Transition risks in the automotive sector
Since the FSB’s Task Force on Climate-related Financial Disclosures (TCFD) published its recommendations in 2017, scenario analysis has been a leading tool to assess the risks and opportunities to companies from measures taken to mitigate climate change. This study analyses the degree to which the valuation of automotive companies could differ between two climate change scenarios and a market ‘consensus’ baseline, with a specific focus on European companies, i.e. BMW, Daimler, and Volkswagen. This report also analyses how company valuations can vary due to two different strategic decisions they could take to adapt to the low-carbon transition. It provides insights for equity analysis and company engagement, with regional and technological sensitivities.