Morgan Stanley has recognized a number of shares to put money into as electrical automobile battery manufacturing shifts to the West. As international locations goal to cut back their dependency on China — which at present dominates 90% of the EV battery market — they might want to create a brand new provide chain for a decarbonized future, in response to the Wall Road financial institution in a notice to purchasers on Could 12. It mentioned that rebuilding a safe home provide chain and assembly authorities calls for might be “difficult,” nonetheless, and predicted that solely a handful of corporations would produce batteries profitably in strategic areas. Morgan Stanley highlighted geopolitical, environmental, and financial challenges that every firm might face throughout the transition, and ranked the companies on how finest they’re positioned to succeed below this framework. EV large Tesla , auto elements maker Aptiv , and battery maker Freyr rank extremely, in response to Morgan Stanley, whereas Ford and Chinese language batter maker CATL rank decrease. Tesla Tesla is effectively positioned to beat the three challenges, Morgan Stanley mentioned. The corporate leads the best way with its battery expertise developments, it added, and is the one giant automaker to make a revenue on each EV automobile manufactured solely within the U.S. “In relation to our framework, TSLA checks all of the bins,” wrote the analysts led by Adam Jonas in a notice to purchasers on Could 11. “Not solely is the corporate already producing battery cells domestically and with minimal environmental emmissions, additionally they have achieved optimistic unit economics through technological innovation and manufacturing prowess, and proceed to drive prices down.” Aptiv Aptiv makes software program and computing platforms for automakers, in addition to programs that improve automobile security. Morgan Stanley mentioned whereas the corporate dangers dropping the enterprise for elements at present utilized in inner combustion engines, Aptil will nonetheless be capable of transition towards EVs with comparatively few challenges. “Past the excessive voltage componentry that comes with transitioning to EVs, many OEMs [original equipment manufacturers] are targetting richer characteristic units of their preliminary choices, doubtlessly posing a number of methods for APTV to be a beneficiary,” the analysts mentioned. FREYR Battery The Norwegian firm has unveiled plans to construct two giga factories — the primary in Norway, which can run nearly solely off hydroelectric energy, and the second within the U.S. Whether or not this may be achieved profitably stays unknown, nonetheless. “FREY is effectively positioned to beat geopolitical and environmental challenges given their authorities help, Western expertise and materials sourcing, and hydroelectric use,” the analysts mentioned. “What stays to be seen is their capability to take action at scale with optimistic unit economics.” Ford / CATL Morgan Stanley famous that corporations like Ford and Chinese language battery maker Modern Amperex Know-how, or CATL, may face challenges with regards to “onshoring” attributable to geopolitical considerations and potential technological limitations. Earlier this yr, Ford mentioned it could collaborate with CATL on a brand new $3.5 billion battery plant for electrical automobiles in Michigan, regardless of ongoing tensions between the U.S. and China. Ford will personal the brand new facility however will license battery manufacturing expertise from CATL, together with technical experience. Nonetheless, the plans have drawn backlash from U.S. politicians attributable to their dependence on Chinese language expertise.