BorgWarner Inc Stock

BorgWarner Inc. (BorgWarner) operates as a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles.

The company’s products help improve vehicle performance, propulsion efficiency, stability and air quality. The company manufactures and sells these products worldwide, primarily to original equipment manufacturers (‘OEMs’) of light vehicles (passenger cars, sport-utility vehicles (‘SUVs’), vans and light trucks). The company’s products are also sold to OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). The company also manufactures and sells its products to certain tier one vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The company operates manufacturing facilities serving customers in Europe, the Americas and Asia and is an original equipment supplier to nearly every major automotive OEM in the world.

In 2021, the company announced its strategy to aggressively grow its eProducts over time through organic investments and technology-focused acquisitions. eProducts include all products utilized on or for electric vehicles (‘EVs’) plus those same products and components that are included in hybrid powertrains whose underlying technologies are adaptable or applicable to those used in or for EVs. The company is well positioned for the industry’s anticipated migration to EVs.

In June 2023, the company announced the next phase of its Charging Forward strategy, which focuses on profitably growing eProducts while maximizing the value of the company’s Foundational products portfolio. Foundational products include all products utilized on internal combustion engines plus those same products and components that are also included in hybrid powertrains.

Acquisitions are an integral component of the company’s growth and value creation strategy.

Eldor Corporation’s Electric Hybrid Systems Business

On December 1, 2023, the company completed its acquisition of the electric hybrid systems business segment of Eldor Corporation (‘Eldor’), which is headquartered in Italy. The acquisition is expected to complement its existing ePropulsion product portfolio by enhancing the company’s engineering capabilities in power electronics.

Hubei Surpass Sun Electric Charging Business

On March 1, 2023, the company completed its acquisition of the electric vehicle solution, smart grid and smart energy businesses of Hubei Surpass Sun Electric, pursuant to an Equity Transfer Agreement. The acquisition is expected to complement the company’s existing European and North American charging footprint by adding a presence in China.

Drivetek AG

On December 1, 2022, the company acquired Drivetek AG, an engineering and product development company located in Switzerland. This acquisition is expected to strengthen the company’s power electronics capabilities in auxiliary inverters to accelerate the growth of the High Voltage eFan business.

Rhombus Energy Solutions

On July 29, 2022, the company acquired Rhombus Energy Solutions, a provider of charging solutions in the North American market. The acquisition is expected to complement the company’s existing European charging footprint to accelerate organic growth and adds North American regional presence to its charging business.

Santroll Automotive Components

On March 31, 2022, the company acquired Santroll Automotive Components, a carve-out of Santroll Electric Auto’s eMotor business. The acquisition is expected to strengthen the company’s vertical integration, scale and portfolio breadth in light vehicle eMotors while allowing for increased speed to market.

Segments

The company reports its results under three reportable segments: Air Management, Drivetrain & Battery Systems, and ePropulsion.

Air Management

The Air Management segment develops and manufactures products to improve fuel economy, reduce emissions and enhance performance. The Air Management segment’s technologies include turbochargers, eBoosters, eTurbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery heaters, battery charging and direct current charging stations.

The Air Management segment’s emissions, thermal and turbocharger systems provide several benefits, including increased power for a given engine size, improved fuel economy, reduced emissions and optimized temperatures in propulsion systems and vehicle cabins.

The Air Management segment’s timing systems enable precise control of air and exhaust flow through the engine, improving fuel economy and emissions. The Air Management segment is a leading manufacturer of timing systems for OEMs around the world.

The Air Management segment’s powertrain products include an array of highly engineered products that complement and enhance the efficiency improvements delivered by many other air management technologies.

Drivetrain & Battery Systems

The company’s Drivetrain & Battery Systems segment’s technologies include battery modules and systems, control modules, friction and mechanical clutch products for automatic transmissions, torque-management products and rear-wheel drive (‘RWD’) and all-wheel drive (‘AWD’) transfer case systems and coupling systems.

The Drivetrain & Battery Systems segment’s battery products include high-performance lithium-ion battery systems for electrified bus, truck and off-highway applications. The battery products provide commercial vehicle performance with a high-power output for safe, reliable and durable operation. The ultra-high energy battery system for electric drivetrains offers up to 4,000 cycles, significantly enhancing electric commercial vehicle range and is compatible with hyper-charging infrastructure. The battery management system provides safety and efficiency, with liquid cooling preventing overheating.

The Drivetrain & Battery Systems segment’s friction and mechanical products for automatic transmissions include dual clutch modules, friction clutch modules, friction and separator plates, transmission bands, torque converter clutches, one-way clutches and torsional vibration dampers. Controls products for automatic transmissions feature electro-hydraulic solenoids for standard and high-pressure hydraulic systems, transmission solenoid modules and dual clutch control modules.

The Drivetrain & Battery Systems segment’s torque management products include rear-wheel drive (‘RWD’) and all-wheel drive (‘AWD’) transfer case systems, front-wheel drive (‘FWD’)-AWD coupling systems and cross-axle coupling systems. The segment is developing electronically controlled torque management devices and systems that will benefit vehicle energy efficiency and vehicle dynamics.

ePropulsion

The company’s ePropulsion segment’s products and technologies provide industry-leading performance and efficiency with quick-to-market solutions powering current and next-generation electric and hybrid vehicles.

The ePropulsion segment’s technologies include power electronics, such as inverters, onboard chargers, DC/DC converters and combination boxes (multiple combined power electronics components). Rotating electric machines are also part of the ePropulsion portfolio, including eMotors and generators, as well as fully integrated drive modules (‘iDM’) consisting of inverter, eMotor and gear reducer. Additionally, the segment’s products include electronic controls, such as engine control units, transmission control units, battery management systems, propulsion controllers and domain controllers.

The ePropulsion segment’s inverter products power many of the global leading electric and hybrid vehicles.

Additionally, the ePropulsion segment’s iDMs combine all the benefits of the company’s inverters, eMotors and gear reducers in a single package optimized for cost, performance, noise vibration and harshness and packaging. iDMs contain full software that offers functional safety and cybersecurity. This capability comes from experience in the field of automotive software. Applications of iDMs include a wide range of electric and hybrid vehicles globally.

Product Lines and Customers

During the year ended December 31, 2023, approximately 82% of the company’s net sales were for light-vehicle applications; approximately 10% were for commercial-vehicle applications; approximately 6% were for off-highway vehicle applications; and approximately 2% were to distributors of aftermarket replacement parts.

In the year ended December 31, 2023, the company’s customers were Ford and Volkswagen.

The company’s automotive products are generally sold directly to OEMs, substantially pursuant to negotiated annual contracts, long-term supply agreements or terms and conditions as may be modified by the parties. Deliveries are subject to periodic authorizations based upon OEM production schedules. The company typically ships its products directly from its plants to the OEMs.

Sales and Marketing

Each of the company’s businesses within its reportable segments has its own sales function. Account executives for each of the company’s businesses are assigned to serve specific customers for one or more businesses’ products. Account executives spend the majority of their time in direct contact with customers’ purchasing and engineering employees and are responsible for servicing existing business and for identifying and obtaining new business.

Seasonality

In China, the company typically experiences lower sales in the first quarter (year ended December 2023) due to the Chinese New Year.

Intellectual Property

The company has approximately 5,700 active domestic and foreign patents and patent applications pending or under preparation and receives royalties from licensing patent rights to others.

The company owns the ‘BorgWarner’ trade name and numerous trademarks, which are material to the company's business.

Competition

The company’s major non-OEM competitors are Robert Bosch GmbH, Denso Corporation, Garrett Motion, Hitachi, Ltd., Magna Powertrain (an operating unit of Magna International Inc.), Valeo, Schaeffler Group and Vitesco Technologies.

Regulations

The company works collaboratively with a number of stakeholder groups, including government agencies, such as the National Highway Traffic Safety Administration, its customers and its suppliers to proactively engage in federal, state and international public policy processes.

History

BorgWarner Inc., a Delaware corporation, was founded in 1987. The company was incorporated in 1987.