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On Wednesday, Bernstein analysts released the latest edition of their Electric Revolution series, focusing on the rapid changes within the electric vehicle (EV) industry. The report emphasized the significant role that software now plays in shaping the future of the automotive sector, marking a shift from traditional hardware-focused models.
The report, authored by analysts from Bernstein, outlined the diverging paths of the EV markets in China and the West. While China continues to advance with scale and innovation, Western markets face challenges such as demand headwinds, policy uncertainties, and rising costs. This divergence has led to a bifurcated global EV industry, impacting original equipment manufacturers (OEMs), suppliers, energy players, and investors.
According to Bernstein’s analysis, the race to become a "most digital" automaker is primarily between companies in China and the United States. Although U.S. groups currently lead, Chinese manufacturers are rapidly gaining ground. The average overall score of Chinese companies increased by 4 percentage points to 51% in 2024, compared to 53% for U.S. groups, according to Garner’s Digital Automaker Index.
The report also highlighted the importance of corporate culture and research and development (R&D) structures in transforming automakers into high-tech companies. New entrants like Tesla (NASDAQ:TSLA) and BYD (SZ:002594), described as "software-native," are setting trends, while legacy automakers such as GM and VW face challenges in overhauling their corporate cultures and R&D organizations.
In the realm of software and services providers, the report identified SAP and Dassault Systèmes as key beneficiaries in the long term, given their role in enabling automakers’ transformations. However, macroeconomic uncertainties are expected to impact services providers like Alten and Capgemini in the short term. Meanwhile, SAP has continued to grow its revenue in the automotive sector, driven by the need for modernizing ERP platforms and supply chains.
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