BorgWarner (BWA) J.P. Morgan Auto Conference 2025 summary

Tariffs and regulatory environment

• Tariff exposure reduced from 1.6% to 1% of sales due to favorable regulations and mitigation efforts.

• Agreements in place cover 70% of tariff exposure, with the remainder expected to be addressed soon.

• Tariffs are considered manageable, and industry cooperation has helped maintain volumes.

• Regulatory clarity has led to increased RFQ activity and improved market outlook.

• Ongoing efforts to mitigate future tariff impacts include potential changes in production locations.

Electrification and product growth

• Electrification growth strongest in China, followed by Europe; North America remains focused on combustion and hybrids.

• E-product revenue outpaced market growth, driven by over 30 new launches and competitive technology.

• Customer intimacy and speed to market, especially in China, are key growth drivers.

• Market share gains expected due to scale and ability to reinvest, with smaller competitors struggling.

• Outgrowth target is above 1-1.5% over end markets, with opportunities in both foundational and e-products.

Financial performance and margin drivers

• Q2 EBIT margin reached 10.3%, exceeding expectations due to productivity, cost controls, and reduced quality costs.

• Sustained margin profile of 10%+ achieved for five consecutive quarters.

• Margin improvement supported by e-product growth, supply chain savings, and restructuring.

• Exit from the charging business reflects focus on ROIC and portfolio discipline.

• 10% margin is seen as a consistent floor, with ongoing focus on mid-teens conversion.