STUTTGART -- BorgWarner CEO James Verrier, 52, sees electrification of the powertrain as a positive for his company despite the supplier's heavy reliance on parts that electric vehicles don't need.
"We will have meaningful content on pure electric vehicles," Verrier said. He explained how in an interview last month with Automotive News Europe Managing Editor Douglas A. Bolduc at BorgWarner's facility in Ludwigsburg, Germany.
Q: Is the electrification of the powertrain bad news for BorgWarner, which is heavily vested in parts that support the internal combustion engine?
A: We view electrification as a friend of BorgWarner. If we look out 10, 12 years from now, our view is that approximately 25 percent of the vehicles will have some form of hybrid or EV product on board. Our view is that the pure electric vehicle will probably be 2 percent or 3 percent of the fleet. The mandate that we have inside of BorgWarner is that we will have meaningful content on pure electric vehicles.
In what areas?
We're into thermal management. We're a guru in transmissions. The biggest space, however, is going to be the conventional internal combustion engine plus some form of hybridization. I think all the current products we have are becoming more electronically capable. That provides opportunity for growth of content from a BorgWarner perspective on our existing goods.
One is what we call a transmission accumulator for stop-start. It is a simple solenoid device that works in conjunction with the transmission. When it goes in and out of stop-start mode, it allows a much smoother and more effective restart of the transmission.
How will global light-vehicle production develop this year?
We see small growth in North America, modest to little growth in Europe and China growing 7 percent to 8 percent.
What's the sales outlook for BorgWarner?
We don't break things down in terms of growth per region. What I can say is that at the beginning of 2015 we expected growth of 2 percent to 6 percent, but that is heavily skewed because of the strength of the dollar. If you do a currency-neutral comparison, we expect to grow more like 9 percent to 11 percent.
How badly will the stronger dollar hurt?
Being a U.S.-based company, we translate all of our overseas sales back into dollars. When we gave our guidance for 2015, the euro was at $1.20 against the dollar as opposed to the $1.07 in March. Every cent it moves costs us $30 million in sales.
Do you need to increase your footprint in Europe?
We will be opening two new facilities in Hungary this year. In Portugal, we're moving from our existing plant into a purpose-built, state-of-the-art new factory. We also continue to invest in technology in the existing plants.
Is BorgWarner profitable in Europe?
We wouldn't be building plants in Portugal and Hungary and other parts of Europe if we didn't see strong growth and good return on that investment.
In 2013, Europe accounted for 48 percent of BorgWarner's sales and Asia for 22 percent. Will that change?
In five years, it will be 40 percent in Europe because we're going to grow rapidly in China and other places. Asia will be 30 percent, and the Americas will be 30 percent.
With ZF taking over TRW, is there more pressure on companies to become megasuppliers?
There's certainly no pressure to become a megasupplier. We will remain focused in the powertrain area. We don't see a compelling need to jump into infotainment or active safety to add another leg to the stool. We feel comfortable with our stated goal, which is to be a $15 billion company by 2020.