BorgWarner sees EV, hybrid growth despite CAFE uncertainty

DETROIT -- Despite an iffy future for the 54.5 mpg CAFE standard, BorgWarner Inc. is sticking with its plan to introduce a new generation of motors, transmissions and other gadgetry for electric cars and hybrids.

During a media presentation earlier today, company CEO James Verrier noted that automakers have spent big sums to design EVs, upgrade powertrains and reduce vehicle weight over the next three to five years.

“I don’t think the automakers will back off,” Verrier said. “I don’t think we’ll see regression.”

However, long-term prospects for CAFE look murky, Verrier acknowledged. “Is 54.5 mpg gone forever? Or are we just going to push [implementation] farther into the future? It’s very early. We’ll have to wait and see.”

Turbocharged business

It’s a big-ticket issue for a company like BorgWarner, one of the top two global producers of turbochargers. Worldwide turbo sales are rising strongly as automakers downsize their powertrains.

BorgWarner also has developed motors and transmission components for hybrids and EVs. And that’s where the growth is, Verrier predicts.

By 2023, annual global production of hybrid vehicles should total 18 million units, up from 3 million in 2016, according to IHS Automotive. Meanwhile, production of electric vehicles is expected to rise to 2.3 million units a year, up from 500,000.

More to come

BorgWarner expects EV and hybrid componentry will generate 16 percent of its sales by 2023, up from 1 percent or so this year.

To be sure, the company generated these projections before Donald Trump got elected this week. But Verrier expects regulators in China and Europe will keep up the pressure for better fuel economy.

Moreover, Daimler AG and Volkswagen AG both have made major commitments to develop electric vehicles and hybrids. The Detroit 3 can’t afford to fall too far behind, Verrier said.

“The push from automakers for better fuel economy will come independently of regulation,” Verrier said. “It may not be as strong, but it definitely will be there.”