Kempower: European market drives growth outlook

Translation: Original published in Finnish on 9/9/2025 at 9:25 am EEST.

The electrification of transportation has advanced considerably in Europe this year, particularly due to stricter emission requirements. Traditional European car manufacturers have begun to gain a stronger foothold in the market, which we believe will support the continuation of the electrification policy. The outlook for the US market, on the other hand, is weaker, though we see an opportunity for Kempower to continue to grow its market share. While we predict strong growth for Kempower in the coming years, we still consider the share valuation to be quite strained.

Share of electric cars in car sales in the EU

Source: ACEA

Sales of electric cars clearly on the rise

Sales figures for electric vehicles have continued to grow strongly in Kempower's most important geographical market, Europe (January-July: +26% y/y). While it seems unlikely that the share of electric cars in new car registrations in the EU will reach the level of up to 20% predicted before the start of the year, H1 nevertheless saw a significant increase of 3.2 percentage points in the market share of all-electric cars (H1’25: 15.6%). The advocacy group Transport & Environment expects the market share to rise to 18% by the end of the year. Key factors contributing to electric vehicle sales include the introduction of new, more appealing models and the EU's emission limits for new cars.

Traditional manufacturers have joined the electrification trend

A significant market change has been the surge in sales of electric models by some traditional European car manufacturers, such as Volkswagen and Renault, while Tesla's sales have declined. From January to July 2025, sales of electric models by European car manufacturers grew by 38% year-on-year, which was slightly faster than the market as a whole. Among non-European manufacturers, Kia and Hyundai have particularly strengthened their positions. Chinese brands have grown as well, but their market share remains relatively small (BYD ranks 12th).

We believe that the success of European car manufacturers in the electric car race is essential to maintaining political support for the rapid electrification of transportation. According to forecasts published by Transport & Environment, five of the six major car manufacturers operating in Europe are on track to meet the EU's emission reduction targets for 2025–2027, with only the Mercedes-Benz Group falling short of the targets.

Political support weakened in the US

In the US, there was no significant growth in sales of all-electric vehicles in the first half of 2025. There are significant differences between individual states, but political support at the federal level has waned during Trump's term. Trump has decided to eliminate the federal $7,500 tax credit for new electric vehicles, causing sales to skyrocket in Q3 before the credit expired. Once support ends at the end of September, sales of electric vehicles are likely to decline significantly.

US: All-electric cars as a percentage of new cars

Source: EIA

Heavy transport continues the trend toward electrification

In the commercial vehicle sector, electrification has been progressing fairly consistently for several years now. For buses, the electrification of heavy transportation is at least comparable to that of passenger cars, but for trucks, in particular, it is still in its early stages. In H1’25, the share of registered buses running on all-electric power rose to 21.6% (H1’24: 16.4%), trucks to 3.6% (H1’24: 2.1%) and vans to 9.5% (H1'24: 5.8%). For instance, the Volvo Group reported a 52% increase in orders for fully electric vehicles in H1, focusing primarily on lighter vehicles, however. 

Kempower has recently delivered its first MCS (Megawatt Charging System) standard charging solutions to Norway, Denmark, and Sweden, among other countries. Efficient charging solutions play a key role in enabling the electrification of heavy transport.

Kempower's growth loaded with strong expectations

We expect Kempower to continue its upward trend in order intake in the second half of 2025. We project order growth of 33% for H2, which is largely in line with the H1 level but more challenging in practice due to stronger comparison figures. Our revenue growth estimates for 2026–2027 are high at 29% and 26%.

The growth is supported, in particular, by increased demand in the European market for both passenger cars and commercial vehicles. We also believe that Kempower has been able to maintain or improve its market share, as it has gradually gained a foothold in Central Europe, for example, and was selected as the primary supplier of charging solutions for Allego, one of Europe's largest charging operators, in the summer.

We estimate that the company will be able to increase its market share in the US as well, though the temporarily weaker growth outlook in the market will impact growth opportunities over the next few years. In addition to Western countries, Kempower could also pursue greater growth in other markets, such as South Asia, but these markets are likely to remain insignificant in the near-term forecasts.

Despite the high growth projections, we consider Kempower's current valuation to be stretched. Based on estimates for 2027–2028, EV/EBIT will fall to 20x and 14x. If Kempower were to achieve an accepted valuation multiple of 15x at the stage of mature profitability in 2028, the current value of the share today would be EUR 14.7, which is below the current share price level. However, it is particularly challenging to estimate Kempower's future cash flows due to the company's and the market's stage of development.