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BorgWarner (BWA) Unveils EV Vision Via Project CHARGING FORWARD

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BorgWarner Inc. BWA unveiled the Project CHARGING FORWARD at its Investor Day yesterday, under which the company plans to boost its electric vehicles’ (EVs) revenues to around 45% of the total revenues by 2030, from the less than 3% currently.

The CHARGING FORWARD plan represents an acceleration of the company’s electrification strategy and encompasses facilitatingthe transition to electric light vehicles in a profitable manner, expanding into electric commercial vehicles market and streamlining BorgWarner’s combustion portfolio via disposal of businesses having revenues in the range of $3-$4 billion.

Michigan-based BorgWarner is a global leader in manufacturing turbochargers for gasoline-powered vehicles. Its products include four-wheel-drive and all-wheel-drive transfer cases, as well as automatic transmission and timing chain systems.

Amid the heightening climate-change concerns, the automotive industry is transforming and investors are intrigued by automakers that lower their global carbon emissions by offeringgreen transportation solutions. This has made it essential for auto giants, including Ford F, Volkswagen VWAGY, General Motors GM, to reorient their business models and shift toward manufacturing EVs.

As the global auto industry evolves to meet the increasingly stringent emissions, BorgWarner, which has Volkswagen and Ford as its largest customers, is likely to benefit from the accelerating vehicle electrification. Also, in its bid to capitalize on the trending EV race, BorgWarner plans to move away from a balanced propulsion strategy and accelerate its shift toward electrification by supplying clean and efficient technology solutions required for hybrid and EVs.

BorgWarner is well poised to execute the electrification strategy, on its decentralized organizational structure, system and component offerings, scale to deliver and commercialize state-of-the-art technology, financial strength and dedicated teams.

Under the latest project, BorgWarner targets to generate roughly $4.5 billion in free cash flow between 2021 and 2025. Also, management has pledged to achieve carbon neutrality by 2035.The company plans to invest further to expand its electrification portfolio through organic and inorganic growth,with asustainedfocus on maintaining top-quartile, double-digit margin performance.

Encouragingly, electrification programs are likely to aid the company’s backlog. From 2022 through 2024, net new backlog is expected to be at least $2.8 billion, with around 45% of the backlog supported by e-products.

Nonetheless, for BorgWarner to succeed as an electrification supplier, it must be able to offer components or entire integrated electric systems for EVs. The company’s acquisitions since 2015 position it well for this. BorgWarner’s buyout of Delphi Technologies has strengthened its electric propulsion leadership, with expanded capabilities and scale. The acquisition of AKASOL AG, likely to close in the second quarter of 2021, will further expand its commercial vehicle-electrification capabilities.

BorgWarner currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of the company have appreciated 86.7% in the past year compared with the industry’s rise of 77.7%.

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Ford Motor Company (F) : Free Stock Analysis Report

BorgWarner Inc. (BWA) : Free Stock Analysis Report

General Motors Company (GM) : Free Stock Analysis Report

Volkswagen AG (VWAGY) : Free Stock Analysis Report

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