BorgWarner Inc.

BorgWarner’s second quarter performance was strong and it delivered an all-around beat despite a slight decline in global output. The company outperformed in North America and Europe and had sales of nearly $3.8 billion, an increase of around 7%. From a margin standpoint, this quarter’s planned increase in eProducts R&D spending, net material challenges, and unexpected production shutdowns in China all had a negative effect on their performance. Besides, the management stated that its battery solutions will be provided to a European commercial vehicle OEM. The first line of the company’s heavy-duty electric trucks, which is anticipated to be announced in 2024, will use this battery system. The most recent version of their ultra-high energy battery technology, which offers a 50% increase in energy density over its predecessor, will be used by their customer for this exciting new project. This improvement considerably extends the vehicle’s range, making it an excellent option for long-distance electrified commercial transportation. We give them a ‘Hold’ rating with a revised target price.