ZF

Brand Overview

ZF Friedrichshafen AG is a global leading automotive parts supplier and technology group, founded in Friedrichshafen, Baden-Württemberg, Germany in 1915, with headquarters also located there. The company's predecessor was "Zahnradfabrik GmbH" (Gear Factory Co., Ltd.), originally producing gears and transmissions for Zeppelin airships. After more than a century of development, ZF has grown from an aviation technology supplier to a technology group ranked in the top 3 of the global top 100 automotive parts, ranking 342nd in the 2025 Fortune Global 500.

The company's main business covers electric drive, vehicle motion control, autonomous driving, integrated safety systems, and industrial technology, providing systematic solutions from software to hardware for passenger cars, commercial vehicles, and industrial equipment. In 2025, ZF achieved sales of €38.8 billion, with 162 production bases in 29 countries worldwide, and a total workforce of approximately 153,000. The company adopts a dual foundation shareholding structure, with the Zeppelin Foundation holding 93.8% of shares and the Dr. Jürgen and Irmgard Ulderup Foundation holding 6.2% of shares.

Development History

ZF's centennial history is one of continuous expansion through organic growth and strategic acquisitions. After its founding in 1915, it rapidly expanded from aviation technology to the automotive transmission field, entered rail vehicle drive systems in 1924, entered agricultural machinery technology in 1937, expanded commercial vehicle transmission business in 1952, and launched the first automatic transmission for passenger cars in 1965.

Since the 1980s, M&A integration has become the main path for company expansion: holding Lemförde Group in 1984 and entering the global chassis components market; acquiring Mannesmann Sachs in 2001, becoming a system-level supplier. In 2015, ZF completed the acquisition of TRW Automotive for approximately $12.4 billion, doubling the number of employees to over 130,000, gaining key technical capabilities in braking systems, safety systems, and driving assistance, surging to become a technology giant in the global automotive industry. In 2020, the company also acquired WABCO for about $7 billion, further consolidating its leading position in the commercial vehicle system field, but also accumulated heavy debt burdens as a result.

Entering the 2020s, the global automotive industry underwent a deep transformation towards electrification and intelligence, and ZF faced huge structural challenges. In 2024, the company launched the largest restructuring plan in its history, promoting business structure adjustment and cost optimization. In October 2025, the group celebrated its 110th anniversary; standing at a new historical node, ZF established a strategic policy of shifting from scale expansion to profitability prioritization.

Brand Matrix / Product Line

ZF possesses the industry's widest product and technology portfolio, covering three major fields of passenger cars, commercial vehicles, and industrial technology, with core business architecture including four sectors: electric drive technology, chassis technology, safety technology, and commercial vehicle solutions.

Electric Drive Product Line is based on the SELECT electric drive platform; the system covers core components such as motors, inverters, reducers, and control software, adopts modular design, can flexibly adapt to 400V/800V different voltage platforms and various vehicle model requirements, achieving high integration and rapid customization. In the commercial vehicle field, the CeTrax 2 central electric drive system has a continuous power of 210 kW and a peak torque of 8720 Nm, suitable for buses with a total weight under 19 tons; the AxTrax 2 LF low-floor electric drive axle reduces energy consumption by approximately 20% compared to the previous generation. In addition, the electric drive range-extender system eRE/eRE+ has launched a new generation of products, planned to go into mass production in 2026.

Chassis Technology is ZF's core advantage field. The company provides passenger cars with complete actuator product lines including steer-by-wire, brake-by-wire, active rear-wheel steering (AKC), electronic anti-roll stability systems, and intelligent chassis sensors. The "Chassis 2.0" concept launched in 2025 integrates subsystems such as steering, braking, and electric drive into a coordinated whole vehicle system through software/hardware decoupling and centralized control, with unified scheduling by cubiX vehicle motion control software, supporting the access of all brand actuators.

Safety Systems (ZF LIFETEC) is the world's second largest passive safety technology supplier, providing a full series of products such as gas generators, airbags, and steering wheels. In March 2026, ZF LIFETEC launched a €150 million gas generator capacity expansion project in Xi'an; after full investment, the annual production capacity of gas generators will exceed 21 million units.

Commercial Vehicle Solutions in terms of, the company provides a complete product portfolio covering transmission systems, braking systems, air management systems, and digital fleet solutions, including city bus collision mitigation systems (CMS), ZF Bus Connect digital fleet management platform, etc., and provides full-process support services for L4 autonomous driving public transport projects.

Market Performance

2025 was a year for ZF where transformation pains and quality repair coexisted. Annual sales were €38.8 billion, a year-over-year decline of approximately 6.2% compared to €41.4 billion in 2024, but organic growth was approximately 0.6% after excluding M&A and exchange rate impacts. Profitability significantly improved, adjusted EBIT was approximately €1.7 billion, corresponding profit margin increased from 3.5% in 2024 to 4.5%, higher than the company's initial expected target of 3%–4%. Adjusted free cash flow jumped significantly to €1.4 billion, far exceeding the €500 million target. R&D investment was €3.3 billion, accounting for 8.6% of sales, maintaining high R&D intensity among European parts companies.

Due to the early termination of some unprofitable electric drive projects, the company recorded one-time expenses such as accruals and asset impairment, resulting in a net loss of €2.1 billion, with the loss scale widening compared to the previous year. As of the end of 2025, net debt decreased to €10.2 billion, reduced by approximately €250 million compared to the end of the previous year. The €1 billion 6-year bond issued in February 2026 received 6 times oversubscription, with a coupon rate of 5.5%, reflecting capital market recognition of ZF's transformation prospects.

From the business sector perspective, traditional advantage businesses -- such as 8AT automatic transmissions, hybrid transmissions, and commercial vehicle systems -- continue to provide stable cash flow. Asia-Pacific sales accounted for nearly a quarter of the group's global sales, becoming the most critical growth pole. Relying on excellent supply chain management capabilities and localized R&D efficiency, ZF secured mass production orders for multiple frontier technologies including steer-by-wire and AKC rear-wheel steering in the Chinese market, establishing a clear leading position in the intelligent chassis field.

In terms of capital strategy, the company sold its Advanced Driving Assistance Systems (ADAS) business to Samsung Harman International for €1.5 billion in 2025, and continued to promote the restructuring of the Electric Drive Transmission Technology Division. ZF expects 2026 full-year sales to exceed €38 billion, with an adjusted EBIT margin target of 4%–5%.

Core Technologies

Chassis 2.0 and cubiX Software Platform is the core technology system of ZF for future smart cars. "Chassis 2.0" incorporates actuators such as steer-by-wire, brake-by-wire, electric drive, active suspension, and electronic anti-roll stability into unified management through software/hardware decoupling and centralized control, achieving coordinated control and whole vehicle dynamic performance optimization. The cubiX software platform acts as a central control system, can access all chassis actuators in a brand-agnostic manner, providing OEMs with flexible "a la carte" technical solutions — one can choose a complete hardware solution, or only purchase software and services. In 2026, ZF further launched the AI tool cubiX Tuner, realizing intelligence and acceleration of the complex chassis dynamics calibration process from thousands of parameters, significantly shortening the development cycle.

Steer-by-Wire and Brake-by-Wire is a landmark achievement of ZF's chassis technology. The company has obtained mass production orders for steer-by-wire and brake-by-wire from Chinese, European, and North American automotive manufacturers, becoming a global leading steer-by-wire solution supplier. Brake-by-wire products cover the full toolkit from hybrid to "dry" systems that do not require brake fluid; the latter generates braking force directly through wheel-end motors, achieving pure electrical signal transmission from pedal to actuator. The company's direct drive haptic simulator adopts a 48V power supply architecture, supporting higher power loads under low current, effectively improving system efficiency.

SELECT Electric Drive Platform adopts modular and scalable design, supporting flexible configuration from motor, inverter, reducer to software, capable of adapting to different power levels and vehicle model requirements within a shorter development cycle. Combined with the TherMaS thermal management system, using propane as refrigerant, can increase pure electric range by up to 30%. The eRE Plus four-in-one range-extender drive system designed exclusively for Chinese new energy vehicles has completed R&D and localized landing.

In terms of Commercial Vehicles and Industrial Technology, products such as CeTrax 2 central electric drive system and AxTrax 2 LF low-floor electric drive axle have set new benchmarks in efficiency and life-cycle cost. City bus collision mitigation system (CMS) is developed based on the OnGuardMAX ADAS platform, achieving active warning and soft braking, providing special protection for standing passengers. The digital fleet solution ZF Bus Connect has capabilities such as battery status monitoring, remote diagnosis, and cross-system status analysis.

Overseas Layout

ZF is a highly globalized enterprise, with 162 production bases in 29 countries. Asia-Pacific sales account for nearly a quarter of the group, with the Chinese market being the absolute core.

Chinese Market has evolved from "China Sales" and "China Made" to "China R&D" stage, and is moving towards the goal of "China Led". Since entering China in 1981, the company has established an Asia-Pacific headquarters in Shanghai, laid out nearly 50 manufacturing factories and 4 R&D centers in about 24 cities including Beijing, Shanghai, Hangzhou, Wuhan, Chengdu, Xi'an, Shenyang, etc., with about 240 after-sales service outlets. Multiple frontier technologies went into mass production in China first: Nio ET9 became the first mass-produced vehicle in the world equipped with ZF steer-by-wire; AKC active rear-wheel steering achieved localized mass production in Zhangjiagang since July 2024. In November 2025, Asia-Pacific Innovation Day was held in Shanghai, concentrating on displaying more than 20 engineering prototype vehicles and about 70 exhibits, with multiple technologies achieving global or China premieres. In March 2026, ZF LIFETEC Xi'an gas generator capacity expansion project went into production, total investment €150 million; after reaching capacity, annual production exceeds 21 million units, being the only production base for similar products in the Asia-Pacific region. In addition, the chassis module joint venture with 50% shareholding each by ZF and Foxconn is building a new factory in Tiexi, Shenyang, raising annual sales target from €4 billion to €8 billion, serving global customers such as BMW, Mercedes-Benz, Stellantis, etc.

Europe Layout takes the German headquarters as the core, radiating to all of Europe. In January 2026, the joint venture company activated an electric axle assembly factory in Debrecen, Hungary, with an investment of €26.7 million, providing just-in-time assembly service for electric front and rear axles for BMW Group "Neue Klasse" platform; the factory was built and put into operation in just 13 months. In Kralice, Czech Republic, ZF opened its first zero-emission factory, focusing on the production of power electronics products. As of 2025, the company has achieved full green power supply for all global production bases 5 years ahead of schedule.

In North America, ZF owns multiple production bases in Mexico and the United States. In July 2025, ZF LIFETEC activated a new factory in Tangier Med Industrial Zone, Morocco, with an area of 8,000 square meters, focusing on steering wheel production, supplying local and European markets.

India is also an important layout direction; ZF already owns 19 factories in India, among which a new off-road vehicle factory was opened in Coimbatore in June 2025, with an investment of €20 million, producing axles and transmissions, practicing the "Made in India Serving India and the World" strategy.

In terms of business optimization, the company plans to completely close the Zetva factory in Slovakia in mid-2026. Overall, ZF is accelerating the optimization and integration of global capacity, focusing on core growth markets.

Future Outlook

Looking ahead, ZF has established a development strategy of "Performance and Profitability First", promoting transformation around three core areas: prudent deleveraging to strengthen financial foundation, precise layout of strategic core areas, and building agile organizational structure and corporate culture.

Financial Level: Reducing debt remains the primary task. Net debt has already decreased to €10.2 billion in 2025; the company will continue to optimize financial structure through organic growth debt reduction and selective asset divestiture, striving to gradually restore the profitability level expected by shareholders. Sales in 2026 are expected to exceed €38 billion, with an adjusted EBIT margin target of 4%–5%.

Technology Route: Affected by the slowing electrification growth in Europe and the US, the company has adjusted its strategic direction — slowing down radical investment in the pure electric field, while simultaneously providing parts for fuel vehicles, hybrid vehicles, and electric vehicles. Chassis intelligence has become the new track where the company is betting all its strength; ZF judges that the next five to ten years will be a critical period for the explosion of "Intelligent Chassis". Brake-by-wire technology is expected to achieve scaled mass production in China first from the second half of 2026 to early 2027, and the Chassis 2.0 system will also be gradually promoted to global customers. The second generation electric drive range extender system is planned for mass production in 2026, further enriching the product matrix. The SELECT electric drive platform will continue to expand to more vehicle models, while innovative technologies such as the TherMaS thermal management system and eRE range extender system will be gradually promoted to the European and North American markets.

Business Architecture: the company is considering the overall split of the "Electric Drive Technology" department; this move will affect over 32,000 employees and approximately €11.5 billion in sales. The split ZF LIFETEC and the chassis module company joint-ventured with Foxconn have both entered the independent operation stage and will respond to market changes with a more flexible posture in the future.

Asia-Pacific Market: as a core growth engine will continue to be strengthened. From mass production of steer-by-wire on Nio ET9 to localized landing of AKC rear-wheel steering, to the launch of eRE Plus four-in-one range extender system, ZF will increasingly push innovation results originating from China to the global market. "China is our 'gym', if you can train well here, you can fight in the global market" — this philosophy is driving the company to tilt more R&D and mass production centers of frontier technologies towards the Asia-Pacific region.

Sustainable Development: ZF is continuously promoting the 2040 full value chain climate neutrality target, has achieved full green power supply for all production bases 5 years ahead of schedule, and the Kralice factory in Czech Republic has become the group's first zero-emission factory benchmark. ZF is with a pragmatic posture of "Focusing on Core, Retreating and Advancing", attempting to regain the position of industry leader in this century transformation.