BorgWarner (BWA) JPMorgan Auto Conference 2024 summary

Market trends and outlook

• Battery electric vehicle (BEV) growth forecasts have been revised downward, with near-term volatility driven by consumer concerns over range, infrastructure, and cost, but long-term electrification and hybridization trends remain intact.

• Regulatory changes in Europe and China are expected to drive future hybrid and electric vehicle adoption.

• The company is focused on controlling what it can: maintaining a technology-driven portfolio, growing above-market, and converting growth into mid-teens income and cash flow.

Regional and customer diversification

• Revenue from China now represents 20% of total, with 70% of that from local OEMs and 90% of eProduct sales in China also with local OEMs.

• The customer base is highly diversified by region and OEM, reducing risk from overexposure to any single market.

• Shift from joint ventures to local OEMs in China marks a significant change in revenue composition over recent years.

Growth and margin performance

• Targeting 0.5%-2.5% organic growth in a shrinking industry, outperforming peers by 350-450 basis points.

• Both combustion and eProduct business units are focused on growing above their respective markets, supporting overall outperformance.

• Scenario analysis shows confidence in delivering similar EBIT even if BEV penetration trends lower, with a new focus on delivering mid-teens incremental margins regardless of propulsion mix.