Vitesco Technologies, the powertrain unit that Continental plans to spin off on Thursday, has about $17.7 billion in orders for its electrification products. CEO Andreas Wolf explained what is driving interest in the supplier’s systems and components in an interview with Automotive News Europe Managing Editor Douglas A. Bolduc.
Where is Vitesco on its journey to becoming a listed company?
It’s the final sprint now. All the necessary steps from authorities are done. Now we look with ever-increasing interest toward the first listing day (tomorrow, Sept. 16).
What has Vitesco done in the last few months to generate interest from potential investors?
We have seen a lot of investors and what we have done is show them our products, such as the fourth generation of our electric axle. We have also shown our fourth-generation inverter. What they are happy to see is that we have achieved modularity with a number of our products. That means many of our products don’t have to be developed from scratch.
Have you gotten any orders for those product?
Yes, for both our third-generation electric axle and inverter, which shows we are moving in the right direction.
Could you say which companies will be using those components?
We can’t disclose the names of our customers yet, but what I can say is that we are active in all parts of the world and the orders came from all parts of the world.
Could you give us an idea on some of the bigger wins Vitesco has had in the last couple of quarters?
One that I’m really proud of is the recent award from Hyundai for an 800 volt system, because that is this high-voltage part of the electrification sector that we expect to grow in over the next decade. We are very happy that we got that order. In addition, we were sitting on more than 13 billion euros in orders for our products related to electrification [at the end of 2020. That number rose to 14.8 billion euros at the end of the first half of 2021]. That is not only for more common products such as inverters and battery management systems, but also for control units and thermal management solutions. That means the traditional business units within Vitesco Technologies are taking advantage of the shift toward electrification.
What about making batteries in-house?
We looked into that in depth roughly two years ago and decided that is not our world. We don’t have the skills and experience to move into that area. Another reason for this was that we eventually foresee high-voltage batteries being part of the car and part of the chassis. That is where our customers, the automakers of the world, want to take responsibility as it is part of the development of the car. Therefore, we will focus on the electronics, the management of the battery, which is extremely difficult and includes a lot of functions.
There have been several recalls over the last year because of battery fires. Has the industry as a whole perhaps underestimated the complexity of battery thermal management and is that an opportunity for Vitesco?
Absolutely. That is part of the battery management system, but also the whole complexity of an electric drivetrain. Sometimes we hear that with the move toward electrification things will become less complex; that an EV is a simple product because all you have is the e-motor and the battery. That’s not at all true. It is a high-tech, highly complex product that is extremely challenging but also extremely interesting.
So much of what you’re doing is electronics based, which means you need a lot of microchips. What has Vitesco done to offset the ongoing shortage of chips and how long do you expect the problem to last?
The underlying problem of being short on chips will continue into 2022, but I hope that we don’t have any additional surprises. What are we doing? We are in very close contact with our customers. We manage the situation day by day to try to make sure we don’t stop their production lines. We fly components from Asia to Europe, from Europe to Asia, wherever they are needed to be so that we can serve our customers. There’s a lot of momentum in the supply chain to make sure that our customers are served. We can’t always guarantee this is the case, but we do everything possible to continue to supply them without interruption.
Chip suppliers have told us that automakers and suppliers were going to get a more reliable supply of chips in the second half. Has this happened?
I can confirm that we see have seen a better overall supply and we hope that continues. Unfortunately, the last few weeks have brought some negative surprises [rising COVID-19 infections slowed chip output at factories in Vietnam and Malaysia]. But all in all, we have seen an improvement.
What other challenges do you have on your radar?
Looking to our specific situation combined with the overall market boom for electrification, the biggest challenge I see is that we make sure that we grab our part of this big opportunity and translate that into business. I hope that we don’t make mistakes or have the wrong products.
It sounds like the dilemma you are facing is how to maximize this incredible moment, right?
Absolutely. That’s a good summary and hopefully it will also be reflected in our share price.