The transition to a low-carbon way of life continues to gain momentum despite the global pandemic. In total, 127 countries responsible for around 63% of global carbon emissions are considering or have adopted net zero targets[1]. Encouragingly, recent net zero carbon emission pledges by China, Japan and the US have put the Paris Agreement’s goal within reach[2]. We think 2021 will see more corporates join governments in unveiling net zero pledges ahead of the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November. As a result, we think the global auto industry will likely experience a faster shift toward vehicle electrification (Exhibit 1) and a potentially speedier decline in internal combustion engine (ICE) vehicle sales, as also discussed during the inaugural Goldman Sachs Research Carbonomics conference last November.
US President Biden’s climate-related spending plans entail increasing the number of electric vehicle (EV) charging stations, which can likely be achieved through the budget reconciliation process (i.e., without bipartisan support). The availability of EV charging infrastructure is something our auto research analysts are closely monitoring. In our view, electrification of mobility is creating investment opportunities across various industries including battery technology.
