For ZF, differentiation is key in electric amid Chinese onslaught

Time of India

09-06-2025

HighlightsSekarbabu reviews major Chennai development projects, including Broadway multi-modal hub and school upgrades. ZF's Peter Laier says Chinese EV makers lead on speed and cost, but ZF differentiates through safety and innovation. ZF faces headwinds in Europe, shifts focus and workforce growth to India amid global electrification challenges. ZF raises India sourcing target to €2.5 billion by 2030, with expanded engineering roles and local supplier focus.
Mumbai:
Peter Laier
was quite candid when asked if there were lessons to be learnt for his company from Chinese electric vehicle makers.
'Absolutely!' came the prompt response from the Member of the ZF Group Board of Management and Head – Commercial Vehicle Solutions and Industrial Technology.
'When it comes to the Chinese, whatever you may like, when it comes to electric mobility setting the pace in costs and development speed, we have a lot to learn from them and we are doing that,' he told ET Auto during the course of a roundtable discussion in Coimbatore soon after the inaugural of ZF's 19th facility in India.
Yet, continued Laier, the priority for his company was to 'differentiate a little bit' in the sphere of electric mobility where there were varied approaches on how 'you make a product efficient'. For instance, the company had showcased a magnet-free electric motor at the last passenger car IAA event which was clearly about pushing the envelope.
'We are thinking that there could be a new concept of being more competitive and are now in discussions with different customers. This is a classical approach where we are using the engineering strengths on our side to come up with a solution,' explained Laier.
Clear opinion
As for the pace of engineering — 'that is something where China has introduced a new speed' — ZF has analysed what the Chinese are doing and drawing its conclusions in the process. As he added, 'We are working on acceleration as well where we are having a clear opinion on all what is safety-relevant.'
From Laier's point of view, this is a key differentiator where ZF is keen on sending the right message. 'We are standing as a company with our brand upholding safety and quality. ZF will make no compromise regarding development by compromising on safety,' he said.
When it comes to the Chinese, whatever you may like, when it comes to electric mobility setting the pace in costs and development speed, we have a lot to learn from them and we are doing thatPeter Laier
According to him, such a thought would not even occur because 'functional safety for us is the key differentiating factor where we will keep the procedures as we have them'. Even while this would admittedly take some time longer, the company was of the view that this was worth its while, especially when it meant ensuring the safety of occupants in cars and commercial vehicles.
ZF caters to the needs of Chinese automakers both in the passenger car and commercial vehicle segments. The country's homegrown brands like BYD have been growing at a scorching pace in the EV segment and this has created a fair degree of concern in Europe and the US given that they need to now cope with models that offer the best mix of competitive pricing and top-class features.
Also Read: ZF Group inaugurates ₹192 crore manufacturing plant in Coimbatore
Commitment to China
At
Auto Shanghai
which was held in April this year, the ZF top management had said, 'ZF has continuously invested in innovative technologies for the Chinese market in recent years. We have also consistently optimised our production and development processes to the requirements of our Chinese customers.'
We are standing as a company with our brand upholding safety and quality. ZF will make no compromise regarding development by compromising on safetyPeter Laier
The company's top China official had added, 'We have invested billions of euros in China over the last five years. Not only have we localised R&D and started volume production of globally advanced technologies, but we have also brought innovative technologies from China to the global market.'
ZF has also been going through its share of challenges in recent times where 2024 turned out to be a difficult year in terms of the automobile industry's slow growth accompanied by the disruptions in electrification. The commercial vehicle segment too went through a slight dip in 2024 even while 2023 was a 'great' year. As Laier said, this business is continuously growing and 'we will proportionally grow with it'.
However, passenger cars remain a different ballgame since global volumes are just 'not growing any longer'. In fact, they are stagnating and even going down in regions like Europe. Likewise, electrification which was tipped to grow rapidly 'is not coming as fast as predicted originally'. Despite this, ZF has made heavy investments both on the customer side as well as in in R&D and equipment.
Changing customer mix
'We are also seeing a change in customer mix for passenger cars and all of this is leading us to make decisions which are regional-specific. For Europe, we have decided to reduce the workforce in Germany because growth is not there any longer,' said Laier.
As he elaborated, 'We need to work as well in regard to what kind of competitiveness we can create in different countries. That is causing on one side announcements that we are reducing the workforce in Germany and growing here (in India).'
ZF made known last year that it was going to reduce its headcount in Europe, and Germany in particular, by 14,000 people which set alarm bells ringing across the automotive ecosystem. This slash in its workforce will happen over the next three years and it is a clear reflection of the changing dynamics with electrification setting in.
When other German auto component makers like
Schaeffler
and Continental also announced that there would be workforce rationalisation exercises in their facilities, it was amply clear that Europe's auto industry was going through a painful upheaval.
Also Read: Auto companies face shortages due to China's rare earth restrictions
When tariffs hurt
Disruptions are still continuing in the form of tariffs imposed by the US even though there is a breather of sorts which will last a few weeks longer. There is no telling what is in store from the
White House
thereafter which has clearly had the European Union and the rest of the world worried.
'Tariffs are having an impact on every automotive supplier and we are no exception,' said Laier. From ZF's point of view, it has for a long time pursued a strategy to produce as much local for local. 'Producing local for local is the best insurance which we have against tariffs,' he added.
However, while this exercise continues as a business priority, there are products which cannot always be localised 'economically and sensibly' in the drive towards creating economies of scale. 'For that, we are developing strategies product by product, customer base by customer base and we think that over time, there will be some stabilisation of the present tariff situation,' said Laier.
The hard truth is that the new global order will see tariffs continue to prevail across the planet and they will not go away in a hurry at least going by the present frenzied momentum. 'However, there will be a lot of negotiations between countries to find reasonable solutions and we are also getting prepared for this,' he added.
Also Read: ZF integrates fibre optics into software-defined vehicles' electrical systems
Importance of India
For the supply base, it is 'a different story' because this is a place where 'you need to think of where you are developing it in terms of competitiveness, on-shoring and tariffs. Our strategies are in place based on those conditions and we are executing them right now. It is here that India is playing an important role,' said Laier.
He reiterated that the country was a vital part of ZF's strategy and more responsibilities would be entrusted to this part of the world. This faith has been borne out by the fact that the target of sourcing components from India has been increased from €2 billion to €2.5 billion by 2030.
Laier said engineering teams in India were taking care of global projects with more and more products supplied to ZF operations worldwide. This would mean entrusting even more responsibilities to the Indian workforce going forward.
'We are convinced that there needs to be more regional decision-making too and local suppliers will increasingly play a big role. India is our main hub and we have all the ingredients here to make it a success story for ZF,' he declared.