The transition to electric vehicles has "broad implications" on traditional automakers and suppliers, Potter added.
"In an effort to more fully capture the breadth of this trend, we are adding coverage of the ‘Detroit 3’ as well as two key suppliers," Potter said.
The new initiations from Potter include ratings on the "Big 3" Detroit automakers.
- Stellantis's NV (NYSE:STLA): Overweight, $39 price target
- Ford Motor Company (NYSE:F): Neutral, $13 price target
- General Motors Company(NYSE:GM): Neutral, $44 price target
"
Of these, our favorite is Stellantis," Potter said.
The analyst said Stellantis "sets the standard for incumbent OEMs."
"Like many carmakers, this builder of Ram pickups and Jeep SUVs may face margin pressure due to rising EV mix but with 6M+ units sold annually and best-in class margins, STLA has margin to spare."
The analyst said Stellantis is well positioned as it is partially shielded from EV risks with growth outside of the U.S. and Europe in regions that could be slower to adopt electric vehicles.
"We think STLA has the volume and the margins required for bridging the gap to a post-ICE world."
