Borg Warner to spin off some auto parts--getting ready for EVs

This looks like the first of many. Most of the interior parts like door handles, seats, window lifters etc will be the same, but the end of ICEs means a major reduction in parts manufacturing.

Of course the industry will consolidate. And expect intense competition for the remaining parts. And disappearance of many firms (over coming decades). An industry in decline.

The hand writing is on the wall. Manufacturers have gotten the message. Can investors figure out how to play this one? There’s lots more to this than lithium and batteries.

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“The Michigan-based company believes it would ‘ultimately achieve or exceed’ its stated target of 25% of revenue from EVs by 2025 as automakers invest billions of dollars to develop environment-friendly vehicles.”

That is an ambitious target for 2025 considering that EVs make up such a small percentage of cars on the road. Maybe ‘ultimately’ is the key word.


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Sometimes, the right play is to avoid the industry.



Well, for the most part, we can avoid transmissions, instrumentation, etc. That part is obvious. And when I think Borg Warner, that is what I think. (I had a Super T-10 in my 1980 Corvette too!). You still (usually) need differentials though, unless you have two motors on a single axle. But I think Peter has nailed it, the best play might be to avoid it.

I don’t know about the 2025 target date but parts suppliers are seeing ICE sales shrink and EV sales grow and there is no better time to act than now. First mover advantage?

The Captain

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At the same time, errors in demand forecasts can lead to inventory problems, either too much or too little.

Are others forecasting 25% EVs in a couple of years?


I see the auto industry phasing in EV parts and production gradually. Converting plants as demand grows. Many EV items can be made in existing plants. Installing a line to make EV parts may not be a big deal. Even if it only runs part time initially.

At some point parts for ICEs will be scaled back. Consolidation and outsourcing could be part of the transition.

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