Borg Warner Expects Hybrid and EV Growth Even If U.S. Backs Away

One major auto parts supplier sees hybrid and electric vehicle parts making for a growing share of its sales – whether that be in the U.S. or overseas.

U.S.-based Borg Warner on Friday said it expects to see sales grow for these vehicle segments even if the U.S. review of fuel economy and emissions standards threatens to weaken the market.

Borg Warner CEO James Verrier told Reuters that if the Trump administration does cut back the standards and demand lessens, that would be made up for in the growing markets of China and Europe. Emissions standards are toughening up in those markets.

“Our belief is that there will continue to be a strong increase in fuel economy emissions standards,” Verrier said in an interview. “What this means for us is that in our business nothing has really changed, it’s business as usual, and that’s what we see with the automakers.”

The company does take electrification quite seriously, expecting revenue from hybrid and electric vehicle parts to go up from about 1 percent of its revenue now to about 16 percent in 2013.

The supplier has expanded its product lineup for electrified vehicles. That now includes transmissions and drive modules for electric cars, and turbochargers and clutches for hybrids.

Borg Warner already counts Volkswagen, Ford, and most global automakers as clientele. Chinese automakers have become more important to the supplier.

Most of its market for EV parts is in China. That includes Chinese automakers Geely Automobile Holdings and Great Wall Motor Co., Verrier said.

“As our customers look at what the fuel regulations may be in China versus the United States versus Europe, we can help them figure out the best mix of propulsion technology they can have to satisfy each region,” he said.

Even if fuel economy and emissions rules are softened in the U.S., some market analysts see continued demand for green cars in the U.S. and even more of it in China and Europe as emissions rules tighten up soon.

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China started cutting back on subsidies and purchase incentives for its “new energy vehicles” after the start of the year. The government still expects automakers to meet a set level of sales coming from battery electric and plug-in hybrid electric vehicles. Beijing is considering a proposal mandating that new energy vehicles make up 8 percent of new vehicle sales for manufacturers in 2018; targets would rise to 10 percent in 2019 and 12 percent in 2020.

That’s been compared to California’s zero emission vehicle standards. Automotive executives would prefer to see generous incentives and for market demand to drive sales, as opposed to requiring that fairly high sales volume numbers be met when there could be a costly wide gap between demand and the mandates.

Reuters

 


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