Goldman Sachs has warned that European carmakers risk losing market share to Tesla and Chinese companies. The investment bank’s pessimistic view came as it downgraded BMW from buy to neutral and Volvo Cars from neutral to sell, and upgraded Ferrari from sell to neutral. Goldman also raised its price target for Fiat-Chryser parent Stellantis by 10.5%. The Wall Street investment bank said the switch to battery electric vehicles in Europe could cause swings in some stock prices. Goldman Sachs analysts say Europe’s current mass-market brands accounted for 72 percent of sales last year. But they added that if automakers want to maintain their strong position, they will need to produce products with industry-leading powertrain performance. “So far, we believe there is little evidence of industry-leading products when we look at European BEV products based on overall powertrain efficiency,” the analysts said. led by George Galliers wrote in a note to clients on April 6. The table below shows Goldman Sachs changing its price target: Goldman has only raised price targets for two stocks: Porsche, bullish target multiple to 24% and Ferrari, where it changes the company’s cost of capital in its valuation method. The bank notes that Tesla’s reported gross margin is significantly higher than Europe’s battery-electric vehicle gross margin, indicating a widening technology gap between the two regions. The report also highlights risks from Chinese competitors seeking to expand internationally due to the high level of competition and discounting in their domestic markets. This can also eat into the market share of established players over time. Chinese electric car maker Nio announced plans to open a manufacturing plant in Hungary last year. Similarly, Warren Buffet-backed BYD plans to open a factory in the continent by 2025. Several Chinese EV battery makers, including CATL, have begun production in Europe. However, Goldman notes that European carmakers have already begun to adapt to changes in the market. For example, it said some companies have begun to focus on luxury markets, where they believe less competitive risks exist, coupled with consumer demand for more flexibility during a recession. economic recession. According to Goldman Sachs, the regulatory change to allow the use of e-fuel – a synthetic alternative to gasoline – also has the potential to reduce risks for companies and brands.