December marked the 17th consecutive month of growing new car registrations in the UK, but battery electric vehicle (BEV) sales stuttered at the tail-end of last year, amid mounting concerns over the practicality of the government’s zero-emission vehicle mandate. The aim is that 80 per cent of new cars and 70 per cent of new vans sold in UK will be zero emission compliant by 2030. But it has been suggested that the timeframe will come under pressure because the ban on the sale of new internal combustion engine cars and vans has been pushed back by five years to 2035.
In addition to longstanding concerns over inadequate infrastructure, BEV range anxiety and raw materials shortfalls, we can now add uncertainties over the residual values of BEVs and rising insurance costs. Legacy automakers have struggled to make electric vehicles affordable for mid-tier consumers and it’s quite conceivable that some well-known manufacturers could go to the wall due to the capital demands brought about by the transition.
GKN Automotive, a division of Dowlais Group (DWL), styles itself as a “global leader in technologies for electric vehicles”, with partnership arrangements in place with “90 per cent of global automotive manufacturers”. But the challenge is that those businesses engaged in automotive supply chains will still need to honour legacy commitments at the same time they’re being asked to introduce new platforms for BEV models. It is also the case that automakers are making a conscious choice to concentrate research and development on fewer platforms. In addition, BEVs require roughly one-tenth of the 200 moving parts required for conventional vehicles – it's a dwindling market in that regard.
The automotive industry is undergoing profound structural change, so it would be unwise to make too many assumptions from an investment perspective, especially as it’s difficult to recall a period in which the wider sector has been subject to more disruptive external factors, as opposed to standard market fundamentals.
| NAME | Price (p) | Market cap (£mn) | 12-month (%) | Fwd PE | Yield (%) | Last IC view |
| Aston Martin Lagonda | 188 | 1,589 | 14 | n/a | 0.0 | Sell, 350p, 26 July 2023 |
| Dowlais | 91 | 1,277 | n/a | 5 | n/a | Hold, 122p, 12 Sep 2023 |
| TI Fluid Systems | 143 | 728 | 29.7 | 7 | 1.6 | Hold, 151p, 08 Aug 2023 |
