BorgWarner Inc. is planning to expand its U.S. manufacturing footprint to handle its fast-growing electrification business, expected to generate about $4 billion by 2025.
That's as the automotive supplier's top and bottom lines stabilize following prolonged volatility in car supply and production.
BorgWarner took in $292 million in net earnings in the third quarter, more than double from the same period last year, while revenue grew nearly 20 percent to $4 billion, according to its earnings report Thursday.
The company said it is making strides toward swapping out its internal combustion engine business for EV battery and component contracts. It expects 2022 EV revenue to grow to approximately $850 million, more than double what it was in 2021 but still a small fraction of overall business. It aims to bring EV revenue to 45 percent of overall sales by 2030, up from less than 3 percent last year, according to its 2021 annual report.
CFO Kevin Nowlan said the Inflation Reduction Act, passed in August with $370 billion in climate change investments, is motivating BorgWarner — and many other automotive companies — to expand operations in the U.S.
Lear Corp. announced Thursday a new EV parts plant, which its CEO Ray Scott said was spurred by the need to localize supply chain. Battery startup Our Next Energy said the IRA was a factor in setting up its $1.6 billion plant in Michigan. Magna announced more than $500 million in expansions, fueled largely by new EV business.
"We think there's a real opportunity for us to benefit from the IRA as we continue to invest and increase our capacity and manufacturing capability in the U.S.," Nowlan said during a call with investors.
BorgWarner completed last year its $788 million acquisition of German commercial EV battery pack maker Akasol AG, which has two plants in Germany and one in the Detroit area.
"We have a facility in the U.S. right now in Michigan, and we're looking at expanding the U.S. footprint, actually, as we speak," CEO Frédéric Lissalde said on the call.
The timing and location of the expansion have not been disclosed.
"We have not publicly announced our expansion location yet, unfortunately I cannot share any details at this time," spokesman Michelle Collins said in an email.
In tandem with its earnings report, the auto supplier announced several business wins, including a contract to supply integrated drive modules to a Chinese automaker and a deal to supply electric motors to a European commercial vehicle OEM.
The company said net sales for the year are expected to be in the range of $15.4 billion to $15.7 billion, compared with 2021 sales of $14.8 billion.