Continental is putting more focus on the electric future of mobility. This is due to the tightening of political targets, that are leading to an increasingly disruptive market in which future technologies are determined by regulations.
“Our customers are increasingly and consistently turning to the electrification of combustion engines through hybrid drives as well as to pure battery-powered vehicles. We have long been a technological leader in the field of electronic control units and related functional software. In keeping pace with our customers and markets, we are now focusing more rapidly and systematically on our strengths and are targeting the future of electric mobility with our broad and successfully applied experience,” says Andreas Wolf, head of Continental’s Powertrain division, which in the future will operate under the name Vitesco Technologies with Wolf as CEO. “With this strategy and gradual optimizations to the portfolio, we aim to ensure that the powertrain business remains financially strong, competitive and sustainable in the long term,” he adds.
“The future is clearly electric. We are convinced of this,” comments Wolf, adding: “The transformation phase along the way will almost certainly be characterized by a combination of drive systems. In other words, classic combustion engines will continue to be used for many years and – especially in combination with efficient hybrid technologies – will make a significant contribution to lower emissions.”
Within this mix of drive systems, Continental expects diverging dynamics. The market for high-voltage components and hybridization solutions, for example, is growing at a much faster pace than anticipated. This sharp rise in production is leading to an economically attractive business at an earlier stage than previously thought.
Changes to the systems and solutions business for combustion engines
Combustion-only components, meanwhile, are set to offer only selective growth opportunities in the future, which has prompted Continental’s Powertrain division to reduce investment in the hydraulic components business. This part of the strategy relates primarily to injectors and pumps for gasoline and diesel engines. “Investments in research and development and in production capacity for innovations are becoming less profitable,” says Wolf, explaining the reasoning behind this decision.
This means that existing orders will be fulfilled, but new orders will play an increasingly marginal role. “This transformation phase will likely extend over a number of years, as combustion engines essentially serve as the basic drives for hybrid solutions,” remarks Wolf, before adding that the business in components for exhaust-gas aftertreatment and fuel delivery would also be reviewed. “The main reasons for this are intense price pressure and a high degree of dependency on the further development of the diesel engine market. We are currently examining all possible options here to ensure our portfolio is sustainable, profitable and competitive. We’re also considering partnerships,” Wolf says.
The announced changes will affect segments, technologies, locations and jobs to varying degrees. “Given all these changes, it is important for us to look for specific solutions. In doing so, we must remember to involve our customers and employees in the transformation process. Wherever possible, we will make our employees fit for the future in the new technological fields by providing them with new skills and enabling them to take on new responsibilities,” Wolf notes.
Greater use to be made of the high growth momentum of electrification
The Powertrain division is already one of the few providers capable of supplying complete electrification systems from a single source. The portfolio includes efficient technologies for 48-volt electrification, electric motors and power electronics for hybrids and battery-powered all-electric vehicles, as well as those for fuel-cell vehicles, intelligent energy and thermal management systems.
“Clean drive systems for clean air have long been our guiding principle. As a result, we already today offer ultra-clean conventional drives. Our technologies enable drivers of both gasoline and diesel vehicles to keep well within emission limits,” Wolf explains. “In the medium term, we will make transportation for the masses even cleaner by offering comprehensive support for mild- and full-hybrid solutions. The next generation of technology for long-term, CO2-free mobility is already being developed in our laboratories and workshops. This includes e-drives as well as technologies for CO2-neutral, hydrogen-based fuels, fuel cells and synthetic fuels,” Andreas Wolf continues.
He adds: “We will gradually shape our future-oriented transition in the powertrain sector and from a position of strength. In the future, Vitesco Technologies will concentrate primarily on areas where we can benefit from competitive advantages and develop attractive business models. With a focused portfolio, Vitesco Technologies will be very well positioned for this and we are confident that this will allow us to successfully harness the growth opportunities offered by the growth of electrification. We will step by step make more targeted investments in electrified and all-electric technologies, increasingly shift internal resources in this direction and continue to significantly strengthen our outstanding expertise in electronics.”
No market entrance into battery cell production
In this context, Wolf also indicates that Continental will not consider potentially entering into the production of solid-state battery cells in the future. Until now, the company was open regarding a potential investment in this regard. However, Wolf states that the disruptive market no longer offers any attractive economic prospects for battery cell production for Continental.