Schaeffler, known for its expertise in mechanical engineering and ICE components, gears up for the EV era with the acquisition of Vitesco Technologies.
07 Mar 2025 | 3442 Views | By Ketan Thakkar & Kiran Murali & Darshan Nakhwa
As the global automobile industry undergoes a once-in-a-lifetime transformation, auto component manufacturers are turning to mergers and acquisitions in the clean mobility space as a way to shield themselves from the disruptions of the shift. The merger of German automotive suppliers Schaeffler and Vitesco Technologies can be seen as the ...
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As the global automobile industry undergoes a once-in-a-lifetime transformation, auto component manufacturers are turning to mergers and acquisitions in the clean mobility space as a way to shield themselves from the disruptions of the shift. The merger of German automotive suppliers Schaeffler and Vitesco Technologies can be seen as the latest manifestation of this trend.
Over the last few years, the auto component industry has seen many merger and partnership announcements, in line with the trend in the broader auto industry. These tie-ups have resulted from a shift in automakers and the government’s focus to finding cleaner mobility solutions to reduce carbon emissions and cut dependency on oil. Mergers and partnerships have taken precedence over ground-up research and development due to lack of clarity on the fuel of the future and automakers' multifuel strategy.
Schaeffler India, traditionally known for its expertise in mechanical engineering and internal combustion engine components like clutches, uni-air systems, and auxiliary drives, has strong presence in the ICE components space, but is not as established in the EV space. However, with Vitesco – which makes systems and components for electric, hybrid, and combustion engines – the company is now better positioned to compete in the two, three, and four-wheeler segments.
“Vitesco is already strong in the two-wheeler electric applications and all the sensors and electronics that go into the IC engine,” said Schaeffler India’s managing director and chief executive officer, Harsha Kadam. “This is a force multiplier situation because we never made ECUs and knock sensors, but now we have that…They also have some modem designs with gearboxes and the controller as a package.”
Kadam believes Schaeffler’s addressable market – or content per vehicle – is set to increase more than ten times after its integration with Vitesco. “Earlier, our offering was in the double digits of euros in the EV segment. Today, when I look at it, the offering jumps straightaway to four digits. This is because the company is now at a system level and not offering small components,” he noted.
Schaeffler has four plants in India—two in Gujarat and one each in Maharashtra and Chennai, and manufactures high-precision components and systems for powertrain and chassis applications as well as rolling and plain bearing solutions for various industrial applications.
Vitesco has a manufacturing unit in India and focuses on electric drives, electronic control systems, sensors, actuators, and innovative exhaust gas cleaning. The company's plant employs around 2,000 people, and it also has a research and development centre with 900 engineers.
The Indian automotive sector is gradually transitioning towards electric mobility, though more slowly than markets like Europe, where regulations aim to phase out internal combustion engines by 2035. “Compared to global markets, India’s EV adoption has been slower, but the shift is evident. The increasing number of electric vehicles launched at the recent Auto Expo is a clear indicator,” Kadam said.
Even before the merger, Schaeffler has been developing EV technologies in Europe through organic growth and acquisitions. The company's first step in this transition was focusing on motor technology. Schaeffler recognised its importance in electric mobility and acquired a German firm specialising in EV motors about five to six years ago.
This move enabled the development of compact, high-power-density motors, giving the company a strong competitive edge. Beyond motors, Schaeffler had existing strengths in gearboxes and reducers. However, the missing piece was power electronics—a crucial link between the motor and the battery.
By merging with Vitesco, Kadam believes Schaeffler has bridged this gap and can now offer a fully integrated e-axle solution, providing automakers with a complete electric powertrain unit. The move has strengthened its capabilities in power electronics, enabling the company to offer fully integrated powertrain solutions, he says.
“We started with electric motors, then expanded to reducers and gearboxes. The missing piece was power electronics, which became critical for integrating with the battery and motor. That gap has now been addressed, allowing us to provide complete EV powertrain solutions,” Kadam explains.
Schaeffler has already secured its first business win in India for a complete EV powertrain system. The company is actively building local capabilities, with development and business teams already in place. “India may be a late adopter of new technologies, but the expertise exists—it’s just about scaling it up. We are optimistic about securing more business and strengthening our footprint in the coming years,” Kadam says.
Beyond EVs
Even as most vehicle component makers continue to invest in clean mobility solutions, Schaeffler India’s MD and CEO believes multiple powertrains will co-exist in the future, as the government has not yet given the industry a clear direction. Global EV adoption varies, with Europe leading while India is still in the early stages.
ICE vehicles continue to see modest growth in India, and Schaeffler is expanding its capacity to support existing customers while investing in EV technologies. “India is a late adopter, which means ICE will stay relevant for at least another decade,” Kadam said. He also indicated that globally, there have been multiple approaches towards reaching the goal of clean transportation.
“Western markets favour a direct move from ICE to BEVs, while Japanese manufacturers advocate transitioning through hybrids. India requires technology customisation,” he noted, adding that his company has secured key business wins in the customisation space and begun local production.
Beyond improving ICE and building capabilities on hybrids and EVs, the company is also gearing up for the next evolution—hydrogen and fuel cells. Schaeffler already has a production line for fuel cells in Germany. Hydrogen ICE is gaining traction in India, and Schaeffler is closely monitoring developments.
“We are studying the space and mapping out the necessary competencies. The groundwork has begun…In Germany, we manufacture fuel cell stacks, bipolar plates, and electrolysers for green hydrogen production. By the time the technology matures there, we will be ready to bring it to India…For us, it is just a question of when the market is ready. As it begins to warm up, we can bring these technologies,” Kadam added