Valeo is going all-in on a business strategy focused on electrification and advanced driver-assistance systems to secure its place in a market it believes will see an “explosion” in growth.
CEO Christophe Périllat presents the group’s Move Up strategy following an announcement earlier in the month that the company had purchased Siemens from its joint venture Valeo Siemens eAutomotive. The move points the way the company wants to head, albeit with its debt increased to €741 million ($527 million).
Nonetheless, Périllat outlines the imperative of the production strategy to the company’s long-term business success.
“Our strategy is very simple and straight forward. Mobility will become carbon-free and will become safer,” Périllat says. “The technologies behind this are going to be electrification and ADAS or driving assistance. The growth and use of these technologies will, literally, explode in the coming years.”
He says we are only at the beginning of a period of what he calls hypergrowth for these two pivotal markets for the automotive industry.
“I think the growth in electrification and ADAS will last one or two decades and be a growth that we have never seen before,” Périllat continues. “In the next 15 years the electrification market will reach €200 billion ($224 billion), while the ADAS market will reach €120 billion ($134 billion).
“Just these two markets will triple the current addressable market for Valeo creating for us a fantastic growth opportunity. So, our mission is to accelerate electrification and also accelerate ADAS, and I believe we can make it happen at the same time,” he says.
He adds that the two main planks of the strategy are complemented by two more that work to the traditional strengths of the company, interior lighting and the interior experience.
“In a car with electrification and ADAS there is space for more lighting to reinforce brand, to reinforce styling, to reinforce communication. More lighting around the car, more lighting inside the car, more lighting everywhere,” Périllat explains. “Lastly, ADAS reinvents your task inside the car – the reinvention of the interior experience.”
Périllat says focusing on the four areas will lead to sales of €25 billion ($28 billion) by 2025, representing an annual growth of 13% for the period 2021-25. The full integration of Valeo-Siemens eAutomotive will help accelerate the strategy.
He says the company has very little exposure to legacy products, such as those designed and developed for internal-combustion powertrains. Currently, those comprise 11% of the company’s sales and are expected to drop to just 4% by 2023.
The company also has a foothold in the new-mobility sector, he says, with projects and partnerships covering new battery-electric-vehicle startups, shuttles and robotic droids, technology players, commercial vehicles and micro-mobility providers.
“While volumes are still quite low, we are prepared to grow with these new players as they will grow by themselves,” Périllat says.
He also highlighted Valeo’s carbon-neutrality program with a goal to reduce CO2 output by almost half by 2030 on the way to total carbon neutrality on or before 2050.
The company is expecting to see global sales to automakers rise from €14.8 billion ($16.5 billion) last year to €24 billion ($26.8 billion) by 2025, with a sales goal of €40 billion ($44 billion) by 2030.
“I am fairly confident about this number since we have already booked 70% of the 2025 business,” he says, noting Valeo’s 13% growth over the period is expected to be double the forecast expansion of the automotive market.
“By 2025, our group will be stronger technologically and financially and we all know that another decade, or even another two decades, after 2025 there will be even sharper acceleration of growth that will change mobility and will change the world,” Périllat says.
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