© Reuters. UBS meets with OEMs on European autos tour
UBS recently took a group of investors to meet with European automakers, suppliers, and experts. After conducting in-depth discussions, UBS views Mercedes’ (ETR:) MMA and MB.EA, as well as BMW’s (ETR:) Neue Klasse Platforms, as significant advancements in terms of efficiency, electrical/electronic architecture, software development, and cost-effectiveness.
UBS analysts wrote in a note, “Mercedes will likely be leading on the efficiency/ range front and BMW could lead in battery cell cost and performance.”
However, Bosch (NS:) has pointed out that none of the established automakers will have a fully software-defined vehicle platform until the end of this decade.
Audi and Porsche’s PPE platform, while impressive, appears to be more of an evolutionary and incremental step compared to BMW and Mercedes. Despite their appealing designs, neither their specifications nor their user interfaces appear to establish new standards.
During the Cariad meeting, there was some reassuring information regarding the PPE platform’s launch timeline, with the software stack expected to be complete by the end of 2023 and the actual launch set for Q1/24. However, there are still uncertainties surrounding the competitiveness of their digital content.
In terms of recent trading conditions, OEMs have described Europe as being in line with a concerning trend, particularly in the mass market segment, which is faring worse than the premium segment. A recent situation exacerbated by increasing discounts on ICE vehicles and sluggish demand for BEVs in Germany following the reduction in fleet subsidies at the end of August.
North America is viewed as the most resilient region, while China continues to present challenges in terms of both volume and pricing for German OEMs. Despite these challenges, all four companies believe they are on track to meet their full-year guidance. However, UBS believes that there may be some negative impact on free cash flow in 3Q due to a high number of vehicles in transit.
