Valeo Group (China) Business Report FY ended Dec. 2022

Performance

[Entire Group]

-In the fiscal year ended December 31, 2022, the Company's net sales increased by 16.1% year-over-year (y/y) to EUR 20,037 million. The increase was due to the expansion of the electrification and ADAS businesses. Orders for high-voltage solutions for electrified vehicles accounted for two-thirds of the total orders in the Powertrain Systems and Thermal Systems business segments, and the average value of orders for ADAS as vehicle architecture for SDV (Software Defined Vehicle) increased. The Company has also signed a partnership agreement with BMW to develop a Level-4 fully automated parking system, and is supplying Stellantis with its 3rd generation LiDAR (SCALA 3).

-In 2023, the Company is targeting Group-wide sales of EUR 22 to 23 billion and an operating margin of 3.2% to 4.0%.

[China business]

-In the fiscal year ended December 31, 2022, the Company's OEM sales in China increased by 7% year-over-year to EUR 2,837 million. It accounted for 18% of the Group’s sales.

-The camera business in the Comfort and Driving Assistance Systems Business Division has won numerous orders from Chinese domestic OEMs. The Thermal Systems business unit benefited from higher sales of self-driving models in Germany and China. On the other hand, the Powertrain Systems business unit was impacted by the slowdown in the commercial vehicle market, and the Visibility Systems business unit struggled as a result of an adverse customer and product mix.

Strategic alliance

Customer	Details
Didi Autonomous Driving	Valeo announced the signing of a letter of strategic cooperation and investment intent with Didi Autonomous Driving, through which the former will strategically invest in the latter, and both parties will jointly develop an intelligent safety solution for Level 4 Robotaxis. The two parties will form a joint R&D team to create a standalone and cost-effective safety redundancy system meeting automotive-grade requirements for Level 4 unmanned driving and shared mobility scenarios, as well as relevant technologies. This solution will be first applied to Didi Autonomous Driving’s Level 4 Robotaxis. (From a Valeo press release dated May 30, 2023)
Ningbo Swell Industry	Valeo Group (Valeo) announced that it has inked a strategic alliance agreement with Ningbo Swell Industry Co., Ltd for the development, production, and marketing of the next gen of illuminated front grilles or panels for the Chinese automotive market. Both companies intend to offer carmakers in China high value-added front panels integrating lighting technologies. Ningbo Swell Industry Co., Ltd is a leader in design, manufacture, and market automotive interior and exterior parts in China and in the world. (From a press release dated December 20, 2022)
Huazhong University of Science and Technology	-The Company announced the inauguration of a vibration and noise laboratory (V&A-LAB China) jointly built with Huazhong University of Science and Technology (HUST). The new lab will be dedicated to the research and development of vehicle vibration and noise-related technologies while cultivating talent in those fields. V&A-LAB China will leverage the advantages of the Company and HUST to research automotive air-conditioning NVH, voice quality, and new materials and technologies to reduce vibration and noise. It will provide technical assistance for the Company’s business units in China and support the Company through research and development to help it maintain its leadership in NVH. The Company will also use this lab as a platform to discover industry-leading solutions and engage in global innovation projects. (From a press release dated August 12, 2022)

Start of operation

Plant/R&D center	Details
Shenzhen: Smart Manufacturing Center	Mainly produces products such as remote communication modules, 5G communication modules, wideband modules, front camera systems, domain controllers, etc.
Wuhan: Comfort & Driving Support System R&D Center	The Wuhan Comfort and Driving Support System R&D Center was established in 2017, and the second phase of the plant was completed in 2019. With the start of the third phase project, the company is aiming to expand the scale of its business.
Shanghai: Comfort & Driving Support System R&D Center	In May 2023, it began operated as an advanced driver assistance research and development center.
Valeo Ichikoh (China) Auto Lighting Co., Ltd. Valeo Wuhan Second Plant	After four expansions, the factory officially began operations in February 2022. In the future, Valeo plans to invest CNY 200 million in the new plant to build Asia's most advanced intelligent car lamp and key module production line, capable of producing 500,000 sets of headlights annually.

Acquisitions

Acquired 27% stake in wiper manufacturing subsidiary from Huayu
-HUAYU Automotive Systems Company Limited (HUAYU Automotive) announced that its subsidiary, Shanghai SIIC Transportation Electric Co., Ltd. (STEC), has completed the sale of its 27% stake in Valeo Shanghai Automotive Electric Motors & Wiper System Co., Ltd. (Valeo Wiper) to Valeo International Holding B.V. Valeo Wiper has completed the procedures of equity transfer and industrial and commercial registration, and STEC no longer holds the relevant equity of Valeo Wiper. (From a press release dated March 17, 2022)

Acquired Valeo Siemens
-Valeo Group (Valeo) announced that it has acquired Siemens AG’s 50% stake in Valeo Siemens eAutomotive, and now Valeo holds 100% of Valeo Siemens eAutomotive. Valeo has integrated Valeo Siemens eAutomotive into its Powertrain Systems business with approximately 4,000 employees, including more than 1,600 engineers, 7 production sites in 4 countries (China, Germany, Hungary, and Poland) as well as cutting-edge R&D (laboratories, test benches, simulation tools) and production capacities. It will help Valeo to offer its customers increasingly high-performance solutions such as new 800V silicon carbide-based technologies, co-development and co-production of a rare-earth-free electric motor with Renault, and new bidirectional onboard chargers. It will also enable Valeo to unlock major synergies with an objective representing a total annual profit of EUR 120 million by 2025. These synergies will be achieved progressively, with the full benefit delivered in 2025 (50% in 2023, 75% in 2024, and 100% in 2025). (From a press release dated July 5, 2022)

Exhibitions

Exhibition	Details
Auto Shanghai 2023	Valeo Group (Valeo) announced that at Auto Shanghai, it will present for the first time the new eDeliver4U, an autonomous and electric delivery droid equipped with Valeo’s cutting-edge innovations and entirely developed in China. The droid is based on an electrified chassis integrating Valeo’s 48V solutions for light mobility. It is also equipped with ADAS sensors and a software stack. It will present a “Smart Heat Pump” for EVs to ensure the comfort of passengers while optimizing the autonomy of the battery. Valeo has developed it for a major Chinese automaker. It will present its portfolio to serve all market needs relating to the electric powertrain, including the new-generation automotive electric motor entirely rare earth and magnet-free developed in partnership with Renault. It will also showcase its comprehensive management of thermal systems. Valeo will present the award-winning SCALA 3 LiDAR. SCALA 3 dramatically increases the domain of operation – and therefore the customer value – of private vehicles thanks to a wider scope of use and higher speed support. Valeo is developing innovative and powerful domain controllers for both parking and driving automation. It will go into production in 2024. This cost-effective solution for L2 vehicles will comply with GSR regulations and NCAP. For vehicle interiors, it will present technologies in the areas of access (phone as a key), monitoring (interior cocoon and driver monitoring system), and interaction (woodlike interactive surfaces). Valeo will present Valeo Lighting Experience and the Digital Twin. These cutting-edge systems will accelerate the virtual development of lighting solutions, with prototypes built at the latest possible stage, thus reducing development costs. (From a press release dated April 14, 2023)
Green and Smart Auto Shanghai 2023 (GSA 2023)	Valeo announced that it will participate in Green and Smart Auto Shanghai 2023 (GSA 2023) to be held from June 11 to 14, where it will exhibit its initiatives to address climate change and its latest scientific and technological innovations. The company previously committed to achieving 100% carbon neutrality for all its operations worldwide and the whole supply chain by 2050, for which the corresponding Carbon Reduction Plan (CAP 50) has been developed. (From a Valeo press release dated June 5, 2023)

Exhibition

Details

Auto Shanghai 2023

Valeo Group (Valeo) announced that at Auto Shanghai, it will present for the first time the new eDeliver4U, an autonomous and electric delivery droid equipped with Valeo’s cutting-edge innovations and entirely developed in China. The droid is based on an electrified chassis integrating Valeo’s 48V solutions for light mobility. It is also equipped with ADAS sensors and a software stack. It will present a “Smart Heat Pump” for EVs to ensure the comfort of passengers while optimizing the autonomy of the battery. Valeo has developed it for a major Chinese automaker. It will present its portfolio to serve all market needs relating to the electric powertrain, including the new-generation automotive electric motor entirely rare earth and magnet-free developed in partnership with Renault. It will also showcase its comprehensive management of thermal systems. Valeo will present the award-winning SCALA 3 LiDAR. SCALA 3 dramatically increases the domain of operation – and therefore the customer value – of private vehicles thanks to a wider scope of use and higher speed support. Valeo is developing innovative and powerful domain controllers for both parking and driving automation. It will go into production in 2024. This cost-effective solution for L2 vehicles will comply with GSR regulations and NCAP. For vehicle interiors, it will present technologies in the areas of access (phone as a key), monitoring (interior cocoon and driver monitoring system), and interaction (woodlike interactive surfaces). Valeo will present Valeo Lighting Experience and the Digital Twin. These cutting-edge systems will accelerate the virtual development of lighting solutions, with prototypes built at the latest possible stage, thus reducing development costs. (From a press release dated April 14, 2023)

Green and Smart Auto Shanghai 2023 (GSA 2023)

Valeo announced that it will participate in Green and Smart Auto Shanghai 2023 (GSA 2023) to be held from June 11 to 14, where it will exhibit its initiatives to address climate change and its latest scientific and technological innovations. The company previously committed to achieving 100% carbon neutrality for all its operations worldwide and the whole supply chain by 2050, for which the corresponding Carbon Reduction Plan (CAP 50) has been developed. (From a Valeo press release dated June 5, 2023)

※You can view the exhibition images here

<R&D Centers>

Name of facility	Operating segment	City	Overview
Valeo Global Electronics R&D Center	Electronics	Shenzhen, Guangdong	-Research and development of electronic products.
Valeo Global Electronics (Wuhan) R&D Center	Electronics	Wuhan, Hubei	-
Valeo Lighting Systems Hubei Technical Center	Comprehensive R&D center	Wuhan, Hubei	-Research and development in advanced technologies such as lamps, automatic parking, driver assistance and HMI
Valeo Power (Shanghai) Co., Ltd.	Powertrain systems	Shanghai	-Research and development of powertrain products.
Valeo Compressor (Changchun) Co., Ltd.	Thermal systems	Changchun, Jilin	-Development of compressor products
Valeo Automotive Air Conditioning Hubei Co., Ltd.	Thermal systems	Jingzhou, Hubei	-Air conditioning system, evaporator, condensers
Nanjing Valeo Clutch Co., Ltd.	Powertrain systems	Nanjing, Jiangsu	-Clutch systems
Wuxi Valeo Automotive Components and System Co. Ltd.	Powertrain systems	Wuxi, Jiangsu	-Actuators, sensors, engine controllers
Valeo Siemens eAutomotive (Changshu) Co. Ltd.	Powertrain systems	Changshu, Jiangsu	-New Energy Vehicle motor management systems, electric vehicle electronic control integration, electric vehicle drive motors, vehicle DC/DC converters
Siemens Automotive ePowertrain Systems (Shanghai)Co., Ltd.	Powertrain systems	Shanghai	-Electric vehicle powertrain systems
Shanghai Valeo Automotive Electrical Systems Co., Ltd.	Powertrain systems	Shanghai	-Starters, generators
Foshan Ichikoh Valeo Auto Lighting Systems Co., Ltd.	Visibility Systems	Foshan, Guangdong	-Lamps
Valeo Interior Controls (Shenzhen) Co., Ltd.	Comfort and Driving Assistance Systems	Shenzhen, Guangdong	-Switches, brake assist, rain/light sensors
Shanghai Comfort & Driving Support System R&D Center	Comfort and Driving Assistance Systems	Shanghai	-Aiming to quickly respond to local customer needs

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