Vestas: Leading Wind Turbine Manufacturing with Turbine Plus Service Combination and Global Factory Network

Origin

In 1979, Danish entrepreneurs Poul Hansen and H. S. Hansen founded Vestas, driven by Denmark's strong push for energy independence following the first oil crisis when wind power technology was still in its infancy. Initially doing agricultural machinery business, Vestas later transitioned to manufacturing wind turbines. Leveraging Denmark's rich local wind resources and government support, the company gradually validated the commercial model for small turbines. In 1986, Vestas suffered severe blade failure incidents at a wind farm project in California, USA, bringing the company close to bankruptcy. However, the founders persisted with technical remediation and distilled a quality management system from the failures, laying the foundation for product reliability during future global expansion.

Milestones

Turning Points

• The 1986 California blade fracture incident pushed Vestas to the brink of bankruptcy, compelling it to establish the world's most stringent blade testing system and abandon the blind pursuit of installation scale.
• The 2008 global financial crisis caused orders to plunge off a cliff. After massive layoffs, Vestas was forced to shift from selling hardware to providing full lifecycle services, fundamentally changing its business model.
• In 2013, Vestas officially proposed the dual turbine-plus-service combination, operating the service business independently and setting profitability targets, allowing service revenue to hedge manufacturing income cyclicality.
• From 2023 to 2025, as the global turbine price war moderated, Vestas took the lead in exiting the ultra-large capacity race and focused on the 15 MW offshore platform. The average order price returned to a high of RMB 8,790 per kilowatt, and earnings recovery was confirmed by the capital markets.

Failures & Pitfalls

• The 1986 US wind farm blade fracture accident exposed the inadequate adaptation of Vestas' early products to complex wind conditions, bringing the company near bankruptcy. The lesson learned was that global expansion must first complete local wind condition validation.
• During the 2008 financial crisis, Vestas experienced plummeting orders and high inventories, forcing it to lay off employees and close certain factories, demonstrating that a pure manufacturing heavy-asset model lacks buffers against macroeconomic volatility.
• Around 2010, Vestas adopted a high-priced direct-sales strategy in the Chinese market, while local manufacturers rapidly captured market share with low prices, resulting in a sharp decline in its China market share and forcing it to adjust its pricing and localization pace for the supply chain.

Core Data

• 2025 Full-Year Revenue：RMB 154.1 billion
• 2025 Order Backlog：RMB 589.5 billion
• 2025 Average Order Price：RMB 8,790 per kilowatt
• Service Business Covered Capacity：Over 100 GW
• 2026 Share Buyback Plan：EUR 400 million
• Stock Price Increase Post-2026 Q2 Earnings：18%

Competitors / Peers

Vestas' global competitors include Siemens Gamesa (Denmark), GE's onshore and offshore wind business (USA), Nordex (Germany), Acciona (Spain), as well as Chinese players like Goldwind, Envision Energy, and Mingyang Smart Energy. Siemens Gamesa directly competes with Vestas for European orders in offshore wind, while GE focuses heavily on the US market. Chinese companies pose a significant challenge to Vestas in Asia-Pacific and emerging markets due to lower manufacturing costs and local policy support, but Vestas maintains its leading edge in high-margin European and American existing O&M markets thanks to its service network and overseas project financing capabilities.