Borgwarner Inc. · NYSE:BWA
Borgwarner — ESG Presentation (2022)
30 slides from Borgwarner's sustainability presentation, 2022
Slide 1: Charging Forward Investor Presentation
Q3 2022 Charging Forward Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management’s current outlook, expectations, estimates and projections. Words such as “anticipates,” “believes,” “continues,” “cou
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains information about BorgWarner’s financial results that is not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial mea
Slide 4: Electric Vehicles (% Sales)
Electric Vehicles (% Sales) ~45% >25% <3% 2021¹ 2025 2030 1 Based on FY21 Actual Sales 4 2025 & 2030 Source: BorgWarner estimates.
Slide 5: Intentional Growth for a Sustainable Future
Intentional Growth for a Sustainable Future Revenue from EVs • Our accelerated electrification strategy is a product of our <3% 1 ~45% vision and long-term focus • Our vision of a clean, energy-efficient world is as relevant today as ever • More aggressively deploying our organic investments and ~$3
Slide 6: Charging Forward Aligns Our Business and Sustainability Strategy
Charging Forward Aligns Our Business and Sustainability Strategy New 2022 Sustainability Report shows our accomplishments and focus CREATE A CLEANER, LIVE THE BORGWARNER PARTNER WITH AND MORE ENERGY-EFFICIENT WORLD BELIEFS REPORT TO STAKEHOLDERS 88% revenue from clean and Power to Evolve training pr
Slide 7: We Are Investing Organically to Achieve Our Ambitious EV Goals
We Are Investing Organically to Achieve Our Ambitious EV Goals Our Organic Investment Strategy • >$4B over next 5 years on combined R&D and Will Also Play a Major Role in Advancing capital spending for eProducts Electric Light Vehicles Estimated R&D Spend for eProducts • eProduct expected to continu
Slide 8: We've Grown Our Electrification Portfolio Deliberately over Time
We’ve Grown Our Electrification Portfolio Deliberately over Time Rotating electric (i.e., Est. 2025 Content Opportunity per eLV 2015 motors) 2016 Industrial-focused $2,640 power electronics and charging 2017 Electronics for start- up EV customers Delphi/Sevcon Acquisitions 2018 $1,614 — Power Electr
Slide 9: Our Investments Have Resulted in a Wide-Ranging Electric Vehicle System Portfolio
Our Investments Have Resulted in a Wide-Ranging Electric Vehicle System Portfolio 1 STATIONARY CHARGING 3 ENERGY STORAGE & MANAGEMENT Battery management DC system (BMS) 5 ELECTRIC PROPULSION Electric Reduction 2 THERMAL MANAGEMENT Inverter motor gear High-voltage DC fast coolant heater charger (HVCH
Slide 10: Pursuing a Science Based Target to reduce Scope 1, 2, and 3 emissions
Pursuing a Science Based Target to reduce Scope 1, 2, and 3 emissions Our decarbonization roadmap Submitting a science-based Scope 1 & 2 target to SBTi in 2022: • Operations: Identify and assess plant-level efficiency opportunities; promoting energy • Carbon neutral operations by management certific
Slide 11: Electrification strategy to drive expected Scope 3 product-in-use emissions decline
Electrification strategy to drive expected Scope 3 product-in-use emissions decline Light vehicle example: indirect product-in-use emissions expected to decline 19% by 2030 vs. 2020 on our EV parts shift Scope 3 light vehicle product in use emissions (MT CO2e / $ (millions MT CO2e) revenue) Scope 3
Slide 12: Implementing our Supply Chain Oversight Roadmap to Ensure Quality and Responsibility
Implementing our Supply Chain Oversight Roadmap to Ensure Quality and Responsibility We use the industry SAQ survey to drive our ESG performance in our supply chain 59.8% supplier survey participation, • In 2021, we again launched our Sustainability Self-Assessment Questionnaire up from 24.1% (SAQ)
Slide 13: We Set Goals to Advance DEI to Support Creating an Inclusive and Sustainable Workforce
We Set Goals to Advance DEI to Employee Diversity1 3 of 11 Strategy Board members are Support Creating an Inclusive and diverse. Sustainable Workforce of the Future 30.1% Our Goals Promoting employee diversity of the company’s total workforce are women. % total workforce Diversity (2019 – 2021)2 35%
Slide 14: We Are Developing Our Workforce to Have the Skills and Diversity to Achieve Our Business Goals
We Are Developing Our Workforce to Have the Skills and Diversity to Achieve Our Business Goals 2021 Talent & Development Highlights hours of training provided to Top quartile- 84,000+ salaried employees Our training program created in partnership worker safety with leading European salaried employee
Slide 15: Recent Awards Across EV Product Portfolio
Recent Awards Across EV Product Portfolio 800-Volt Inverter 800-volt Electric Motor Commercial Vehicle Battery High Voltage eFan System System ▪ Award with a premium ▪ Award with a large global ▪ Award with a major European European OEM on next- commercial vehicle EV customer ▪ Award with a European
Slide 16: Positioned to be #1 Non-Captive Inverter Producer by 2025
Positioned to be #1 Non-Captive Inverter Producer by 2025 Estimated Booked Inverter Volumes Product Highlights • Efficient speed to market with products covering 400V and 800V, silicon and silicon carbide • Proprietary inverter power module design ~0.8M Hybrid • Vertical integration: ▪ Power modules
Slide 17: eMotor Business Continues to Grow
eMotor Business Continues to Grow Estimated Booked eMotor Volumes (including in iDM) ~2M Product Highlights ▪ Flat-wire high-voltage hairpin designs bring higher efficiency as well as superior power and ~0.7M torque density ▪ In-house design of manufacturing equipment enables an optimized product an
Slide 18: Leader in High-voltage Coolant Heaters
Leader in High-voltage Coolant Heaters Estimated Annual High-voltage Coolant Heater Volumes ~4M Product Highlights 18 ▪ Enables improved battery performance, longer range and comfortable cabin climate ▪ 400V and 800V capabilities with awarded ~500K business across multiple variations 2021 2022 2023
Slide 19: eCV Battery Pack Technology Supporting Growth
eCV Battery Pack Technology Supporting Growth Estimated Battery Pack Sales $ in Millions >$600M Product Highlights ▪ Pioneer in electric Commercial Vehicle batteries ▪ High energy density – highly efficient packaging ▪ Multi-pack system solutions, tailored to application ▪ Structural ruggedness and
Slide 20: Progress Report
Progress Report EV Organic Sales M&A Dispositions in 2025 by 2025 by 2025 Current ~$2.9B Booked Status Charging $2.5B $2.0B $3.5B Forward Goals Goal Add’l M&A Reached $1.2B Add’l $3.3B Dispositions AKASOL, $0.8B Santroll & Rhombus $0.2B Completed 20
Slide 21: We have both the strategies and execution capabilities to lead the industry
• We have both the strategies and execution capabilities to lead the industry • Sustainability is core with a commitment to carbon neutrality by 2035 and Scope 3 reduction potential • Our actions through 2025 are expected to achieve ~45% of revenue from EV by 2030, with potential for more to come 21
Slide 22: Appendix
Appendix 3¢ BorgWarner
Slide 23: We're Well Positioned to Seize eLV Market Opportunity
We’re Well Positioned to Seize eLV Market Opportunity Combustion Based Electric ~2.9X Combustion $$ Est. 2025 BorgWarner Hybrid Content Opportunity Per Light Vehicle Summary $2,640 Combustion $1,875 $907 Sources: BorgWarner TAM; IHS Markit, KGP. Excludes: AKASOL battery pack opportunities, Service &
Slide 24: Profitability on EV Portfolio Expected to Improve as Programs Launch
Profitability on EV $1,100 Estimated EV Profitability Characteristics 57.0% Portfolio Expected $900+ 47.0% to Improve as $700 37.0% Programs Launch $500 27.0% Current profitability already $300 17.0% reflects elevated R&D spending for EVs $100 7.0% Growth in R&D spending not $(100) -3.0% commensurat
Slide 25: Significant Capital Available to Accelerate Positioning in EV
Significant Capital 2021-2025 Estimated Capital Flows Available to Accelerate >$7B Positioning in EV ~$1.5B Dispositions1 ~$5.5B • Strong cash flow and investment- >$1.0B Available grade balance sheet support M&A Available Leverage2 for M&A • Dispositions provide additional source of capital • Disci
Slide 26: Electric Component Vehicle Sourcing
Electric Component Vehicle Sourcing Electric Drive Motor Gearbox 42% 34% 2025 2025 58% 66% OEM In-House Suppliers OEM In-House Suppliers On-Board Charger, DC-DC Converter & Inverter Battery Pack Controller 18% 17% 2025 2025 82% 83% OEM In-House Suppliers OEM In-House Suppliers 26
Slide 27: What Does an Inverter Do, and What's Inside?
What Does an Inverter Do, and What’s Inside? Computer Power Competitive Advantage: Module Custom Integrated Circuits (ASICs), Software Competitive Advantage: Viper power Capacitor switch with Competitive Advantage: double-sided PolyCharge Technology cooling Three main inverter components necessary f
Slide 28: Driving Inverter Market Innovation
Driving Inverter Market Innovation Proprietary Power Module Design Custom Integrated Circuits Electronics Silicon Circuitry “die” 1 2 3 4 5 6 Six Power Transistors Competitive Advantages Benefits • Very Compact • Reduced size and cost • Double-sided cooling: 2X better heat transfer • Added functiona
Slide 29: Integrated Drive Module: All Under One Roof
Integrated Drive Module: All Under One Roof Class-leading Inverter Physical integration eliminates phase cables Integrated Oil Cooler and Park Lock Actuator Electric Machine Power-dense designs using rectangular hairpin windings Oil cooled end turns - higher continuous power Gear Reduction Product a
Slide 30: Acquisition of Rhombus Energy Solutions Expands EV Growth Opportunities
Acquisition of Rhombus Energy Solutions Expands EV Growth Opportunities BorgWarner to accelerate the charging business, leveraging the local knowledge and footprint of Rhombus Energy Solutions and BorgWarner’s pre-existing business ▪ Focuses on high-value DC fast-charging (DCFC) Estimated Revenue ($