DETROIT — German powertrain supplier Vitesco Technologies said it plans to open a new plant in the U.S. to help it meet surging demand for its electrification products.
Vitesco is in the process of evaluating potential locations for a new U.S. factory, including greenfield and brownfield sites, Sandy Stojkovski, the supplier’s North American CEO, said on Thursday. The company expects to make a final decision on the plant’s location in the next few months, with plans to open it by roughly 2026.
Stojkovski said Vitesco aims to open a plant similar in size to its factory in Seguin, Texas, which has about 1,700 employees and is responsible for about $1 billion in annual sales. The plant would help Vitesco to keep up with surging demand in the region for electrification-related products, she said. In 2022, the company generated €1.1 billion ($1.17 billion) from global electrification sales, and expects that figure to reach €5 billion by 2026.
“Because of all the new business we’ve been awarded, as we look at the outlook for the North American region, it implies that we would be doubling our sales in the region,” Stojkovski said at a media roundtable at the Detroit auto show. “That creates a bit of a problem for us, which is that we don’t have enough production capacity in the region to handle this new business.”
Stojkovski did not say how many locations the company is looking at, though she said metro Detroit and Michigan more broadly were in consideration.
“It’s a complex decision process,” she said. “We’re talking to the various states about what the most compelling options available to us are.”
Key factors in choosing a location include state and local incentives made available to the company, in addition to federal incentives that Stojkovski said Vitesco expects to be eligible for under the Inflation Reduction Act. Others include access to wind and solar power, and to skilled labor.
“Labor availability is a big one, and not just all kinds of labor, but the right kinds of labor,” Stojkovski said. “We still are in a war for talent.”
The investment plans come as significant uncertainty remains about the pace of electrification and the growth of electric vehicle sales in the coming years, particularly in North America. As a result, Vitesco CEO Andreas Wolf said the company will take a “very flexible approach” to scaling up production at the new plant.
“Since we have a modular approach with our products, we are extremely flexible,” he said. “If one customer is a little lower and another is maybe a little better, we can balance those risks, but we’re still using the same production line.”
The supplier employs about 7,300 people in North America locations in Michigan, Texas, Illinois and New Mexico, as well as Canada and Mexico. Its North American business is responsible for about a quarter of the company’s annual revenue, Stojkovski said.
Vitesco spun off from Continental AG in 2021 and ranks No. 31 on the Automotive News list of the top global suppliers, with worldwide sales to automakers of $9.68 billion in 2022.