Future Mobility - automotive suppliers staying on course in a disruptive market

Future Mobility - automotive suppliers staying on course in a disruptive market
15 September 2020

In this post, we take a look at how the top automotive suppliers are navigating future mobility, including electrification, autonomous driving, connected and shared ownership. At the end of 2019, the top five automotive Tier 1 suppliers, Bosch, Denso, Magna, Continental and ZF, grossed almost $200 billion in sales (Automotive News). This success indicates that there is still a significant market opportunity out there, although a very dynamic one as we have seen the ranking of different players shifting over the last 3 years. Some automotive suppliers are dealing with the CASE (Connected, Autonomous, Shared and Electric) megatrends more successfully than others. From a revenue generation perspective, the order for CASE should actually be E-C-S-A with electrification leading the charge (no pun intended) since late 2010 as the first movers made their debut in this segment.


While companies like Tesla went after a blank sheet design and built it internally (seeking to be a vertically integrated company), big OEMs such as the VW Group worked with their trusted network of Tier suppliers. One of their first hybrid vehicles under the Porsche brand, the Cayenne S Hybrid was released in 2010 with an electric P2 motor provided by Bosch 34kW peak power. Their next-generation Cayenne S E Hybrid was released in 2014 with an upgraded electric motor from Bosch as well, and this time, it provided 70kW of peak power. Bosch as a Tier 1 has managed to dominate the automotive supplier rankings consistently over the last several years and it benefits from the fact that it is a private holding and can prioritise the long-term perspective in terms of its decision making.


Continental, which had for several years been a close second to Bosch in terms of sales, has had a very tough time over the last few years. It has struggled to capitalise on the electrification trend even on hybrid propulsion systems if not completely on fully electrified solution offerings. Their first product to land in series production was their 48V Belt Starter Generator on the Audi A8 in 2018, a mild hybrid offering. In that same year, they provided revenue guidance suggesting revenue would be $1 billion lower than forecasted originally. This followed with the spin out of their Powertrain Division into a separate entity under the name of Vitesco in 2019. Currently, Continental ranks fourth in sales for automotive suppliers as it tries to find a stable position between first movers and quick followers in supporting electric propulsion solutions.

Continental has nevertheless made some progress in connectivity and digitalisation, although significant revenue is not expected to peak yet for several years. In the late 90s, it acquired ITT Industries, a US-based tech manufacturing company. Developments in this area led to intelligent tires with sensors from the ex-ITT division, which could transmit messages about loading and traction and tire health to telematics systems. This has now developed into a service offering under the names, ContiPressureCheck and ContiPressureCheck Integrated which allows for monitoring commercial fleets live and pulling them back for service ahead of significant downtime events.


Another company which has been very successful in climbing up the ranks is Denso Corporation. It currently stands at number two, after Bosch. Formerly a captive supplier to Toyota in Japan, it now has a stable footprint in Europe with its Aachen Engineering Center in Germany. While Denso originally worked on hybrid propulsion systems to support Toyota’s vehicle portfolio (with vehicles such as the Prius and Auris), it boasts today a global market share of at least 30% of all inverters and battery management systems. In mid-2019 it also announced an investment of $1.6 billion in automotive electrification. This investment culminated with the opening of the Electrification Innovation Center in Anjo, Japan in May of 2020. It is lightly involved in the other megatrends such as connectivity and autonomous in the form of partnerships with startups, as those markets reach a significant level of revenue maturity.

ZF Friedrichshafen:

While BMW developed its internal electric motors for its flagship i3 and i8 vehicles, it partnered with the ZF Group for its first plug-in vehicles, the 330e and the 740e, first released in 2016. The electric motor provided 83kW of peak power and sat in the P2 position, coupled with an 8-speed transmission system. However, its electrification portfolio is focused on hybrid solutions for both passenger car and commercial vehicles coupled with a transmission-based system (i.e. P2). This focus might make it more challenging to cater to the pure electric drivetrains which are in most battery electric vehicles. Nevertheless, it is expected that pure fuel-efficient Internal Combustion Engine vehicles, hybrids and battery electric vehicles will co-exist for several years, as the market share for the former declines gradually.

We typically see any business through the prism of three horizons for growth and business planning. That typically refers to the short term (1-2 year period), the mid-term (3 to 5 years) and long term planning (beyond 5 years). As also mentioned in the beginning of this article we see the “E“ in CASE generating most of the large opportunities in the short term, while the “C” comes in potentially thereafter in the mid and long term and “A” firmly in the long term as the technology and legislation catches up with the market demand for such an offering.

Discover further reports relating to automotive suppliers and their progress with electrification, autonomous driving and connectivity with access to RiCK™. It contains over 300,000 abstracted references, and Ricardo’s trusted information specialists can provide a demo.