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A panel of Baird experts was recently featured at CNBC’s Delivering Alpha conference, exploring the tremendous momentum in the vehicle technology and mobility space. Harrison Greene, a Director in Baird’s Equity Sales & Trading business, moderated the discussion, which featured Adam Czaia, a Managing Director in Baird Global Investment Banking, Ben Kallo, a Managing Director and Senior Research Analyst in Baird Equity Research, and Courtney Rosenberger, Policy Research Analyst at Strategas, a Baird company. The group discussed the constant stream of new and disruptive technologies, favorable public policy backdrop, increased conviction and investment from the largest market participants, and heightened consumer interest.

Adoption Leads to New Questions

Attitudes around electric vehicles and mobility have really changed both on the part of investors as well as consumers. Kallo noted that, 10 years ago, everyone was a Tesla skeptic. And yet, today we see companies like Ford announcing significant investments in EVs.

Underscoring the big shifts in favor of greater adoption, Kallo flagged a new set of questions that reflect this new phase of demand and interest: 

“Software: where are we going to be able to hire the most software engineers? Materials are a huge part of this all. Whether it's lithium or rares or recycling -- who's going to do this?”

Kallo also noted autonomy as an additional layer of complexity to some of the questions around software as well as issues around energy sources and battery manufacturing. “There's a lot of ground to cover there,” he said.

Public Policy Catalysts

During the panel discussion, Rosenberger outlined the myriad of legislative items that the Biden administration and Democrats are trying to enact with the current reconciliation legislation being debated in Congress.

“Things like a carbon tax, a methane tax, hydrogen and fuel cells, and of course, electric vehicles… Over a third or $82 billion of the $235 billion in green energy tax credits that are in the House's Reconciliation Bill are related to transportation. About half of those are for alternative fuels, but the other half are for things like electric vehicles, things like energy refueling, things like fuel cells… "

"We're talking about a growing new industry where 2% of new vehicle sales last year were in electric vehicles. The administration really is trying to accelerate deployment to the middle class.”

Rosenberger went on to explain how powerful some of these legislative items may be in impacting consumer decisions. She noted that, under some scenarios, a typical car buyer could enter a dealership knowing that he or she could receive up to $12,500 in a tax credit for selecting an electric vehicle. That potential environment “really changes the dynamics in terms of purchasing decisions.”

Capital Investments Reflecting the Opportunity

In addition to public policy tailwinds, Czaia commented on the tremendous capital formation activity happening in the space. “If you look at the multiple paths to the public markets, you have the traditional IPO. You now have direct listings. The SPAC alternative has clearly been one that's been used a lot within vehicle technology mobility. Since January of 2020, there have been 64 vehicle technology and mobility SPAC transactions announced. Certainly, those within the vehicle electrification have been an overweight portion of that group.”

Czaia also noted that, in addition to those financial vehicles and transactions, there are the investments of market participants such as BMW, Ford, Volkswagen, Amazon, and others who are making meaningful investments earlier and earlier in the development stage of some of these disruptive companies. “Vehicle OEMs have committed something like a half trillion dollars to next generation mobility by vehicle OEMs over the next five years. I think that the punchline that's driving transaction activity is investor appetite.”

Czaia and the rest of the Baird team expect continued robust activity from a capital formation and M&A perspective.

“A at the end of the day, investor appetite in the sector, vehicle technology mobility broadly, and electrification specifically, will continue to [experience] great levels of activity.”

Watch the Full Panel

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