Friday, October 21, 2022

Capital Market Day 2022: Vitesco Technologies Presents Its Expected Business Development For Electrification

Projected organic growth in electrification sales: to a total of €5 billion in 2026, to a total of €10 to €12 billion by 2030 

E-mobility: orders worth approximately €10 billion received within one year (HY2/2021 and HY1/2022) 

      New order intake: major order for thermal management worth more than €1 billion received 

      Expectation for 2030: electric vehicles will account for more than 70 percent of passenger car production 

Vitesco Technologies, a leading international developer and manufacturer of state-of-the-art powertrain technologies for sustainable mobility, presented its current strategy and projected business performance through 2030 to prospective investors and analysts at today’s Capital Market Day 2022. The company has been listed on the Frankfurt Stock Exchange since September 2021. 

By 2030, electric vehicles will make up more than 70 percent of global passenger car production, with battery-electric vehicles (BEVs) accounting for the lion’s share.[1] “In the years to come, we will see an ever-growing range of electric vehicles,” says CEO Andreas Wolf. “The majority will have Vitesco Technologies components on board: e-axles, battery management systems, inverters and numerous other products”.

In the last two six-month periods alone, Vitesco Technologies recorded orders worth around €10 billion in electrification business. And it goes on: Vitesco Technologies recently booked a large order in the field of thermal management system from a global customer with a total volume of more than €1 billion. The thermal management system is used to regulate the optimum temperature range for high-voltage components in battery electric vehicles. 

Company targeting strong e-mobility market 

Vitesco Technologies revealed its expectations for 2026 at the Capital Market Day. The company expects to see its electrification business generate sales of around €5 billion in four years – set to rise to between €10 and €12 billion by 2030. “We are talking about strong organic growth in electrification, meaning an annual average increase of 40 percent up to 2026,” says CFO Werner Volz. Vitesco Technologies is also expecting the Group’s adjusted EBIT margin to range between 7 and 9 percent in 2026 and free cash flow to reach more than €400 million. 

“We aim to achieve these financial targets in the medium term with a double-digit EBIT margin in the future 'Powertrain Solutions' business area and increased profitability in the future 'Electrification Solutions' business area,” continued Volz. The electrification business is expected to break even in 2024. It is planned to make an initial dividend payment for the 2023 fiscal year. 

Suppliers will remain key for electrical components 

Experts believe battery-electric vehicles will continue to depend on parts from suppliers, particularly in powertrain technology, with fewer but higher quality components being supplied. Battery management systems and inverters, in particular, will be provided much more frequently from suppliers such as Vitesco Technologies in the coming years. According to company estimates, it is anticipated that the share of production contributed by suppliers for battery management systems will grow by around 10 percentage points to roughly 65 percent in 2030, with the share for inverters rising from 50 percent to roughly 70 percent in that time. For electric motors, the expectation is that even in 2030, around 40 percent will continue to be manufactured by suppliers. 

The road to sustainability with strategic partnerships 

With the help of strategic partnerships, Vitesco Technologies aims to bring even more efficient e-mobility solutions to market while also improving its access to raw materials. In terms of suppliers, Vitesco Technologies has enlisted a new partner, Infineon, in May to complement its existing collaboration with ROHM Semiconductor. This partnership gives Vitesco Technologies access to more than 50 percent of the global capacity for silicon carbide wafers, which are essential for the production of semiconductors. In terms of customers, Vitesco Technologies has gained a close strategic partner in the shape of its long-standing key account, Renault Group, in July. Going forward, the two companies will jointly develop highly integrated and compact power electronics.  

Vitesco Technologies is not just dedicated to finding solutions for emission-free mobility. Achieving the highest standards of sustainability lies at the core of its mission. Vitesco Technologies has set itself ambitious targets, aiming for its production to be fully carbon neutral by 2030 followed by its entire value chain by no later than 2040. The company also helps its customers to achieve their own sustainability goals using electrification solutions from Vitesco Technologies. “Regardless of the decision at hand, we always ask ourselves what the next generation would say,” explains Wolf. 

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