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Morgan Stanley Storms Into the EV Space; Offers 2 Stocks to Buy

We are indeed living in interesting times – and in many ways, that’s a good thing. Take the automotive industry, for example. Technology is changing a rapid pace, and when it settles, it will dramatically change the way we drive. In 2030, our concept of ‘car’ will likely be unrecognizable to drivers from 1980. The biggest changes are coming from power systems and artificial intelligence. AI will bring autonomous tech to our cars, making self-driving vehicles a reality. But the power systems changes will hit us first. In fact, electric-drive vehicles are already on our roads, and electric vehicle (EV) companies are proliferating rapidly. For the moment, there are several roads to potential success in the EV market. Companies are working to position themselves as leaders in battery tech, or electric power trains, or to maximize their range and performance per charge. It’s a fact-paced industry environment, offering both opportunity and excitement for investors. Smart investors will look for companies capable of meeting scaling demands, once they have settled on marketable models. Investment firm Morgan Stanley has been watching the EV industry, seeking out innovative new design and production companies that are positioning themselves for gains as the market matures. The firm’s automotive analyst, Adam Jonas, has selected two stocks that investors should seriously consider buying into, saying “As we survey the EV/battery startup landscape, we are prioritizing highly differentiated technology and/or business models with a path to scale at a reasonable level of risk.” Opening up the TipRanks database, we’ve pulled up the details on both of Jonas’ picks to see whether they could be a good fit for your portfolio. Fisker (FSR) First up, Fisker, is based in Southern California, the epicenter of so much of our ground-breaking tech industries. Fisker’s focus is on solid-state battery tech, a growing alternative to the lithium-ion batteries that most EVs depend on. While more expensive that the older lithium-based systems, solid state batteries are safer and offer higher energy densities. Fisker has been busy patenting its moves into solid-state batteries, a sound strategy to lock in its advances in this field. For EVs, solid-state batteries offer faster charging times, longer range per charge, and potentially lower battery weight – all important factors in vehicle performance. Every car company needs a flagship model, and Fisker has the Ocean – an EV SUV with a mid-range price ($37,499) and a long-range power system (up to 300 miles). The vehicle features stylish design and room mounted solar panels to supplement the charging system, and is scheduled to enter serial production for the markets in 2022. The stylish design reflects the sensibilities of the company’s founder, Henrik Fisker, known for his work on the BMW Z8 and the Aston Martin DB9. Fisker entered the public markets through a SPAC merger agreement last fall. Since completing the SPAC transaction on October 29, shares in FSR are up 112%. Morgan Stanley’s Jonas is impressed by this company, describing the ‘value proposition of Fisker’ as “…design, time to market, clean sheet user experience and management expertise,” and saying that the 4Q22 launch schedule for the Ocean is likely to be met. “Fisker is specifically targeting the personal owned/passenger car business as opposed to commercial oriented end markets, where emotive design and user experience matter more. Additionally, the company wants to create an all-digital experience from the website to the app to the HMI in the car and continued customer engagement through its flexible lease product,” Jonas added. In line with his upbeat outlook on the company (and the car), Jonas rates Fisker an Overweight (i.e. Buy), and sets a $27 price target suggesting an upside of 42% for the coming year. (To watch…