BorgWarner's Q1 2025: Unpacking Contradictions in Tariffs, M&A Strategy, and Electric Growth Expectations

Tariff recovery and impact, M&A strategy and portfolio review, hybrid and electric product growth expectations



Strong Financial Performance and Sales Growth:
- BorgWarner reported sales of over $3.5 billion in Q1 2025, with an organic sales growth of 3.7%, outperforming market production which declined by approximately 3.6%.
- The growth was driven by a strong increase in light vehicle eProduct sales, which rose by 47%, and foundational growth in regions outside China.

Portfolio Strategy and Decisions:
- The company exited its charging business due to market dynamics and an inability to achieve shareholder value within the planning horizon.
- Additionally, capacity consolidation actions were taken within the North American battery systems business to adjust to market dynamics, aiming to improve competitiveness.

Profitability and Margin Expansion:
- BorgWarner achieved an adjusted operating margin of 10% in Q1, driven by strong operational performance and cost controls, despite a 20 basis point headwind from tariffs.
- This margin expansion reflects the company's focus on profitability and effective management of its cost structure.

Product Awards and New Business Wins:
- BorgWarner secured multiple new product awards, including a Hybrid eMotor Award with a major North American OEM and a High-Voltage Coolant Heater Award with a global OEM.
- These wins indicate BorgWarner's continued product leadership and demand for its technology across various powertrain architectures.