2025-12-08 02:30Summary of the Auto Industry and Shared Mobility Conference Call Industry Overview - The report focuses on the North American Auto Industry and Shared Mobility for the year 2026, highlighting a cautious outlook due to an anticipated 'EV Winter' expected to persist through 2026 [1][4][10]. Key Points and Arguments 1. Sales Forecasts: - The 2026 US Auto sales forecast is set at 15.9 million units, reflecting a 1.0% year-over-year decline. This includes 14.9 million Internal Combustion Engine (ICE) vehicles (+1.0% y/y) and 1.0 million Electric Vehicles (EVs) (-20% y/y) [5][11][25]. 2. Market Dynamics: - The 2025 US Auto sales showed unexpected resilience, driven by pre-buying before tariff implementations and the expiration of consumer tax credits for battery electric vehicles (BEVs) [4][10]. - Factors contributing to the cautious outlook include: - Continued lack of affordability due to the expiration of EV tax credits and rising average transaction prices (ATPs) [5][10]. - Tightened credit standards, particularly affecting subprime borrowers, although some modest loosening has been noted recently [5][10]. - Inflationary pressures from tariffs expected to impact consumer prices through the first quarter of 2026 [5][10]. 3. Consumer Behavior: - There is pent-up demand in the market, with US Auto SAAR still below pre-COVID levels and an aging car parc averaging nearly 13 years [5][10]. - Rate cuts may marginally improve affordability for consumers [5][10]. 4. Scenario Analysis: - Bull Case: Forecasts a SAAR of 17.5 million (+8.7% y/y) if consumer confidence improves and OEMs focus on core ICE/hybrid offerings [12][25]. - Bear Case: Projects a SAAR of 14.5 million (-9.9% y/y) if credit availability tightens further and consumer affordability worsens [12][25]. 5. Stock Ratings Changes: - General Motors (GM) upgraded to Overweight with a target price of $90, citing strong execution and capital allocation strategies [8][48]. - Tesla (TSLA) downgraded to Equal-weight with a target price of $425, reflecting high expectations and near-term headwinds [8][51]. - Rivian (RIVN) and Lucid (LCID) downgraded to Underweight due to negative EV outlooks [8][54]. Additional Insights - The report emphasizes the importance of monitoring policy updates regarding tariffs and consumer health indicators such as unemployment and inflation [12][13]. - The EV market is expected to face significant headwinds, with a projected 20% decline in volume and a penetration rate of 6.5% for BEVs in 2026 [10][31]. - Companies with diversified sourcing and regional manufacturing strategies are seen as better positioned amid geopolitical tensions and market shifts [47]. Conclusion - The North American auto industry is navigating a complex landscape with mixed signals for 2026. While there are opportunities for companies with strong execution and adaptability, significant challenges remain, particularly in the EV segment. Investors are advised to remain selective and focus on companies that can effectively manage costs and capitalize on market dynamics.