It was my last meeting on the last day of the annual four-day Baader Bank conference, attended by some 170 German, Swiss and Austrian companies.
The question seemed fairly innocuous. “Which of the businesses do you think is the best?” You would have thought from his response that the Continental AG investor relations guy had been asked if he had committed murder. He looked around sheepishly, checked the room for listening devices and whispered “the powertrain business”.
A powertrain is the collection of componentry that transfers power from an internal combustion engine (“ICE” in the industry lingo) to an automobile’s axels. Continental and another UK parts provider, Delphi, dominate the market for their supply to global automobile manufacturers. It is not hard to see why the IR guy likes this part of the business so much.
The reason he didn’t speak out loud is that, at this year’s conference, ICE was a dirty acronym. The new star of the show is “EV”, industry speak for electric vehicle. Unfortunately for Continental, electric vehicles don’t need a powertrain.
There was hardly a presentation without a slide or attendee question on “EV Strategy” and its impact. Attendees seemed convinced that the internal combustion engine is going the way of the ice box. Perhaps this is a consequence of the diesel emissions scandals or the sky high market valuation attributed to US electric vehicle manufacturer Tesla.