EVs Burn Up Tires Faster, a Positive for Goodyear Tire & Rubber (GT) - Morgan Stanley

Morgan Stanley analyst Adam Jonas had an interesting note on Top Pick Goodyear Tire & Rubber (NASDAQ: GT) Thursday related to EVs burning up tires faster, a long-term positive for the company.

The firm is bullish on demand due to their views of global miles traveled tripling by 2040. Additionally, they are increasingly bullish on some of the technological demands on tires that they believe are occurring under the radar.

Jonas notes EVs tend to weigh more than normal cars and all else being equal this could potentially drive greater replacement of tires.

"The Tesla Model S weighs 20% more than its ICE comparable class average, and the Chevrolet Bolt EV weighs over 36% more than its ICE comparable class average," Jonas comments. "We would also note that both the Tesla Model S and the Chevrolet Volt EV are over 10% heavier than the next heaviest ICE in each comparable class."

In addition, the analyst highlights that EVs have more torque than normal cars, also potential driving greater replacement of tires. "The 2017 Model S has been rated by some sources to have an ICE rating as high as nearly 700 horsepower," he commented.

He also highlighted that advanced propulsion system architecture can add extreme forces on a vehicle’s corner module, adding stress on tires.

The firm reiterated an Overweight rating and price target of price target of $43 on GT.

For an analyst ratings summary and ratings history on Goodyear Tire & Rubber click here. For more ratings news on Goodyear Tire & Rubber click here.

Shares of Goodyear Tire & Rubber closed at $32.14 yesterday.

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