![]() And the scramble for energy transformation has sparked “greenflation,” as demand for batteries pushes up prices for key materials involved in making them, according to strategists in Goldman Sachs Research. EV prices are declining, which could depress margins for the industry. The EV sector has some challenges in the near term. ![]() In an attempt to rebalance their pricing power with battery makers, finished-vehicle assemblers are rushing to develop vertically integrated production and joint-venture plants. Pricing power has shifted to the battery makers, giving them an edge in generating higher earnings. By comparison, the top five automakers had about 40% of the worldwide market. ![]() The top five battery makers had more than 80% of the global market share in 2020, according to Goldman Sachs Research estimates. In the meantime, the market for EV batteries, which account for as much as 40% of the car’s cost, is becoming concentrated. The global car industry’s operating profits are expected to rise to $418 billion in 2030, up from $315 billion in 2020, while the pool of profits for EVs is forecast to increase to $110 billion from $1 billion. Our strategists forecast sales of EVs to grow by 32% annually this decade, even as sales of products related to gasoline engines slump. As the ecosystem grows, Goldman Sachs Research expects the way the industry makes money will be transformed. ![]()
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