Faurecia goes green, betting on electrification
French automoitve supplier Faurecia changes its ’emission control’ branch into ‘green mobility’ and plans to focus on electrification. Until now, the supplier was specialized in treating emissions providing exhausts, catalytic converters and NOx reducing systems. It will now work on heat management for batteries and hydrogen tanks for fuel cell cars.
The board of directors presented their ambitions to investors on Tuesday and tried to convince them of this new department’s potential. In fifteen year, the OEN supplier plans on realizing a turnover of 10 billion euro while being 3,4 billion in 2016. It represents an average growth of 7% per year.
This increasing activity should enhance profitability with an operating margin for the “green mobility” branch of 15% in 2030 against 9,4% in 2016. With the ever toughening emission standards around the world “the market for sustainable mobility should see a major sales growth of about 25 billion euro by 2030”, according to Patrick Koller, Faurecia’s CEO.
“By 2030 about half the cars will be electrified”, he believes. Apparently he CEO has a more ambitious vision than any of the major study firms projecting an electrification rate of 40 to 45% by 2030.
Schaeffler as an example
German OEM supplier Schaeffler’s results could be used as a warning to illustrate the problems Faurecia will be facing in the near future. Producing valves, bearings and hybrid modules, Schaeffler saw its operating margin go down from 12/13% to 11/12% in 2017.
This year’s profit should be lower than last year’s, majorly due to increasing R&D costs. “Being ambitions for electric cars means a necessity to build more prototypes than expected”, points out Klaus Rosenfels, Chairman of the board of Schaeffler.
This illustrates that the ongoing technological revolution in automotive is promising, but also prone to risks. “The Schaeffler case will relaunch the debate on the margins and on the organic growth for OEMs while we approach the cycle’s peak”, says the investment bank Jefferies.