Valeo has completed the acquisition of Siemens’ 50% stake in the Valeo Siemens New Energy Vehicle Joint venture. As a result, Valeo currently holds 100% of the Valeo Siemens New Energy Vehicle Joint Venture, a leader in high voltage electrification, which has been integrated into Valeo Powertrain Systems. This strategic transaction strengthens Valeo’s position as a major player in electrification, enabling its low to high voltage electric power solutions to cover all uses and needs.

The Valeo Siemens NEV joint venture has around 4,000 employees (including more than 1,600 engineers), seven production sites in four countries (China, Germany, Hungary and Poland) and production capabilities (laboratories, test platforms, simulation tools). The company’s electric powertrain systems, motors, inverters and on-board chargers are on the main platforms of more than 20 automakers and will be used to assemble more than 90 electric and plug-in hybrid models by the end of 2022.

The Valeo Siemens New Energy Vehicle joint venture announced at the beginning of June that it had achieved its target of more than 4 billion euros in total orders for the period 2021-2022, more than seven months ahead of the strategic plan. In the coming years, the high voltage electrification market will increase significantly in value, reaching 92 billion euros in 2030 (an annualized growth rate of 17.5% in the 2021-2030 period). Forty percent of the market is outsourced to auto parts suppliers. By 2030, the market for vehicles with high-voltage electric powertrain systems (pure electric vehicles and plug-in hybrids) will account for 35% of global vehicle production.

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The integration of Valeo Siemens’ NEV joint venture will enable Valeo to accelerate its technology strategy and offer customers enhanced high-performance solutions (the new 800V silicon carbide technology, the development and production of automotive motors with Renault that do not use rare earths at all, a new two-way vehicle charger). And the goal is to reach an annual total of 120 million euros by 2025. Synergies are gradually completed and full synergies are achieved by 2025 (50% in 2023, 75% in 2024 and 100% in 2025).

Christophe Perillat, CEO of Valeo, commented, “As announced at the launch of our Move Up program, Valeo is accelerating in the electric sector. With this transaction, Valeo has a unique advantage in this fast-growing market and a portfolio of technologies that cover all needs and uses, making it better positioned than ever to position itself as a leader in e-mobility. We will benefit from the unique expertise of Valeo Siemens NEV joint Venture in the field of high voltage electrification, Valeo will also contribute unique innovation capabilities and standardised cutting-edge technologies, as well as operational excellence in mass production to promote business growth, and I sincerely thank Siemens for working with us over the past few years.”

As a result of this integration, Valeo aims to achieve annual sales growth of more than 12% for its Powertrain Systems division between 2021 and 2025 (estimated), and to achieve sales of more than 8.5 billion euros in 2025 (estimated sales of 5.4 billion euros in 2021), including around 7.5 billion euros in Oems. The target of supporting sales of Oems in 2025 has been 80%.

EBITDA for Powertrain Systems is expected to increase from 5.8% in 2021 to more than 8% in 2022 and to approximately 13% in 2026. Pre-tax free cash flow from the business is expected to break even from 2022 onwards and reach approximately 350 million euros in 2025. The deal will see Valeo acquire Siemens’ shares for 277 million euros on a debt-free basis, using Valeo’s existing funds. Net debt increased by approximately €700 million, which had no significant impact on Valeo’s financial position. Valeo expects to cut debt from 2023.