According to Automotive News, U.S. automotive parts supplier BorgWarner has announced that its sales and profits for the first quarter increased due to strong demand for its hybrid products in the European and Chinese markets and the company's outstanding operational performance.
In the previous quarter, BorgWarner's sales were $3.6 billion, a 6% year-on-year increase, with net profits rising by nearly 30% to $213 million, surpassing expectations. The adjusted operating profit margin reached 9.4%, and the company repurchased $100 million worth of stocks in the first quarter of this year.
Demand for hybrid vehicles has been steadily growing in Europe and Asia, with BorgWarner outperforming the overall market in these two major regions. In North America, the company's performance has remained steady despite lower-than-expected sales of electric cars, as demand for batteries and turbochargers offset the impact.
Due to lower-than-expected demand for electric cars, North American automakers are reducing investments in this area, posing challenges to BorgWarner's electrification strategy. CEO Fred Lissalde has made adjustments based on market changes, relying more on the company's flexibility, including increasing investment in hybrid products in the North American market. "North American customers want advanced hybrid cars, and we have all the fundamentals to support them."
Currently, Detroit automakers like General Motors are planning to resume investments in hybrid cars. Lissalde remains secretive about the details of inquiries from customers about hybrid car products, stating, "We are in the early stages of discussing platforms, and there has always been interest in plug-in hybrid electric vehicles (PHEVs) globally. It's too early to see inquiries from some U.S. automakers in the U.S."
Despite some uncertainty in BorgWarner's electric car business in the North American market, the company has signed two contracts for electric cars with foreign automakers. BorgWarner has partnered with XPeng Motors for two high-voltage hairpin (HVH) motor business collaborations, used in XPeng's upcoming SUV models, including BorgWarner's advanced oil-cooled 800V motor system. Additionally, BorgWarner will introduce electric torque vectoring and disconnect (eTVD) systems for pure electric vehicles (BEVs) for Polestar and another major European OEM.
For the full year 2024, BorgWarner maintains its sales expectations between $14.4 billion and $14.9 billion, with operating profits between $1.1 billion and $1.2 billion. According to Lissalde, BorgWarner's flexibility lies in its products being almost interchangeable between pure electric and hybrid vehicles, helping to reduce investment risks.
