Auto Sector
Note: This is a daily stock update and the information stands true as of 16/12/25, 09:00 CET.
Company Update:
This decision reinforces growing doubts about the timing of EV dominance. At this stage, competing with Chinese OEMs on cost and battery technology, or with the US on full automation, appears uneconomic (at best) for European players. The expected EU step back—allowing up to 10% non-EV sales in 2035—is a welcome move and likely only a first adjustment. Without further flexibility, Europe’s auto industry risks long-term decline, with protectionist measures offering only temporary relief. Regulatory shifts also raise the risk of further write-downs from past EV investments. Current European auto share prices suggest these risks are already largely priced in. The risk reward is gradually turning positive but the execution risk is high and momentum is likely to remain adverse. The sector is becoming a risky tentative buy in our expert's opinion.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
Company Update:
The European Commission is expected to adjust its 2035 CO₂ framework, replacing a full zero-emission requirement with a 90% reduction target and potentially removing a strict ban on combustion engines. This would allow continued sales of ICE vehicles, hybrids, PHEVs and EREVs, and possibly the use of biofuels and e-fuels. In the near term, this is supportive for European OEMs, as it preserves higher-margin ICE volumes and reduces the risk of fines linked to slower-than-expected EV penetration.
However, regulatory stability and long-term visibility are now critical. Frequent policy shifts complicate investment planning, capital allocation and product development, as illustrated by Ford’s costly strategic reversals. Importantly, easing CO₂ targets does not resolve the industry’s structural challenges: overcapacity, muted demand and intensifying competition from Chinese manufacturers. While deadlines have been pushed back, continued investment in BEV technology remains essential to avoid a widening cost and technology gap in a market where electrification remains the long-term direction.
Additional measures such as minimum BEV pricing or local-content requirements may offer limited protection but would likely translate into higher prices for consumers. Ford’s $19.5bn EV asset write-off highlights the risks of capital misallocation amid shifting regulations and fading subsidies. While new narratives, such as battery storage, may temporarily support valuations, execution risk and poor returns on capital remain key concerns for the sector.
Expert Opinion:This decision reinforces growing doubts about the timing of EV dominance. At this stage, competing with Chinese OEMs on cost and battery technology, or with the US on full automation, appears uneconomic (at best) for European players. The expected EU step back—allowing up to 10% non-EV sales in 2035—is a welcome move and likely only a first adjustment. Without further flexibility, Europe’s auto industry risks long-term decline, with protectionist measures offering only temporary relief. Regulatory shifts also raise the risk of further write-downs from past EV investments. Current European auto share prices suggest these risks are already largely priced in. The risk reward is gradually turning positive but the execution risk is high and momentum is likely to remain adverse. The sector is becoming a risky tentative buy in our expert's opinion.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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Simplification of structure - Stake in Ageas increased from 15% to 23%.
