China Automotive Systems Wins First R-EPS Steering Order From Major European Automaker

Rhea-AI Summary

China Automotive Systems (NASDAQ: CAAS) has secured its first R-EPS (Rack Electric Power Steering) product order from a major European automaker through its subsidiary Jingzhou Henglong. The order, valued at over $100 million in annual sales, covers multiple vehicle models with mass production scheduled to begin in 2027.

The company's R-EPS technology features proprietary ball screw assembly and electronic control units, delivering improved network security, functional safety, and enhanced steering performance. CAAS plans to expand its R-EPS production capacity to 250,000 units by 2025 and over 1 million units by 2030 to meet growing OEM demand.

Positive

• Secured first R-EPS order worth over $100M annually from major European automaker
• Plans to expand R-EPS production capacity to 250,000 units by 2025 and 1M+ units by 2030
• Successfully developed proprietary technologies improving product quality and performance
• Strategic transformation from cost-based to technology-based supplier

Negative

• Mass production won't begin until 2027, indicating a significant wait for revenue realization

Insights

Automotive Industry Analyst

CAAS's first R-EPS order from a European automaker represents significant revenue growth and technological advancement in high-value steering systems.

This US$100+ million annual R-EPS order from a major European automaker marks a watershed moment for China Automotive Systems. The deal represents approximately 15-20% of CAAS's current annual revenue, making it a substantial growth catalyst when production begins in 2027. More significantly, this validates CAAS's strategic pivot from being merely a low-cost manufacturer to becoming a technology-driven supplier capable of meeting stringent European quality standards.

The R-EPS (Rack Electric Power Steering) technology is particularly notable as it's becoming the standard configuration for mid to high-end vehicles globally. Unlike traditional hydraulic systems, R-EPS offers superior efficiency, reliability, and responsiveness - critical elements for modern vehicles and especially important for the growing electric vehicle segment where energy efficiency is paramount.

CAAS's proprietary innovations in this space are technically impressive: their ball screw assembly technology optimizes costs while maintaining quality, and their in-house developed electronic control units address the crucial aspects of network security and functional safety. These technological advances reveal CAAS's R&D investments are bearing fruit in high-value components.

The capacity expansion plans are equally telling - growing from 250,000 units in 2025 to over 1 million by 2030 represents a 400% production increase over five years. This suggests management anticipates securing additional high-value contracts beyond this initial European deal. The timeline also indicates confidence in sustained demand through the end of the decade, providing unusual visibility into the company's long-term growth trajectory.

WUHAN, China, May 21, 2025 /PRNewswire/ -- China Automotive Systems, Inc. (NASDAQ: CAAS) ("CAAS" or the "Company"), a leading power steering components and systems supplier in China, today announced that its largest subsidiary by sales, Jingzhou Henglong Auto Parts Manufacturing Co., Ltd. ("Jingzhou Henglong"), won its first R-EPS product order from a large, well-known European automobile producer.

This order, with annual sales exceeding US$100 million, covers multiple models of the client's vehicles and mass production for this order is expected to begin by 2027. This order demonstrates that Jingzhou Henglong's technical strengths in the field of high-end electric power steering systems has been recognized by a top international automobile OEM, marking another important milestone to CAAS' strategic global reach.

R-EPS has become a must-have steering configuration for mid-to-high-end vehicle models due to its high reliability and efficiency, and quick responsiveness. With its growing importance to Jingzhou Henglong's steering product line, the increased R&D investment in R-EPS has successfully made breakthroughs in key technologies in noise, vibration and harshness ("NVH"), steering quality and other steering performance characteristics. Using CAAS' proprietary ball screw in assembly further assures product quality with optimized costs. CAAS' proprietary developed electronic control units have improved network security and functional safety, reducing the probability of hardware failure with improved algorithm control. These improvements lead to steering performance that have met or exceeded customer requirements.

This project further demonstrates the strategic transformation of Chinese auto part suppliers from a traditional "cost advantage" profile to a growing realization of being a "technology content" provider of high value-added products. As the leading supplier with the most complete product line in China's steering industry, CAAS continues to lead in the technology upgrade of the steering supply chain through its global presence, injecting a new impetus into the development of high-quality steering products.

Mr. Qizhou Wu, the Chief Executive Officer of CAAS, commented, "This first order from a major European automobile OEM further expands our global footprint and acknowledges the growing value of our high-technology EPS products. We are expanding our R-EPS annual production capacity to reach 250,000 units in 2025 and is expected to exceed 1 million units by 2030 to meet the increasing demand by a number of automobile OEMs."

About China Automotive Systems, Inc.

Based in Hubei Province, the People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through its sixteen Sino-foreign joint ventures and wholly owned subsidiaries. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 8 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Stellantis N.V. and Ford Motor Company in North America. For more information, please visit: http://www.caasauto.com. 

Forward-Looking Statements

This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2025, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict, and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

For further information, please contact:

Jie Li
Chief Financial Officer
China Automotive Systems, Inc.
jieli@chl.com.cn 

Kevin Theiss
Awaken Advisors
+1-212-521-4050
Kevin@awakenlab.com

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SOURCE China Automotive Systems, Inc.

FAQ

What is the value of CAAS's new European R-EPS order?

The R-EPS order from the European automaker is worth over US$100 million in annual sales.

When will CAAS begin mass production for the European R-EPS order?

Mass production for the European R-EPS order is expected to begin by 2027.

What is CAAS's targeted R-EPS production capacity by 2030?

CAAS plans to expand its R-EPS production capacity to exceed 1 million units by 2030.

What technological improvements has CAAS made to its R-EPS systems?

CAAS has improved noise, vibration and harshness (NVH), steering quality, network security, and functional safety through proprietary ball screw assembly and electronic control units.

What is CAAS's R-EPS production target for 2025?

CAAS aims to reach an R-EPS annual production capacity of 250,000 units by 2025.