Hot Picks: Analyst flags EV push and restructuring trends in auto stock ideas

Ferrari’s pullback and the sector’s evolving technology landscape are shaping the newest opportunities in autos. The outlook includes momentum behind assisted-driving features, a supplier breakup and steady demand in the U.S. market.

BNN Bloomberg spoke with Tom Narayan, lead global autos equity analyst at RBC Capital Markets, who outlined growth drivers across luxury manufacturers, Detroit automakers and technology-focused suppliers.

Key Takeaways

• Ferrari’s 20 per cent stock pullback has created an entry point as its high-margin F-80 supercar approaches deliveries.
• The company’s first EV is expected to draw new customers in regions including California, the Nordics and China.
• General Motors continues to benefit from tariff mitigation and holds dominant share in the U.S. large SUV market.
• Strong U.S. employment and a multi-million-vehicle replacement gap support ongoing demand despite high prices.
• Aptiv’s coming wire-harness spinoff could unlock value, with assisted-driving technology providing a long-term growth tailwind.

Read the full transcript below:

ANDREW: On Hot Picks today we are checking out the auto sector. Our guest has Ferrari as his top pick. He expects the company’s first all-electric vehicle will bring in new buyers in key markets such as California, the Nordic countries and China. We’re joined by Tom Narayan, lead global autos equity analyst at RBC Capital Markets. Tom, great to see you as ever. Thanks for joining us. Start off with Ferrari. Remind us why you think things are looking up for this car company.

TOM: Yeah. I mean, it’s very difficult usually to get people really interested in buying the stock because it’s usually always so expensive, but they have an interesting opportunity — investors do — because the stock has pulled back 20 per cent after its October investor day, and there are some people worried about its EV. We are not. They have this really interesting car, the F-80. There are 800 of them. They’re going to sell their US$4-million cars. When you do the math on that, it’s incredible — super profitable. So the setup is really great given this 20 per cent pullback in the stock. Finally, investors who want to buy this stock, I think it’s a great time for them to participate, and they get to benefit from this F-80 car, which starts deliveries in Q4 of this year.

ANDREW: What’s that car?

TOM: It’s basically a supercar. They’re going to make 800 of those in its lifetime. They’re going to sell them over just a three-year period. And they cost US$4 million a car. So the profits on those are incredible, right? Unless you’re putting a million dollars of costs or something. A car is a car at the end of the day. So it’s super profitable — a huge boost to numbers in 2025 and, sorry, in 2026 and then really 2027. I think some folks who got a little spooked at the Oct. 9 investor day — I think there were a lot of new people in the stock — kind of pulled out. And now I think the core holders, the people who want to own Ferrari, were waiting on the sidelines a little bit. But now I do think folks will start buying the stock.

ANDREW: Let’s get a little more mundane here. General Motors — you see upside here. Tom, why is that?

TOM: Yeah. I mean, this one has been a great performer. It’s hard to also pitch this one now, given how strong it has performed, but I still think there’s more upside here. Tariffs have been a great story. The resolution of them — they really benefit GM. USMCA is going to be negotiated, I think, June or July in 2026, a big catalyst for them. Also, you know, they do have some tariffs that come from their Korean imports. So we’ll see probably some resolution there. And then outside of that, this is just “steady as she goes.” Sixty-five to 70 per cent of the large SUV market in probably the best auto market in the world — the United States. They don’t have to worry about China coming into the U.S. because of tariffs and because Americans aren’t really buying EVs. It’s a great relative play, and it has been working. So, yeah, if it ain’t broke, let’s keep going.

ANDREW: And what about pushback in America to the high sticker prices on cars? Presumably that will curb sales growth. People are just tired of these massive prices.

TOM: Yeah, no, you’re right. But that’s been the case for a while now. Since the pandemic we’ve seen a huge bout of inflation in car prices. But at the same time, unemployment is really low. The economy is actually pretty healthy in the States, except for maybe the lower end. People need it. If you need a car, you have to buy a car. That’s it. How else do you get to work? It’s not really a discretionary purchase. And we calculate a six- to seven-million-vehicle deficit — cars that were never purchased since the pandemic. Partly it’s because of the high prices, but also it’s just people weren’t buying cars and they still need them. The cars are getting old and they have to replace them to get to work. So, yeah, we still think there’s going to be some support, even despite the high pricing.

ANDREW: Tom, finally Aptiv. Remind us what they do and why you see upside.

TOM: Yeah. This is a really interesting auto supplier. They do some of the assisted-driving technology — you know, cameras and some of the software there. And then they also do some hardware stuff. They do wire harnesses and some of the electrical components. Why we like this stock — partly it’s what we just talked about. There’s strong demand in autos in the U.S., particularly their core market. But also there’s something cool happening. They’re spinning out that wire-harness business, and we think potentially it could get acquired. So if you’re buying the stock now, you get to benefit from a takeout price of that asset or even the spinout. And then it’s kind of the sum of the parts — you get to value all these different piece parts and also benefit from tariff recovery next year, as well as the secular driver, which is this assisted-driving, ADAS functionality.

ANDREW: It’s fascinating — assisted driving and automatic driving. Tom, are we going to see incredible progress in the next few years, do you think?

TOM: People have been waiting on this forever, including myself. It has been kind of slow going, right? People either want the car to drive them completely or not at all. So it has been difficult to get consumers on board. But we are seeing this in China. I was just actually there last week and people love that product — assisted driving. And of course Aptiv sells these products in Europe, China and the U.S. And we do think ultimately American buyers will want these products. Eventually we’ll get to a point — maybe it’s level three — where your eyes are off the road and your hands are not on the steering wheel, but you’re sitting in the driver’s seat. That could be the evolutionary phase we go to next, and a company like Aptiv is definitely a beneficiary.

ANDREW: Tom, thank you very much for joining us. Tom Narayan, lead global autos equity analyst at RBC Capital Markets.

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This BNN Bloomberg summary and transcript of the Dec. 2, 2025 interview with Tom Narayan are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.