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Continental Refocuses Powertrain Division On Electric, Spins Off As New Company

Global automotive supplier and solution company Continental’s Powertrain division is embracing the future and going all-in on e-mobility with a specific focus on electrified powertrains.

Global automotive supplier and solution company Continental’s Powertrain division is embracing the future and going all-in on e-mobility with a specific focus on electrified powertrains.

The news comes as the entire global luxury combustion vehicle market is crashing, driven by a sharp uptick in sales of electric vehicles in the segment. “Our customers are increasingly turning to the electrification of drive systems, so we are concentrating systematically on this area,” Continental’s Powertrain CEO Andreas Wolf said.

Vitesco Technologies’ Andrea Wolf. Image credit: Continental

The move comes as recognition that the writing is already on the wall for the direction automotive powertrains are headed and Continental believes that future will be powered by battery packs and electric motors. To realize the full potential of the paradigm shift that is redefining the the automotive market, Continental is rebranding its powertrain division as Vitesco Technologies, with Wolf as the CEO of the new company.

“The future is clearly electric. We are convinced of this,” Wolf said. “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.”

The pivoting of the powertrain unit makes sense as a response to the overall market shift, both current and future, towards electric, but spinning the company off as a separate entity does not. If Continental sees electric as such a big opportunity, why break that out of the parent company into its own entity?

The most obvious answer is that Continental is doing this to mitigate the risk that comes with any unknown, though the opposite might be true. Realigning its entire powertrain division to a host of new technologies is akin to spinning up a completely new business, with a few common threads that stretch back into the world of combustion vehicles.

Spinning off the newly refocused unit as a new company could give them the autonomy needed to take risks that would not be acceptable by Continental, but fit right into the startup culture needed to rebuild the unit into a successful electric powertrain company. Time will tell how the move pans out and where Continental’s Andreas Wolf will take Vitesco Technologies in the electrified future.

Continental’s powertrain division is already one of the only companies providing end to end electrified powertrain solutions and spinning it off seems to be a bullish move to capitalize on that leadership. For now, the company has committed to the transition and stated for the record that it will not produce batteries. As the most expensive single component of the current generation of electrified vehicles, the production of next generation solid state battery cells are not on the radar for Continental. Wolf noted that the company had left the possibility of entering battery cell production on the table, but the battery cell production market has since stabilized, making it less lucrative than it otherwise might have been.

Source: Continental via Electrive

 
 
 
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I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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