Schaeffler AG's Strategic Position in the EV Transition: Valuation Mispricing Amid Long-Term Industrial Tailwinds

The global electric vehicle (EV) transition is accelerating, reshaping the automotive industry's competitive landscape. As governments and consumers pivot toward sustainability, companies like Schaeffler AG are navigating a dual challenge: capitalizing on long-term growth while managing near-term profitability pressures. This analysis examines Schaeffler's strategic positioning in the EV sector, focusing on whether its valuation reflects a mispricing of its long-term potential amid industrial tailwinds.

The EV Transition: A Structural Shift with High Stakes

The EV market is on a transformative trajectory. According to a report by BloombergNEF, global EV sales are projected to grow at a compound annual rate of 32.5% from 2025 to 2030, with the market size expanding from USD 1,328.08 billion in 2024 to USD 6,523.97 billion by 2030Global EV Outlook 2025 – Analysis - IEA^[1]. China remains the largest market, with over half of its 2025 vehicle sales expected to be electricGlobal EV Outlook 2025 – Analysis - IEA^[1]. Meanwhile, Europe and the U.S. are lagging but show incremental adoption, albeit with policy-driven uncertainties. This structural shift creates both opportunities and risks for suppliers like Schaeffler, which must balance R&D investments with operational efficiency.

Schaeffler's Financial Performance: Growth vs. Profitability

Schaeffler's E-Mobility division reported revenue of €2,419 million for the first half of 2025, a 9.7% year-over-year increase, driven by higher EV production in Europe and the AmericasSchaeffler with solid first half of 2025 | Press Releases^[2]. However, the division's EBIT before special items remained negative at €461 million, reflecting a -19.0% margin-a modest improvement from -25.7% in the prior yearSchaeffler with solid first half of 2025 | Press Releases^[2]. For 2024, the division achieved 12.6% revenue growth at constant currency, with strong order intake of €4.7 billionSchaeffler with solid first half of 2025 | Press Releases^[2], yet its EBIT margin before special items was only 4.2%Schaeffler with solid first half of 2025 | Press Releases^[2]. These figures highlight a critical tension: Schaeffler is scaling its EV business but has yet to achieve profitability, raising questions about its cost structure and competitive positioning.

Strategic initiatives, such as the integration of Vitesco Technologies, aim to enhance operational efficiencySchaeffler with solid first half of 2025 | Press Releases^[2], but the absence of new partnerships in the 2023–2025 period suggests a reliance on internal restructuring rather than external collaboration. This contrasts with peers like ZF Friedrichshafen, which has pursued joint ventures (e.g., with Foxconn and Qualcomm) to accelerate innovationZF accelerates restructuring efforts - ZF^[3].

Valuation Metrics: A Puzzle of High Multiples

Schaeffler's valuation appears decoupled from its financial performance. As of October 2025, the company trades at a P/E ratio of 275.5x and a P/S ratio of 0.27Schaeffler - Public Comps and Valuation Multiples^[4], far exceeding the sector averages of 16.22x and 1.44xSchaeffler - Public Comps and Valuation Multiples^[4]. This disconnect suggests that investors are pricing in aggressive long-term growth expectations, potentially overlooking near-term profitability challenges. For context, Bosch Limited's P/E ratio stands at 42.44xSchaeffler - Public Comps and Valuation Multiples^[4], while ZF Friedrichshafen's metrics remain undisclosed but are likely constrained by its restructuring costs and debt burdenZF accelerates restructuring efforts - ZF^[3].

The high multiples imply a belief in Schaeffler's ability to capture a significant share of the EV value chain. However, the company's E-Mobility division has yet to demonstrate consistent profitability, with EBIT margins hovering near breakeven. This raises the question: Is the market overestimating Schaeffler's growth potential, or is the company underinvesting in the R&D and partnerships needed to secure its position?

Competitive Dynamics and Strategic Risks

ZF Friedrichshafen provides a useful benchmark. Despite a 10.3% sales decline in H1 2025, ZF improved its adjusted EBIT margin to 4.4%ZF accelerates restructuring efforts - ZF^[3], outperforming Schaeffler's -19.0% margin. ZF's restructuring efforts-including a planned 14,000-job reduction by 2028ZF accelerates restructuring efforts - ZF^[3]-underscore the industry's need for cost discipline. In contrast, Schaeffler's focus on internal integration may limit its agility in a rapidly evolving market.

Bosch, another key player, has a more balanced valuation profile (P/E of 42.44xSchaeffler - Public Comps and Valuation Multiples^[4]) but lacks the same level of EV-specific strategic clarity. While Bosch's P/S ratio of 7.92x (as of October 2025BOSCH Price/Earnings (PE) Ratio-12 Oct,2025 - Smart-Investing^[5]) suggests a stronger revenue-based valuation, its EV division's strategic direction remains less defined compared to Schaeffler's dedicated E-Mobility focus.

Conclusion: Mispricing or Justified Optimism?

Schaeffler AG's valuation appears to reflect a bet on its long-term potential in the EV transition, but this optimism is not yet supported by its financials. The company's high P/E and P/S ratios suggest that investors are pricing in a scenario where Schaeffler dominates the EV supply chain, yet its current EBIT margins and lack of new partnerships indicate that this dominance is far from assured.

For investors, the key question is whether Schaeffler can bridge the gap between its strategic ambitions and operational execution. If the company can achieve profitability in its E-Mobility division while maintaining its R&D momentum, the current valuation may prove justified. However, if it fails to address cost inefficiencies or cedes ground to more agile competitors like ZF, the market could reassess its multiples downward.