In this regard, Stian Ueland, portfolio manager at DNB Asset Management, states:
“The quality of cars produced in China is good, and the prices are low, which is why the Asian giant could dominate a significant part of the automotive market in a few years.”
And he adds: “It is relatively easy to produce a few good-looking electric cars and subcontract many difficult components, such as battery packs and inverters.”
However, to gain a competitive advantage, Ueland indicates that it is necessary to internally develop the hardware and/or software, as BYD and Tesla do.
The challenge lies in scaling production and offering high-quality products at a price that can compete with alternative solutions and provide a reasonable return on investment.
As of today, Norway is the leading country in the transition, as the market share of electric cars is 80%.
It is worth mentioning that while in 2022, 79% of new vehicles sold were zero-emission, in 2021 the figure was 65%, and ten years ago it was only 2.9%.
This growth is due to the successive Norwegian governments implementing a series of measures, making environmentally friendly cars cheaper to buy in the country than similar internal combustion ones.
However, Ueland acknowledges that “before electric cars reach a dominant market share, as is the case in Norway, there is still considerable growth potential ahead.”
DNB Asset Management highlights the need for investments in the electrical grid
According to Stian Ueland, there are other ways to “position oneself to take advantage” of the energy transition.
In this regard, he emphasizes that electrification requires investments in the electrical grid.
“As renewable energies grow and more people install solar panels on their roofs, the electrical grid must be modernized to handle larger transmissions and offer greater flexibility,” says Ueland.
He adds, “Currently, there is not enough capacity during peak days, which is why more investments are needed.”
In the field of electrical grid renewal, DNB Asset Management points to two other winners: Schneider Electric and Hubbell Incorporated.
Both companies are represented in the Nordic manager’s renewable energy portfolio.
“They manufacture parts for the electrical grid, and many consumers have Schneider products in their fuse boxes,” says Ueland.
Finally, regarding this topic, the portfolio manager opines:
“With time, we expect battery technology to be installed on a large scale, both in public buildings and private homes.”
On the other hand, DNB highlights the importance of investing in energy efficiency and reducing resource and energy consumption.
“Traditional insulation of pipes and buildings to prevent heat loss is a significant contribution to reducing energy demand,” says Ueland.
He adds, “Overall, there are many ways to meet the new requirements for both existing and new buildings.”
More details about DNB Asset Management
It is the largest and oldest asset management company in Norway.
It offers investment funds and asset management services to private and corporate clients internationally.
The provided funds can be indexed, equity-based, actively managed across various markets and sectors, fixed-income, combining investments in different asset classes, among others.
In cases where the client desires a customized management product, the Nordic asset manager also offers personalized investment portfolios.