Competition in the electric vehicle industry is intensifying. Price declines have accelerated since the start of the year, the market has grown and government subsidies have been scaled back, putting EV companies’ business models to the test, Goldman said. The investment bank said in an Aug. 10 report that it sees two groups of companies “dominating in an era of intense competition.” The first category consists of companies backed by “solid financials” that aim to build a “vertically integrated business model,” which includes batteries. Companies adopting this model can control more processes throughout the supply chain instead of relying on other suppliers. Goldman Sachs said such companies include Tesla, Chinese electric carmaker BYD and automaker Toyota. The second category includes companies that are seizing opportunities with new technologies and businesses, including stocks such as Panasonic, Toyota Industries and Hon Hai Precision Industry, Goldman said. The 6 Stocks Here’s what Goldman Sachs has to say about the 6 stocks, one of which is on its Firm Buy list. Hon Hai: Goldman Sachs says Hon Hai, the world’s largest electronics contractor maker, is a “major beneficiary” of “the rising trend of outsourcing electric vehicles.” The bank highlighted its “global footprint”, extensive manufacturing experience and comprehensive products and services in areas such as electric vehicle design, semiconductors and software. “Hon Hai can also leverage its experience operating ICT product factories in 24 countries, which we believe reflects its strong ability to manage workforce, supply chain, logistics and government relations globally,” Goldman Sachs wrote. Ratings, with a 12-month target price of NT$151 (US$4.73), representing a potential upside of about 42%. The stock is also on Goldman Sachs’ firm buy list. Tesla: Goldman Sachs noted that, in addition to working with battery suppliers, Tesla is building up its in-house battery manufacturing capabilities. The bank pointed out: “Tesla believes its battery strategy and capacity expansion plan will help support its long-term growth goals and reduce costs.” Goldman Sachs gave Tesla a neutral rating with a 12-month target price of $275, equivalent to About 25% potential upside. Toyota Motor: Goldman Sachs says a strong electric vehicle offering is the “missing piece” for Toyota, but it’s a “potential catalyst for a stock re-rating.” “Toyota trails Tesla and BYD in EV sales, but we still see a strong chance of Toyota catching up,” Goldman Sachs wrote. It added that, unlike Toyota, not all EV makers will be able to sustainably Spending “substantial amounts of money” to respond to various technological changes. Goldman also said Toyota’s ability to cut costs would be an advantage in the EV space. “Sustainable profitability of electric vehicles requires being truly cost-competitive in an environment without government subsidies,” Goldman Sachs said. Goldman gave Toyota a buy rating with a 12-month price target of 2,800 yen ($19.25), equivalent to about 19% potential upside. Panasonic: Goldman Sachs calls Panasonic a “pioneer” in cylindrical car batteries, saying it has an excellent capacity and safety record. Give Panasonic a buy rating with a 12-month target price of 2,100 yen, representing a potential upside of about 32%. Toyota Industries: Last year, Toyota Industries developed a bipolar nickel-metal hydride battery for hybrid vehicles. Goldman Sachs said it was working with Toyota in the area, which is “central” to Toyota’s EV battery strategy. “Toyota Industries is a major player in the field of electric compressors, with a global market share of about 50 percent, and its added value is increasing with the advancement of electric vehicles,” the bank wrote. It added: “Toyota Industries through Reliable dividend income from its stakes in Toyota and Denso ensured steady income and cash flow this fiscal year. The company is in a strong financial position to fund any need for larger investments in bipolar batteries. “In our view, the future. Goldman Sachs gave Toyota Industries a neutral rating with a 12-month target price of 9,200 yen, equivalent to a potential downside of about 7%. BYD: Goldman Sachs gave BYD a buy rating with a target price of 353 yuan ($48.40), That equates to about 47% potential upside. — CNBC’s Michael Bloom contributed to this report.