A new European battery ecosystem could be in the cards as the region seeks to lead the global shift to electric vehicle adoption, according to Goldman Sachs. The bank identifies key stocks in the battery value chain that it believes can benefit from Europe’s “biggest industrial transformation”. The bank estimates that EV penetration in Europe will reach 72% in 2030, up from just 11% in 2021. The region is expected to lead the world in EV penetration. In a June 20 note, Goldman analysts led by Philip Koenig said they expect EV battery demand to grow at a combined rate of 20% through 2030. Coupled with the European Union’s ban on fossil fuel vehicles by 2035 , this will create a battery market valued at $900 billion by 2035, according to Goldman. The bank warned that battery capacity supplies are likely to remain constrained until 2030 – given the challenges of industrial-scale battery production – and we could see further constraint if carmakers accelerate their electrification plans. Stock Picks Against this backdrop, Goldman has identified a number of battery supply chain stocks that it believes will benefit from the growth of Europe’s battery ecosystem. German battery maker Varta joins Goldman’s list. The bank said the company is the only established German battery manufacturer and has leadership in micro and consumer batteries across Europe. Goldman noted that the company plans to expand battery manufacturing into the EV space and has already attracted Porsche as its first customer. It also aims to take advantage of further demand from other carmakers, energy storage and other end markets. Varta’s expansion into electric vehicles will drive total top-line growth of 14 percent from 2025 to 2030 and generate revenue of nearly 3 billion euros ($3.15 billion), according to Goldman estimates. “With shares currently trading near all-time lows and reflecting little growth potential in the e-mobility segment, we see an attractive entry point with a potential major catalyst, [such as an] EV order,” Koenig said. The bank has a €102 price target on the stock, suggesting a potential upside of 18.6% from its closing price of around €86 on June 28. Goldman also likes South Korea’s LG Energy, which it describes as a bank the world’s second-largest supplier of electric car batteries. The bank “particularly likes” the company’s “sustainably high” market share in Europe, as well as growing exposure to the United States, which it sees as the next big driver of electric cars. The bank estimates that the profits of the company before interest, taxes, depreciation and amortization will grow 6.7 times by 2030. It has a 475,000 Korean won ($365.90) target price on the stock, representing a potential upside of 21.3% to its price closing at KRW 391,500 on June 29. Samsung SDI is another stock Goldman likes. The bank believes the company will continue to deliver earnings growth, driven mainly by strong demand for cylindrical batteries and solid growth in EV battery supplies. The company also has a strong presence in the European EV battery market and counts BMW and Volkswagen as its main customers, according to Goldman. The bank expects the company to maintain its leadership in this space. Its new joint venture to build a battery plant with Stellantis will also position the company well to expand its global footprint and increase EV battery capacity and revenue, Koenig said. Other positives cited by the analyst include the company’s ability to protect its EV battery margin, an attractive valuation level, as well as strong revenue growth potential. Shares of Samsung SDI closed at 570,000 Korean won on Wednesday, suggesting a potential upside of 56.1% from Goldman’s target price of 890,000 Korean won.

Goldman Sachs identifies the stocks to buy to drive growth