), Avangrid (NYSE:AGR), Algonquin Power
(NYSE:AQN), Clearway Energy (NYSE:CWEN), Atlantica Sustainable
Infrastructure (NASDAQ:AY), and Duke Energy (NYSE:DUK), through their
strong wind sites and/or development capabilities which are key to
producing low cost green hydrogen. In addition, Bloom Energy (NYSE:BE)
is listed through its electrolyzer manufacturing business, Shoals
Technologies (NASDAQ:SHLS) through its utility-scale solar and future EV
charging products, TPI Composites (NASDAQ:TPIC) through the
manufacturing of light-weight chassis for EV vehicles, and Solaredge
Technologies (NASDAQ:SEDG) through its EV powertrain manufacturing
business.
- Downside ZEV risk is seen for Cummins (NYSE:CMI) and Allison (NYSE:ALSN
) as MS doesn't think the New Power/E-Axle businesses fully offsetting
erosion of their legacy diesel businesses. Also, the firm sees a smaller
total BEV TAM for Romeo Power (NYSE:RMO) than the market appreciates due
to FCEV vs. BEV penetration dynamics and potential risks given the
company's position in the battery supply chain.
- Moody's thinks ESG investing will get an even closer look after the
pandemic.
|Today, 9:00 AM|61 Comments
Stock picks for the zero-emission commercial vehicle transition
- Morgan Stanley takes a deep dive into the impact of the adoption of
alternative powertrains in the commercial vehicle industry.
- The firm notes the combination of stricter emissions regulations,
battery advancements, increasing viability of Green Hydrogen and influx
of
fresh capital in Zero Emissions Vehicle startups has re-ignited the
debate
around the timeline for ZEV adoption in the global Commercial Vehicle
market.
- MS estimates the total ZEV truck Total Addressable Market will grow
from <$5B today to ~$30B by 2025 and ~$600B by 2050, resulting in a ~20%
CAGR over the 2020 to 2050 time period.
- How do investors play that long-term ZEV trend?
- Among truckload carriers, the firm see the highest degree of implied
EBIT upside from ZEV adoption at US Xpress (NYSE:USX), Schneider
National (NYSE:SNDR), ArcBest (NASDAQ:ARCB) and Knight-Swift
Transportation (NYSE:KNX). Among OEMs, PACCAR's (NASDAQ:PCAR) current
share price is said to more than appropriately discounts the ZEV risk to
its legacy Truck & Parts business and MS sees Daimler's (OTCPK:DDAIF)
truck business as fairly valued. Tesla's (NASDAQ:TSLA) valuation does
not contemplate significant contribution from the production of the semi
(~1-2% to the sales figure over the 2023-2030 time frame).
- Among Utilities/Clean Tech, key beneficiaries include NextEra Energy
(NYSE:NEE), AES Corp (NYSE:AES), Avangrid (NYSE:AGR), Algonquin Power
(NYSE:AQN), Clearway Energy (NYSE:CWEN), Atlantica Sustainable
Infrastructure (NASDAQ:AY), and Duke Energy (NYSE:DUK), through their
strong wind sites and/or development capabilities which are key to
producing low cost green hydrogen. In addition, Bloom Energy (NYSE:BE)
is listed through its electrolyzer manufacturing business, Shoals
Technologies (NASDAQ:SHLS) through its utility-scale solar and future EV
charging products, TPI Composites (NASDAQ:TPIC) through the
manufacturing of light-weight chassis for EV vehicles, and Solaredge
Technologies (NASDAQ:SEDG) through its EV powertrain manufacturing
business.
- Downside ZEV risk is seen for Cummins (NYSE:CMI) and Allison (NYSE:ALSN
) as MS doesn't think the New Power/E-Axle businesses fully offsetting
erosion of their legacy diesel businesses. Also, the firm sees a smaller
total BEV TAM for Romeo Power (NYSE:RMO) than the market appreciates due
to FCEV vs. BEV penetration dynamics and potential risks given the
company's position in the battery supply chain.
- Moody's thinks ESG investing will get an even closer look after the
pandemic.
|Today, 9:00 AM|61 Comments
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