Two Chinese battery makers are set to surge as global demand for electric car batteries could multiply by roughly 30 times in the next 20 years, Goldman Sachs analysts said in a March 18 note. The firm updated its forecast for sales in Europe and the U.S. — the analysts now expect 47%, or nearly half, of all cars sold worldwide in 2040 will be electric, driving up demand for batteries. If sales end up surpassing that base case scenario, there could even be a shortage in batteries in 2025, the report said. Here are the numbers behind the more than 70% gains Goldman predicts for at least one Chinese battery company: The analysts have more than doubled their sales expectations for electric cars in Europe to 11.2 million units in 2030, and raised their U.S. forecast by 33% to 6.4 million cars. That's thanks to tighter environmental regulations in Europe and support for EV purchases in the U.S. under President Joe Biden. The analysts didn't change their predictions for China, the largest auto market in the world, where they expect just over half of cars sold in 2035 will be electric. As a result, the analysts expect drivers worldwide will need 4,629 gigawatt hours in electric car power, up from 158 gigawatts in 2020. BYD and CATL "Major battery makers CATL and BYD are actively expanding production capacity," the Goldman report said. Both companies manufacture in China. BYD, which counts Warren Buffett's Berkshire Hathaway as an investor , also makes electric buses and passenger cars. Goldman has a "buy" rating on BYD with a price target of 292 Hong Kong dollars, up 73% from Wednesday's close. For CATL, the analysts have a "neutral" rating and expect share prices to reach 428 yuan, up 48% from Wednesday's close. Chinese stocks have sold off in recent sessions. Hong Kong's Hang Seng index closed in correction territory on Wednesday. Batteries accounted for about half of electric vehicle costs last year, which means that if the electric car market grows, greater demand for batteries could lower their cost and allow the automakers to become profitable sooner — in 2022 with government subsidies and 2028 without, the Goldman analysts said. — CNBC's Michael Bloom contributed to this report.
