Our Heart Beats for a Healthy Mobility Ecosystem

Continental is keeping its targets firmly in sight, particularly during the
crisis,” Continental CEO Dr. Elmar Degenhart said today at the technology company’s 2020 Annual
Shareholders’ Meeting, which was held virtually in Hanover. As the crisis persists, Continental will
be resolutely continuing the realignment of the company initiated in 2019 and will be adjusting its
financial structure to the decrease in global vehicle production. Continental is focusing on three
areas of technology: digitalization; assisted and automated driving, with autonomous driving based
on this concept; and emission-free drive systems. “Because we have committed to innovation at an
early stage and are pursuing it with vigor and purpose, we are and will remain a pioneer in the
industry,” said Degenhart.
Continental technologies are geared toward competitiveness and future viability, and thus support
sustainable growth. “Our heart beats for a healthy mobility ecosystem,” explained Degenhart. “This
is a system in which all three key requirements are balanced: ecologically, economically and
socially.” The solutions developed by Continental pave the way for this by enhancing
environmental protection and supporting carbon neutrality, by placing an emphasis on affordability
and by facilitating personal mobility for individuals. “This huge task starts with us. As early as this
year, we will buy electricity only from verified renewable sources for all our plant locations
worldwide,” said Degenhart, outlining the company’s roadmap. “By 2040, our production will be
carbon-neutral and by 2050 we will eliminate CO2 emissions in all the stages of our value chain.

Growth with software as well as safety and clean drive systems
Continental is harnessing digitalization and software to drive its profitable and sustainable growth.
“Software is the oxygen of industry, since it lays the foundation for completely new services. Value
creation with software is recording double-digit percentage growth each year,” explained
Degenhart. Backed by high-performance computers – the digital heart of vehicles – Continental
already generates sales exceeding €3 billion (calculated over the life of the car model series in
question). “One customer alone will have received 2.5 million such computers from Continental by
2022. And this is only the beginning. By 2022, we expect more than ten further projects for this
innovation,” said Degenhart.
Digitalization is equally decisive for new mobility-related services. “We’re making sure almost all
of our products are smart, and we’re digitalizing tires and air-spring systems, for example. Demand
is already very high for tire data, which is transmitted via our digital services to vehicle fleet
operators. We are thus expanding our business with fleets, generating sales of around €1 billion
annually,” said Degenhart. The plan is to triple these sales by 2030. “In our opinion, it is
digitalization that offers the greatest potential for increasing efficiency in production in the years
ahead. Currently, we’ve already deployed 1,600 collaborative robots in this area, which work handin-
hand with their human colleagues,” explained Degenhart.
A second growth area for Continental is the business with systems for assisted and
automated driving. “We’re developing these technologies with a view to zero accidents and zero
fatalities on roads. The driver assistance system business is experiencing growth like no other,”
said Degenhart. In addition, Continental currently sells around 350 million sensors annually in the
area of passive safety. With respect to the brakes business, Degenhart projected that just shy of
40 million highly integrated braking systems will be produced by the company by 2023.
The third growth area for Continental is technologies for clean vehicle drive systems. “The ‘e’
in e-mobility does not stand just for ‘electric.’ It also stands for ‘emission-free.’ Whether with
batteries or fuel cells, e-mobility is a real growth market. It therefore offers huge potential for
Vitesco Technologies,” explained Degenhart. For most products in the drive systems family,
Continental is expecting the market to grow by approximately 30 percent annually in the next five
years.

The roadmap out of the crisis
“A winner delivers good results, even under bad circumstances,” Degenhart emphasized. “We are
persistently maintaining our position among the global elite when it comes to the providers of top
technologies and software. To compete in such a field, you have to maximize your competitiveness
and future viability.” With that in mind, Continental is systematically focusing on implementing its
crisis plan, where protecting the health of the workforce takes top priority.
The realignment of the company initiated in 2019 is being continued during the crisis. “Our
restructuring plan is our path into the future. It is and remains our most important task,”
underscored Degenhart when addressing the shareholders. “We’re expanding our portfolio where it
is growing profitably and making it even more fit for the future. We’re also speeding up our
processes by introducing even leaner structures.” Building on this strategy, Continental is planning
annual savings of around €500 million from 2023.
Degenhart stated that a key task for Continental is to realign the company to lower global vehicle
production, with market observers forecasting production volume for passenger cars and light
commercial vehicles in 2020 of 70 million vehicles at most. Continental predicts that the record
level seen in 2017 totaling over 95 million units will not be witnessed again before 2025 at the
earliest.
“We’re building ourselves a bridge over the coming years; a ‘corona bridge’ that will make us
successful once again,” Degenhart said, visualizing the company’s activities. By minimizing
overcapacities, decreasing investments, and reducing working capital as well as labor and material
costs, Continental plans to save an additional several hundred million euros by 2022.