BorgWarner eyes electric vehicle business, plans to make acquisitions again

According to foreign media reports recently, BorgWarner, one of the world's two largest turbocharger manufacturers, intends to strengthen its expertise in power electronics and is also preparing to strengthen its competitiveness in this field through acquisitions.

BorgWarner CEO James Verrier said this will help suppliers gain an advantage in the hybrid vehicle market. Verrier said in an interview this month: "Currently BorgWarner has good power electronics, but I want more. BorgWarner wants to upgrade its business."

He said BorgWarner has about $400 million in earmarked funds each year for acquisitions or stock buybacks. "If we have to go into debt if there's a suitable deal, we'll do it."

BorgWarner assumed the debt when it acquired supplier Remy International, Inc. for $951 million in July 2015.

Remy International's products mainly include alternators, starters, power transmissions, etc. The company's business covers 10 countries around the world. BorgWarner has seen the trend of the expansion of the electric vehicle market. Verrier said that BorgWarner can now supply parts for pure electric vehicles, hybrid vehicles, and internal combustion vehicles.

BorgWarner predicts that by 2023, sales of electric and hybrid vehicle parts will account for 16% of total sales, compared with only about 1% this year.

According to data from IHS Automotive Research, global annual production of hybrid vehicles will reach 18 million by 2025, compared with 3 million in 2016. At the same time, annual production of electric vehicles is expected to rise from 500,000 now to 2.3 million.

Verrier said, "I think the major automakers will continue to rush into the electric vehicle market, and the investment in electric vehicles will not shrink."

Verrier said BorgWarner is already looking at another acquisition.

The election of a conservative administration in the United States has not changed Verrier’s attitude. Many observers speculate that the Trump administration may reduce or even eliminate the 2025 vehicle fuel economy standards.

This will undoubtedly deal a blow to suppliers who have invested heavily in energy-saving and efficient components.

But Verrier doesn't think there's anything to worry about. First, the United States only accounts for 30% of BorgWarner's global sales. And the relevant regulatory authorities in China and Europe will not relax fuel economy standards.

In addition, Verrier pointed out that Daimler and Volkswagen have invested heavily in electric and hybrid vehicles, and the Detroit Big Three automakers cannot do nothing and will definitely try their best to catch up. "In fact, the promotion of automakers to improve fuel economy does not depend on policies and regulations. The promotion of automakers may not be as strong as that of policies and regulations, but it will definitely be there."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.