Wall Street analysts are busy publishing their 2023 lookahead pieces, and Cowen analyst Jeff Osborne is out with the big one — the firm’s Future of Mobility report.
Osborne has partnered with 16 other analysts at the firm to map out what’s next in the nearly 500-page report, from electrification, to government regulation, to infrastructure, and even 5G and edge computing to give investors the lay of the land. Cowen has also listed 50 stocks to target for exposure.
Key among the report’s findings is firm’s improved outlook for EV penetration, now hitting 21.4% by 2025 in the U.S., up from 9.6%. Osborne sees companies beyond the automakers benefiting from this big mobility trend.
“We see a variety of different companies benefiting at Cowen, starting with semiconductors. You have about two to three times the number of semiconductors in an electric vehicle as you do in internal combustion engine vehicle,” Osborne said in an interview with Yahoo Finance.
“Some of the tier 1 suppliers that I cover— Aptiv (APTV), for example, is a top idea of mine, as well as Visteon (VC), but there's a variety of plays. Charging and lithium in particular as well are gating obstacles to grow the industry,” Osborne says.
By “gating obstacles,” Osborne means there are some factors at play, such as charging infrastructure and lithium production, that are blocking the expansion of the EV transformation in the U.S., but could prove to be strong investments down the line.
“I think between now, and say 2027, you have a bit of a red line in the industry as to how quick this industry can grow, Osborn says. “But when you look beyond that, you're seeing the OEMs— GM (GM), Ford (F), Tesla (TSLA)— going straight to the mines. That's allowing them to get better funding terms and move the industry forward.”
While short term obstacles like a chip shortage can be addressed by new factories, which take around a year to set up, new mines for lithium can take anywhere from 4 to 7 years to put into production.
Looking out to mid-decade and beyond, Osborne says he is “very bullish,” especially by 2030 when he sees 30% to 35% penetration for EVs. Among his top picks in mobility are ChargePoint (CHPT), BorgWarner (BWA) Fisker (FSR), Lithium Americas (LAC), Tesla, and Uber (UBER).
Next year, one pick stands apart as the Cowen’s top idea in 2023, and that’s SolarEdge Technologies (SEDG), a solar tech company which creates inverters that Osborne says are like a “router” for electrons coming off a homeowner’s solar panel.
“When you buy an EV, about 30% to 50% of your electricity consumption is increased at your home, and so more EV owners are going solar, see SolarEdge leading the charge, so to speak, in terms of their ability to manage the electron, so pairing with batteries, pairing with EV chargers, and really being a better constituent with the grid to allow solar to interoperate with utility networks in a much better fashion,” he says.