COVID-19 accelerating climate awareness-fuelled shifts across OEMs and tier 1s
COVID-19 is accelerating several automotive supplier and OEM trends, notably the transition away from combustion engine propulsion to cleaner energy, such as electric propulsion and hydrogen.
“Tier 1s that are heavily relying on the traditional components will see challenges from the pricing and volume side over the next couple of years, while their customers are seeking to place their investments towards new technology, be it electrification, connectivity, autonomous driving, etc,” the expert said.
After addressing the industry’s semiconductor shortage, the competitive positioning and revenue trajectory of Tenneco’s Clean Air segment were discussed. The expert highlighted Faurecia, Tenneco and Eberspächer as the key players in temperature exhaust systems, with Magneti Marelli leading the way in APAC. Faurecia was described as the “innovator technology leader,” with Tenneco a “fast follower” and Eberspächer the “price player”.
When asked whether further volume declines are inevitable in Tenneco’s Powertrain business, the expert commented: “Over the course of five years or so, definitely. We will see a faster transition to electric or hydrogen vehicles.” However, it was later noted that the unit is “still so big and cash and margin successful that it still could be very interesting for a private equity buyer to invest”.
Tenneco’s debt load and whether this is an inhibiting factor to certain dynamics, such as the EV transition, was also discussed. Although reducing debt is something the company should be looking at, the specialist doubts that this will be possible without a “separation transaction”.
To access all the human insights in Third Bridge Forum’s Tenneco – Clean Air segment outlook & evolving industry dynamics Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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